Market Segmentation Market Segmentation What is a market

Market Segmentation

Market Segmentation What is a market segment? Why is it important?

What is a “Market Segment”? § § Set of potential customers Who have similar needs Who refer each other when buying Are alike in the way they: • Perceive value • View products and services • Purchase products and services

Why Define a Market Segment? § Easier to understand customer needs § Focus “whole solution” to a narrower set of customer needs § Easier to become a leader in a smaller market (Big fish in small pond) § More effective use of marketing Rupee § Generally more profitable

Levels and Patterns of Market Segmentation § Levels of Market Segmentation Mass Micromarketing Niche Marketing

Geographic Segmentation Region City or metro size Density Climate Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Under 4, 999; 5, 000 -19, 999; 20, 000 -49, 999. . . 1, 000 -3, 999; 4, 000 and over Urban, rural, suburban • HLL – Lesancy (big soap), Philips introduced ‘Bahadur’ • in rural area Northern, southern, tropical Exporters segment the market as Western countries , African Countries.

Geographic segmentation § § § Local Marketing : Target Marketing is leading to Marketing Programs tailored to the needs and wants of local customer groups. Tang Launches Eid campaign , Baskin Robbins “Three Mile Marketing” Wal-Mart opening Market side grocery stores Mc. Donald's ties up with Chhota Bheem to lift desi image

Demographic Variables Income Age Gender Occupation Family size Education Nationality Religion

COLGATE DENTAL CREAM -DOUBLE PROTECTION § § § ADULTS Packaging consist – Red Color, Double Ring Double ring signifies Double Protection Helps to fight more germs. Unique super active foam Colgate regular mint flavor keeps your breath fresh.

COLGATE GEL (RED AND BLUE) § YOUNGSTERS § LAUNCHED IN TWO VARIABLE COLORS – Red and Blue § Same product line, same set of customers § Highlights two aspects – Super Transparency and Actrinse

Target – Kids ages 3 – 8 Featuring Fun Barbie Graphics Fun bubble fruit flavor Fights against bad breath and cavities.

Behavioral Segmentation Occasions Regular occasion, special occasion Benefits Quality, service, economy, speed User status Nonuser, ex-user, potential, first-time, regular Usage rate Light user, medium user, heavy user Loyalty status None, medium, strong, absolute Buyerreadiness stage Attitude toward product Unaware, informed, interested, intends to buy Enthusiastic, positive, indifferent, negative, hostile

Psychographic Variables Lifestyle Hobbies TV viewing habits Social activities Club memberships Vacation preferences Personality Compulsive Outgoing Authoritarian Ambitious

Requirements for Effective Segmentation § § Measurability – the size , purchasing power and profiles Substantiality – Large and Profitable one to serve Accessibility – Effectively reached and served Actionability – Effective programs can be designed for attracting and serving the segments. § Differentiable – Conceptually differentiable

Segment Exercise Segment the Market for the following categories: § Shampoo § Soap § Toothpaste § Mobile phones § Hair Oil § Pen § Hair colours § Laptops § Camera § Chocolates

Undifferentiated Targeting § Mass market philosophy- 1 mix for entire market (commodity products or brand new products) • Advantage: Saves Rupees in production/marketing expenses • Usually a sort of lazy, unimaginative approach • Problems: More exposed to competitive threats • E. g Coca Cola ( Non- alcoholic beverage market , IBM ( computer market ) , General Motors ( Vehicle Market)

Concentrated Targeting (#2) § Select a market niche (one segment of a market) • • • § Be able to focus and specialize the marketing mix Concentrate resources rather than spread too thinly Better knowledge about segment Operating economies thru specializing its Production, Distribution , and Promotion If it captures segment leadership , a firm can earn higher profits Recycled paper producer Wizard India focus on marketing for Greeting And Wedding cards, § Oshkosh Truck for Airport rescue trucks § M&M on Tractors to Agriculture Markets § Zodiac on formal shirts for executives and Professionals

Multisegment Targeting (#3) § Strategy that chooses two or more well-defined market segments and develops distinct marketing mix for each § Product same, different promotional appeal, rather than completely different marketing mix , increases costs considerably.

Costs of Multisegment Targeting $ $ $ $ Product design costs Production costs Promotion costs Inventory costs Marketing research costs Management costs Cannibalization

One-to-One Marketing An individualized marketing method that utilizes customer information to build longterm, personalized, and profitable relationships with each customer.

One-to-One Marketing Focuses on Share of Customer One-to-One Marketing Develops Customers Finds Products for Customers Focuses on Share of Market Mass Marketing Develops Products Finds Customers for Products

Ethical choice of Market Targets § Socially responsible Marketing calls for targeting that serves not only the company’s interests , but also the interests of those targeted § Pizza hut reading programs and Nickelodeon magazines v Did You Know “To tackle Child Obesity in France , French Diet guru Pierre Dukan has recommended giving kids extra marks in their final year exams if they kept a body mass index between 18 and 25.

Differentiation and Positioning Product position is the way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products • • • Perceptions Impressions Feelings Toyota’s Land Cruiser

Differentiation and Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy § Identifying a set of possible competitive advantages to build a position § Choosing the right competitive advantages § Selecting an overall positioning strategy § Developing a positioning statement

Differentiation and Positioning Identifying Possible Value Differences and Competitive Advantages Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

Differentiation and Positioning Choosing a Differentiation and Positioning Strategy Identifying a set of possible competitive advantages to build a position by providing superior value from: Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation

Differentiation and Positioning Choosing the Right Competitive Advantage: How many differences to promote , Which differences to promote. Difference to promote should be: Important Distinctive Superior Communicable Preemptive Affordable Profitable

Differentiation and Positioning Selecting an Overall Positioning Strategy Brand’s Value proposition is the full mix of benefits upon which a brand is positioned