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MARKET SEGMENTATION

What is a market??

 Mass marketing approach: Approaching the entire set of customers with a uniform marketing approach thereby creating the largest potential market (sale of staple food items like rice and bread)  Differentiated approach: Strategy of market segmentation Marketer selects one or more of the segments as the target market and positions his outlet as per the profile of the targeted segment (Diet Coke sold to market segment of health conscious adults)

Re-seller Market
Market of the middlemen like wholesalers and retailers who buy goods for resale Main focus of retailing is on consumer products  Convenience products:  Shopping products:  Specialty items:  Unsought items:

Market segmentation
Major characteristics Is an aggregating process: clustering people with similar or homogenous needs and respond to the marketing mix in the same way. Different kind of promotional activities are developed for serving different market segments Identifying niche segments Customized products and services are provided to customer groups (Whirlpool automatic washing machines in urban Mumbai with large groups of working women can be segmented)

Benefits of segmentation

Benefits of segmentation
 Development of marketing mix

helps to identify target audience  customize marketing strategies in terms of product, price and promotion for customers
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 Store location decision

 to concentrate stores where target population are found


 Understanding customer behavior

how and why the target group behaves and acts  determining the buying behavior after segmenting the market
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 Merchandising decisions

deciding on which items will occupy the store shelves for display  understanding the preference of target groups
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 Promotional campaigns

 effective and accurate promotional campaigns


 Positioning
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major feature of segmentation . Sarvana stores are positioned for lower middle class consumers where as the clientele of Lifestyle and Shoppers Stop are for the upper income class and the elite

Criteria for effective market segmentation

 Homogeneous within: similar needs, wants and buying behavior an effective marketing programmer can be developed (Gillette Mach 3 for young male adults)  Heterogeneous within: customers between segments stay different for better focus from retailers  Substantial :

should have sufficient discretionary income (Ebony must ensure high income groups exist in their trade area)

 Actionable

useful for identifying target groups and deciding on marketing mix variables (Caf Coffee Day attracts college goers and young working executives to enjoy coffee in a fashionable outlet)
 Accessible

reachable target market and accessible to target consumer groups (Crossroads is readily accessible with parking facilities)
 Measurable

size, purchasing power and characteristics of market segment should be measurable

Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customer characteristics.

 Geographic

 Demographic

 Psychographic

 Behavioralistic

   

Geographic Segmentation The following are some examples of geographic variables often used in segmentation. Region: Size of metropolitan area: Population density: Climate: (Subhiksha Stores in Chennai)

Demographic Segmentation
Some demographic segmentation variables include:  Age  Gender  Family size  Family lifecycle  Generation: baby-boomers, Generation X, etc.  Income  Occupation  Education  Ethnicity  Nationality  Religion  Social class (Life Style may segment the market by income class)

 Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on : -the age of the children. -educational background, and professional background -Family decision-making (a CTV or a 2-wheeler purchase)

Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include: Activities Interests Opinions Attitudes Values

    

Behavioralistic Segmentation
Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include: Benefits sought Usage rate Brand loyalty User status Readiness to buy Occasions Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation

     

Bases for Segmentation in Industrial Markets


 Fewer in number and purchase larger quantities.  Evaluate offerings in more detail, and the decision process usually involves more than one person.  Apply to organizations such as manufacturers and service providers, as well as resellers, governments, and institutions.  Many of the consumer market segmentation variables can be applied to industrial markets.

Location customer location may be important in some cases. Shipping costs may be a purchase factor for vendor selection for products having a high bulk to value ratio, so distance from the vendor may be critical. In some industries firms tend to cluster together geographically and therefore may have similar needs within a region. Company Type Business customers can be classified according to type as follows:  Company size  Industry  Decision making unit  Purchase Criteria

Behavioral Characteristics
In industrial markets, patterns of purchase behavior can be a basis for segmentation. Such behavioral characteristics may include:  Usage rate  Buying status: potential, first-time, regular, etc.  Purchase procedure: sealed bids, negotiations, etc.

Choice of segments to target the market


 measure the attractiveness and capacity of the segment  estimate its size, purchasing power, growth rate, presence of competition, etc.  opt for an untapped segment  choose to operate in a segment where there are already existing players e.g. CROSSROADS  targets clientele from upper middle-class customers  devoted to each of the four shopping categorieswomen, kids, men, and home furnishings

Why does an organisation need to segment a market?


 No single product can satisfy the needs of all customers.  What would happen if Adidas sold only a single product? How well would it compete in the marketplace? What would be the - Impact on - Profit / sales / market share?  Consumers all have different needs and wants  Companies must consider - Individual Features & Benefits sought, and the individual characteristics of consumers

Market segmentation in India


Marketer uses segmentation models based on demographics, geo-demographics, SEC data, and benefits and usage Prominent examples are  McDonalds  Nescafe  Caf Coffee Day  Benetton

-Chrysolyte.S I MBA-3rd yr 1234108129