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Product Market-Segmentation

MARKET SEGMENTATION STRATEGY  It begins not with identifying product possibilities but with determining customer groups & their needs.  A co. can target particular groups rather than blanket the entire market, & it can achieve a higher rate of return. Identifying & categorizing the Market a) Identify & categorize actual or potential customers in to relatively homogeneous segments according to their responses to mktg. mix variables. b) Identify characteristics of these segments or groups. Ask the Following Questions Who?  are the members of this segments that have been identified?  can buys our product or service?  can buys our competitors products or services?

What  benefits customers seek?  factors influence the demand?  function does the product perform for the customer?  are important buying criteria?  is the basis of comparison with other products?  risks does the customer perceive? How  do customers buy?  long does the buying process last?  do customers use this product?  does the product fit in to their life style/ operation?  much are they willing to spend?  much do they buy? Where  is the decision made to buy?  do the customers seek information about products?  do the customers buy the product?

When  is the first decision to buy made?  is the product repurchased? Segmenting Markets Five Variables  Behavioristic segmentation focuses on customer behavior.  purchase occasion.  Benefits sought.  Use status.  Usage rate.  Loyalty status.
 Geographic segmentation  Demographic segmentation Psychographic segmentation  Benefit segmentation

What Kind of Consumer Does This Ad Target?

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This Ad Targets Runners Who Are Physically Active People and Also Relish the Outdoors.

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Why Segmentation is Necessary

Consumer needs differs Differentiation helps products compete Segmentation helps identify media

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Bases for Segmentation

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Discussion Questions
Considering the largest bank in your colleges city or town:
How might consumers needs differ? What types of products might meet their needs? What advertising media makes sense for the different segments of consumers?

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Consumer-Rooted Segmentation Bases

Demographics Geodemographic Personality Traits Lifestyles Sociocultural


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Criteria for Effective Targeting

Identifiable

Sizeable

Stable

Accessible

Congruent with the companys objectives and resources


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Positioning
The value proposition, expressed through promotion, stating the products or services capacity to deliver specific benefits.
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Which Distinct Benefit Does Each of the Two Brands Shown in This Figure Deliver?

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The Dentyne Ads Benefit is Fresh Breath and the Nicorette Ad is Whitening and Smoking Cessation

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Geodemographic Segmentation
Based on geography and demographics People who live close to one another are similar Birds of a feather flock together

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Personality Traits
People often do not identify these traits because they are guarded or not consciously recognized Consumer innovators
Open minded Perceive less risk in trying new things

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Lifestyles

Psychographics Includes activities, interests, and opinions They explain buyers purchase decisions and choices
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Socio-Cultural Values and Beliefs


Sociological = group Anthropological = cultural Include segments based on
Cultural values Sub-cultural membership Cross-cultural affiliations

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Consumption-Specific Segmentation Bases


Usage rate Usage situation Benefit segmentation Perceived brand loyalty Brand relationship
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Consumption-Specific Segmentation Usage-Behavior


Usage rate
Awareness status Level of involvement

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Consumption-Specific Segmentation Usage-Behavior


Usage-situation segmentation
Segmenting on the basis of special occasions or situations Example : When Im away on business, I try to stay at a suites hotel.

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Which Consumption-Related Segmentation Is Featured in This Ad?

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This is an Example of a Situational Special Usage Segmentation.

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Brand Loyalty and Relationships


Brand loyalty includes:
Behavior Attitude

Frequency award programs are popular Customer relationships can be active or passive Retail customers seek:
Personal connections vs. functional features

Banking customers seek:


Special treatment Confidence benefits Social benefits

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Implementing Segmentation Strategies

Micro- and behavioral targeting


Personalized advertising messages Narrowcasting
Email Mobile

Use of many data sources

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Finding new Segments


In searching for new segments the following questions should be considered
a) b) c) d) e) f) Are there other technologies to perform the required functions? Could additional functions be performed by enhanced products? Could the needs of some buyers be better served by reducing the number of functions & possibly lowering the price? Are there other groups of buyers requiring the same service or function? Are there new channels of distribution that could be used? Are there different bundles of products & services that could possibly be sold as a package?

Buyer behaviour analysis


a) b) c) d) e) f) g) h) i) j) k) l) What is the buyers socio-demographic profile per segment? What is the composition of the buying center? Who is the buyer, the user, the decider & the influencer? What is the decision process adopted by buyers? What is the level of the involvement of the buyer? What are the main motivations of the buying decision? What is the package of benefits sought by the buyer? What are the different uses of the product? What changing customer demand & needs do we anticipate? What is the purchasing frequency & periodicity? To which marketing factors are customer most response? What is the rate of customer satisfaction of dissatisfaction?

Criteria for selecting Market Segments


1. 2. 3. 4. The segment must be large enough to be profitable The segment must be identifiable. This issue is addressed by the analysis utilizing demographic & socio economic data The segments must be reachable by media The segments should respond differently to the marketing mix. If all the segments can be reached with the same marketing programs, there is no need to separate them 5. 6. 7. 8. The segments should be stable in terms of size The segments should be reasonably coherent (i.e., the member should behave as similarly as possible) the segments should be growing The segments should not be so heavily dominated by competitors that our product cannot be successful

Benefits of Segmentation

 Co is in a better position to spot & compare mkt. opportunities.  It can develop mktg. programs based on a clearer idea of how customers in specific segments will respond.  It can tailor offerings & programs to the needs of each segment.

How to add value through segmentation?


Plot Demographics + socioeconomics Search for common factors Create cluster of customers Create Target customer Check for Economic Power of segment Check the Actionality Of segments Keep Tracking Segments For changes

Symptoms

Are the links causes Or symptoms

Causes

No

Is focused Marketing possible

Ensure Yes Increase In Customer value

Product Market Strategies


Product
Product modification Quality Style Performance Product Range Extension Size Variation Variety Variation New Products in Related Technology New Products In Unrelated Technology

Market Present

Product Product Reformulation Extension Strategies strategies

Product development strategies

Lateral Diversification strategies

New

Market Extension strategies

Market segmentation Product differentiation strategies

Product Diversification strategies

Longitudinal diversification strategies