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? buys our product or service? 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

Criteria for effective segmentation It must be substantial. It must be measurable. It must be accessible. 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.

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. 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

3.
4.

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

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 Product Range Extension Size Variation Variety Variation New Products in Related Technology New Products In Unrelated Technology

Market Present

Quality Style Performance

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