MARKET SEGMENTATION

MARKET MARKET SEGMENTATIONSEGMENTATION

BASIC IDEAS ( for M.S)BASIC IDEAS ( for M.S)

1.1. Selection of target market.Selection of target market.

2.2. Effective Marketing programs.Effective Marketing programs.

RATIONALERATIONALE

• ““WHAT NEEDS AND WHOSE NEEDS”WHAT NEEDS AND WHOSE NEEDS”• ““PRINCIPLE OF DISTINCTIVE PRINCIPLE OF DISTINCTIVE

COMPETENCE”COMPETENCE”

H o m o g e n e o u s H o m o g e n e o u s ------------------------------------------------------------------------------------------------------------------------------

S u o e n e g o r e t e S u o e n e g o r e t e H H

Targeting OptionsTargeting Options

1.1. Undifferentiated Mktg….ONE Undifferentiated Mktg….ONE

PRODUCTPRODUCT

2.2. Concentrated Mktg….. Concentrated Mktg…..

PARTICULAR MARKET SEGMENTPARTICULAR MARKET SEGMENT

3.3. Differentiated Mktg…..DIFFRENT Differentiated Mktg…..DIFFRENT

PRODUCT FOR DIFFERENT M.SPRODUCT FOR DIFFERENT M.S

MARKET MARKET SEGEMENTATION SEGEMENTATION

(DEFN.)(DEFN.)

Process of identifying Process of identifying group of buyers with group of buyers with

different buying desires different buying desires or requirements.or requirements.

MARKET TARGETINGMARKET TARGETING (Defn.)(Defn.)

Decision ‘Which M.S to Decision ‘Which M.S to serve’serve’

ENTERING A MARKET? ENTERING A MARKET? FIVE STEPSFIVE STEPS

1.1. Determine those attribute along which to Determine those attribute along which to identify the possible existence of distinct identify the possible existence of distinct M.C.M.C.

2.2. Determine size & value of diff / vari. M.SDetermine size & value of diff / vari. M.S

3.3. Determine how existing brands are Determine how existing brands are positioned.positioned.

4.4. Look for opportunities in M.s’s not / Look for opportunities in M.s’s not / inadequately being served.inadequately being served.

5.5. Determine co-related characteristics of Determine co-related characteristics of attractive M.S.attractive M.S.

REQUIREMENTS FOR EFFECTIVE REQUIREMENTS FOR EFFECTIVE MARKET SEGMENTATIONMARKET SEGMENTATION

1.1. MeasurabilityMeasurability

2.2. AccessibilityAccessibility

3.3. SubstantialitySubstantiality

BENEFITS OF SEGMENTATION

1.1. For guiding Marketing Strategy.For guiding Marketing Strategy.

2.2. Better position to spot & compare Better position to spot & compare mktg. opportunities.mktg. opportunities.

3.3. Finer adjustments of products & Finer adjustments of products & mktg. appeals possible.mktg. appeals possible.

4.4. Mktg. programs & budgets based Mktg. programs & budgets based on clearer ideas of the response on clearer ideas of the response characteristics of specific M.S’scharacteristics of specific M.S’s

BASES FOR BASES FOR SEGMENTATIONSEGMENTATION

1.1. GEOGRAPHICGEOGRAPHIC

2.2. DEMOGRAPHICDEMOGRAPHIC

3.3. PSYCHOGRAPHICPSYCHOGRAPHIC

4.4. BEHAVIORALBEHAVIORAL

MARKET MARKET TARGETINGTARGETING

I. UNDIFFERENTIATED I. UNDIFFERENTIATED MARKETINGMARKETING

• Focus : ‘What is common’ (not ‘What is Focus : ‘What is common’ (not ‘What is different’)different’)

• Appeal : Broadest number of buyers.Appeal : Broadest number of buyers.• Rely on : Mass channels/ advts./ universal Rely on : Mass channels/ advts./ universal

themes. (Coke) Endow product, superior themes. (Coke) Endow product, superior image in prosp’s MINDimage in prosp’s MIND

{Cost Economics, Mass Production} Low {Cost Economics, Mass Production} Low M.R. COST(?)M.R. COST(?)

Later, Less profitable segment (!)Later, Less profitable segment (!)

II. DIFFERENTIATED II. DIFFERENTIATED MARKETINGMARKETING

• Focus : Two or more segments & Focus : Two or more segments & separate product.separate product.

• Appeal : Customer’s DesiresAppeal : Customer’s Desires• Rely On : Creating more total sales, Rely On : Creating more total sales,

Concern about increasing cost, Concern about increasing cost, optimality of strategy. Later, over – optimality of strategy. Later, over – differentiation differentiation reverse(!) CGL reverse(!) CGL MEMOMEMO

III. CONCENTRATED III. CONCENTRATED MARKETINGMARKETING

• Focus : Large share in one or a few Focus : Large share in one or a few sub-market.sub-market.

• Appeal : Customer’s Delight (Good Appeal : Customer’s Delight (Good MKT Position)MKT Position)

• Rely on : Greater Knowledge, Special Rely on : Greater Knowledge, Special Reputation. Enjoy operating economics Reputation. Enjoy operating economics (due) specialization(due) specialization

Earns high rates of ROI.Earns high rates of ROI.

Later, higher than normal risk.Later, higher than normal risk.

FIVE FACTORS FOR ACTUAL FIVE FACTORS FOR ACTUAL CHOICECHOICE

1.1. Company resourcesCompany resources

2.2. Product homogeneityProduct homogeneity

3.3. Product stage in life cycleProduct stage in life cycle

4.4. Market homogeneityMarket homogeneity

5.5. Competitive MKTG. STRATEGIESCompetitive MKTG. STRATEGIES

MAJOR SEGMENTATION MAJOR SEGMENTATION VARIABLESVARIABLES

I. GEOGRAPHICI. GEOGRAPHIC1.1. World RegionWorld Region

2.2. CountryCountry

3.3. Metro (city)Metro (city)

4.4. TownTown

5.5. VillageVillage

6.6. Population densityPopulation density

7.7. Climate Climate

8.8. OthersOthers

II. DEMOGRAPHICII. DEMOGRAPHIC1.1. AgeAge2.2. SexSex3.3. GenderGender4.4. IncomeIncome5.5. OccupationOccupation6.6. EducationEducation7.7. Family SizeFamily Size8.8. Family Life CycleFamily Life Cycle9.9. ReligionReligion10.10. RaceRace11.11. CasteCaste12.12. Special CommunitySpecial Community13.13. NationalityNationality14.14. OthersOthers

III. PSYCHOGRAPHICIII. PSYCHOGRAPHIC

1.1. Social classSocial class

2.2. Life styleLife style

3.3. PersonalityPersonality

IV. BEHAVIORALIV. BEHAVIORAL1.1. OccasionOccasion

2.2. BenefitsBenefits

3.3. User statusUser status

4.4. Usage rateUsage rate

5.5. Loyalty statusLoyalty status

6.6. Readiness stageReadiness stage

7.7. Marketing FactorsMarketing Factors

8.8. Attitudes towards ProductAttitudes towards Product

Levels of market Levels of market segmentationsegmentation

Starting point… Mass MarketingStarting point… Mass Marketing

Example: FordExample: Ford T car T car

CokeCoke 6.5 Ounce Bottle ! 6.5 Ounce Bottle !

MANY CRITICSMANY CRITICS HENCE , HENCE ,

MICRO MARKETINGMICRO MARKETING

MICRO MARKETINGMICRO MARKETING

• SEGMENTSSEGMENTS• NICHESNICHES• LOCALLOCAL• INDIVIDUALSINDIVIDUALS

MARKET SEGMENT……..MARKET SEGMENT……..Consists of group of Consists of group of customers who share a customers who share a similar set of wants.similar set of wants.

NICHE…..NICHE…..is a more narrowly defined is a more narrowly defined group seeking a distinctive group seeking a distinctive mix of benefitsmix of benefits

• Customers willing to pay a PREMIUM.Customers willing to pay a PREMIUM.• Niche unlikely to attract competitors.Niche unlikely to attract competitors.• Niche gets certain economics through Niche gets certain economics through

specializationspecialization• Profit size & growth potential.Profit size & growth potential.

e.g. Estee lauder, Hallmark e.g. Estee lauder, Hallmark

Segmentation Segmentation LevelsLevels

1.1. Mass Mass marketing-marketing- No segments No segments

2.2. Segment marketing-In betweenSegment marketing-In between

3.3. Micro marketing-Complete Micro marketing-Complete segment.segment.

I.I. Mass MarketingMass Marketing

Example Ford Model T Car, Coca ColaExample Ford Model T Car, Coca Cola

Local MarketingLocal Marketing

A.A. Specific location, spotSpecific location, spot

B.B. Specific storesSpecific stores

C.C. NeighborhoodsNeighborhoods

D.D. CitiesCities

E.E. IndividualsIndividuals

II.II. SegmentationSegmentation

A.A. GeographicGeographic

B.B. DemographicDemographic

C.C. PsychographicPsychographic

D.D. BehavioralBehavioral

And And

Niche!Niche!

III.III. TargetingTargeting

A.A. UndifferentiatedUndifferentiated

B.B. ConcentratedConcentrated

C.C. DifferentiatedDifferentiated

IV.IV. Product market gridProduct market grid

A.A. Single-specificSingle-specific

B.B. SelectiveSelective

C.C. OP-AMSOP-AMS

D.D. OMS-APOMS-AP

E.E. AMS-APAMS-AP

v.v. CustomizationCustomization

IndividualIndividual

ToTo

Mass CommunicationMass Communication!!

LOCAL….LOCAL….Target Marketing is leading Target Marketing is leading to mktg. programs tailored to mktg. programs tailored to the needs & wants of to the needs & wants of local customer groups, local customer groups, areas, neighborhoods. areas, neighborhoods. e.g. Citibank's different e.g. Citibank's different services to its branches. services to its branches.

INDIVIDUAL……..INDIVIDUAL……..Customized.. One to one Customized.. One to one marketing!marketing!Leading to mass Leading to mass customization,customization,On-line CHOICEBOARD!On-line CHOICEBOARD!

ADVERTISINGADVERTISING

1.1. Any paid form of non-personal presentation of Any paid form of non-personal presentation of ideas, goods or services by an identified sponsor.’ideas, goods or services by an identified sponsor.’

…Kotler.…Kotler.2.2. ‘‘Contribution to brand image.’Contribution to brand image.’ .David Ogilvy .David Ogilvy 3.3. ‘‘Intervener in all aspects of economic & cultural Intervener in all aspects of economic & cultural

life.’life.’ …. Pope VI…. Pope VI4.4. ‘‘Paid, non-personal communications through Paid, non-personal communications through

various media by business firms, non profit various media by business firms, non profit organizations & individuals who are in some way organizations & individuals who are in some way identified in the advertising message & who hope to identified in the advertising message & who hope to inform or persuade members of a particular inform or persuade members of a particular audience.’audience.’

5.5. ‘‘Nourishes consuming power.’Nourishes consuming power.’ ..Sir W. ..Sir W. Churchill.Churchill.

POSITIONINGPOSITIONING

‘‘BATTLE BATTLE FOR FOR YOUR YOUR MIND.’MIND.’

AL RIES AL RIES

&&

JACK TROUTJACK TROUT

New approach to communication New approach to communication ‘POSITIONING’ to overcome universal ‘POSITIONING’ to overcome universal reason given for problems that reason given for problems that develop ‘failure to communicate.’develop ‘failure to communicate.’

Positioning starts with a product, a piece Positioning starts with a product, a piece of merchandise, a service, a company, of merchandise, a service, a company, an institution or even a person. an institution or even a person. Perhaps yourself.Perhaps yourself.

P is what you do to the mind of the P is what you do to the mind of the prospect i.e. position your product in prospect i.e. position your product in mind of the prospectmind of the prospect

6 INCHES OF GREY MATTER = 6 INCHES OF GREY MATTER = MIND = BATTLEGROUNDMIND = BATTLEGROUND

VARIOUS ERASVARIOUS ERAS

1.1. PRODUCT ERAPRODUCT ERA• Fifties in USA & Seventies in India.Fifties in USA & Seventies in India.• Attention on product feature.Attention on product feature.• Attention on customer benefitsAttention on customer benefits• Unique selling propositionUnique selling propositionRosser Rosser

ReevesReeves• Decline due technology + me too Decline due technology + me too

products ‘new & improved jokesproducts ‘new & improved jokes

2. IMAGE ERA2. IMAGE ERA

• Architect ‘David Ogilvy’Architect ‘David Ogilvy’• Every advertisement is a long term Every advertisement is a long term

investment in the image of a brand.investment in the image of a brand.• Me too companies kill image era.Me too companies kill image era.• E.g. Rolls Royce, MarlboroE.g. Rolls Royce, Marlboro• Xerox exceptions due to technical Xerox exceptions due to technical

achievement.achievement.

3. POSITIONING ERA3. POSITIONING ERA

• IBM…………. Invented the computer? IBM…………. Invented the computer? first company to build a computer positionfirst company to build a computer position‘‘Sperry Rand’Sperry Rand’

• Amerigo Vespucci……..who discovered Amerigo Vespucci……..who discovered USA?USA?

{15{15thth Century} Century}Separate ContinentSeparate ContinentNot AsiaNot AsiaWrote!! Wrote!! ‘Christopher Columbus’‘Christopher Columbus’

ExamplesExamples• Promise - (clove oil + Grandmother)Promise - (clove oil + Grandmother)• 7UP - Un Cola (but USA turning 7UP)7UP - Un Cola (but USA turning 7UP)• Avis- Avis is only no 2 in Rent- a car so Avis- Avis is only no 2 in Rent- a car so

why so with us ? we try harder!(HERTZ)why so with us ? we try harder!(HERTZ)• LITE - Everything you have always LITE - Everything you have always

wanted in a greater Beer & LESS!wanted in a greater Beer & LESS!• Listerine- The taste you hate twice a Listerine- The taste you hate twice a

Day !(WL)Day !(WL)

Scope ..Medicine Breath (P&G).Scope ..Medicine Breath (P&G).• Coca Cola – Real THING!Coca Cola – Real THING!• Burger King- Have it your way!Burger King- Have it your way!

• Joy- There is only one JOY !The Joy- There is only one JOY !The costliest perfume in the world!costliest perfume in the world!

• XEROX + Polaroid + Zippo lighter …XEROX + Polaroid + Zippo lighter …Inventor!Inventor!

• Lowen BRAV Vs Lowen BRAV Vs Beck- You have Beck- You have tasted the German beer that’s tasted the German beer that’s the most popular in America. the most popular in America. Now taste the German beer Now taste the German beer that’s the most popular in that’s the most popular in Germany.Germany.

1.1. Attribute Listing..(say) Screw Driver then , Attribute Listing..(say) Screw Driver then , replace Plastic (for wood, mobile set. replace Plastic (for wood, mobile set. (OSBORN)(OSBORN)

2.2. Forced Relationship(say) Furniture list Forced Relationship(say) Furniture list ideas , relate w.r.t each ,table T therefore ideas , relate w.r.t each ,table T therefore table T mostly, therefore Table Lump.table T mostly, therefore Table Lump.

3.3. MORAHU LOGICAL Analysis -MI Dimension MORAHU LOGICAL Analysis -MI Dimension of start T Problem – Move WT from A to B ! of start T Problem – Move WT from A to B !

4.4. Brain Storming- BBD&O advts techniqueBrain Storming- BBD&O advts technique

5.5. Operational Creativity- State Gen .Problem Operational Creativity- State Gen .Problem SYNECTICS (GURDON)-Focus on Specific.SYNECTICS (GURDON)-Focus on Specific.

6.6. New Assumption Analysis- List normal New Assumption Analysis- List normal assumption, then reverse it MENU assumption, then reverse it MENU (New U Daily)(New U Daily)

7.7. New Context –Familiar process now New Context –Familiar process now ! New Registration in Hotel, Day ! New Registration in Hotel, Day Care DUGS!Care DUGS!

8.8. Mind Mapping- start one thought …Mind Mapping- start one thought …Car !Car !

Germany, Mercedes ..Size NEW! Germany, Mercedes ..Size NEW!