Market segmentation targeting and positioning

Selecting customer to serve

The company must first decide who it will serve, by dividing the market into segments of customers (market segmentation) and selecting which it will go after (target marketing).

Selecting customer to serve

Dividing a market into smaller group with similar needs, characteristics, or behaviors who might require separate products or marketing mixes.

Market segmentation

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Market Segmentation

Dividing a market into customer categories

Target MarketingSelecting a category of customers with similar wants and needs who are likely to respond to the same products

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Market Segmentation:

Divide the market into segments of customers

Target Marketing:

Select the segment to cultivate

#1 #2

1)Consumer Market Segmentation2)Business Market Segmentation3)International Market Segmentation

There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination to find the best way to view the market structure.

Consumer market can be segmented through the following variables

A. Geographic segmentationB. Demographic segmentationC. Psychographic segmentationD. Behavioral segmentation

Consumer market segmentation

A. Dividing a market into different geographical units-such as nations, states, region, cities or countries.

Geographic segmentation

Dividing a market into groups based on variables such as

Age Gender Family life cycle Income Occupation Education Religion Nationality

Demographic segmentation

1. Age and Life cycle stage. Dividing a market into different age and life cycle groups.

2.Gender Segmentation- Dividing a market into different groups based on gender (male/female).

For example- NIKE has recently stepped up its efforts to capture the women sports apparel market. Nike made women’s shoes.

3.Income segmentation. Dividing a market into different income groups. (high, medium and low income groups)

For example Honda presenting Motor cycle for low income and car for high income groups.

Dividing a market into different groups based on social class, lifestyle and personality characteristics.

1. Dividing a market into groups based on consumer knowledge, use or response to a product.

2: Occasion segmentation- when the buyers get the idea to buy. (occasional buyers)

Occasional buyers

3.Benefit segmentation- dividing a market into groups according to the different benefits that consumers seek from the product.

For example- free bag with a laptop. Or discount on software or free delivery.

Benefits

4.Usage rate. Markets can also be segmented into light, medium and heavy usage.

5.Loyalty status. A market can also be segmented by consumer loyalty. Consumer can be loyal to brand (surf excel), stores (Jans Arcade) and companies (Toyota).

Use and loyalty

Table 3.1 Market Segmentation

Occupation

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Kabul; Jalalabad; Ghazni; Khandhar

Major metropolitan areas, small cities, towns

Urban, suburban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusGenderAge Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, married, divorced, widowed

Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over

Education Some high school, high school graduate, some college, college graduate, postgraduate

Professional, white-collar, agricultural, military

Table 3.1, continuedSEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, social

Socializers, novelty seeker, aggressive, innovators

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Subcultures (Race/ethnic)

Religion

Cultures American, Italian, Chinese, Mexican, French, Pakistani

Islam; Catholic, Protestant, Jewish; other

African American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married,

Attitudes Positive attitude, negative attitude

Sociocultural Segmentation

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyalty

Awareness status

Usage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective

Time Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievement

Home, work, friend’s home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, value-for-the-money

Demographic/Psychographics

Combination of demographic and psychographic profiles of consumer segments profiles

Hybrid Segmentation

Table 3.1, continued

Business markets can be segmented by Geographically and Demographically.

Customer operating characteristics

Customer purchasing approaches

For example: American Express focuses on convincing new merchants, building relationships with old customers, and offering benefits to corporate such as insurance plan, travel discounts etc.

Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.

World market can be segmented by geographic location, grouping countries by region such as Western Europe, Middle East, South Asia etc.

World market can also be segmented on the basis of economic factors. For example-countries might be grouped by population income level or by their overall level of economic development.

World market can also be segmented by political and legal factors, such as the type and stability of the Govt.

Target market: A set of buyers sharing common needs or characteristics that the company decides to serve.

After successfully segmented the market the firm now must evaluate the various segments and decide how many and which segment it can serve best.

In evaluating different market segments, a firm must look at three factors:

Segment size and growth (sales, growth rate and expected profitability)

Segment structural attractiveness (a segment is less attractive if it already contain strong and aggressive competitors-substitute products)

Company’s objectives and resources.(even if a segment has the right size and growth and is structurally attractive, the company must consider its own objectives and resources)

After evaluating different segments, the company must decide which and how many segments it will target.

A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

Buyers have unique needs and wants, a seller could potentially view each buyer as a separate target market. Then a seller might design a separate marketing program for each buyer.

Companies can target very broadly , very narrowly or some where in between.

Targeting broadly targeting narrowly

1. Undifferentiated Marketing

A firm might decide to ignore market segments and target the whole market with one offer. This mass marketing focuses on what is common in the needs of consumers rather than on what is different.

Undifferentiated Marketing

2.Differentiated Marketing

A firm decides to target several market segments and design separate offers for each.

Differentiated Marketing

3.Concentrated marketA third market coverage

strategy is specially appealing when company resources are limited. Instead of going after a small share of a large market, the firm goes after a large share of one or few smaller segments.

Concentrated Marketing

4.Micromarketing

The practice of tailoring products and marketing program to the needs and wants of specific individuals.

5.Individual marketing- has also labeled one to one marketing. For example. Dell is doing individual marketing, by taking the order of every individual and prepare the computer accordingly.

Micro & Individual Marketing