Chapter 2 By: Prof.

Dipti Purohit

Market: An aggregate of people who,

as individuals or as organizations, have needs for products in a product class and who have the ability, willingness, and authority to purchase such products

Segment: A group of individuals,

groups, or organizations that share one or more similar characteristics which make them have relatively similar products needs
identifying smaller markets (groups of people or organizations) that exist within a larger market

Segmentation: The process of

The more you know about a customer

age, gender, what he owns, what he spends and what his preferences are - the more
likely it is that you can create and pitch a product or service that will hit a bull's-eye. Identifying and interacting with your customers in ever-smaller groups is a tantalizing prospect - and now easier and more cost effective than ever,

Segmentation is done to Provide distinct & unique value proposition (allocate its resources more efficiently) Servicing, nurturing, developing as profitable customers (increase the returns)

 Segmenting

consumer market. Segmenting business market. Segmenting international markets

Identify and profile distinct groups of buyers who differ in their needs and preferences Select one or more market segments to enter Establish and communicate the distinctive benefits of the market offering

Segments

Niches

Local areas

Individuals

A market segment consists of a group of customers who share a similar set of needs ad wants.

Naked solution: Product and service elements that all segment members value

Discretionary options: Some segment members value options but not all

Homogeneous preferences exist when consumers want the same things Diffused preferences exist when consumers want very different things Clustered preferences reveal natural segments from groups with shared preferences

Homogeneous preferences

Diffused preferences

Clustered preferences

A niche market is a focused, targetable portion of a market. By definition, then, a business that focuses on a niche market is addressing a need for a product or service that is not being addressed by mainstream providers. You can think of a niche market as a narrowly defined group of potential customers.

Enterprise Rent-A-Car targets the insurancereplacement market

Focus on Ayurvedic medicines and health supplements

local marketing approach is that it allows a business to connect with consumers on a more personal level. As part of the public outreach, the company creates an image that conveys understanding and appreciation for factors that impact that local community

When the firm deals with each customer on a one to one basis. When products are customized for the customer. Wind and Rangaswamy gave the concept ofcustomerisation.

Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

Geographic

Demographic

Behavioral / Product Usage

Common Bases for Segmenting Markets

Psychographic

Geographic Demographic Psychographic Behavioral

Segmentation Variables for Consumer Markets

FIGURE 7.3

Dividing the market into different geographic units

Nations States Regions Counties Cities Neighborhoods

Shop outlets: Locations for new shop outlets can be identified. Advertising: Areas for advertisement can be identified. Segmentation can also reveal information for advertisement media. Product selection: Different geographic segments have differing consumption patterns. Introducing different products for different geographic segment can bring more sales! Catalog sales: In catalog sales direct marketing, generally demographic information of customers is not available. Census information derived from geographic data can be used to develop better customer segmentation and predictive models.

For more information visit: India: http://www.censusindia.net/

South requires Voltas ac

North requires Voltas coolers

TATA for different habits

Age and Life Cycle

Life Stage Gender Income Generation Social Class

The Retired Solitary Survivor (medical expenses)

Bachelor stage (Single men and women living on their own-

Newly married couples (spend on vacations, cars, and clothing)

Empty Nest II (head of household has retired -- may move to warmer climate and purchase a condominium) Solitary Survivor in Labor Force (travel, vacations, medical expenses) Empty Nest I (children have left home; family income at peak -travel, cruises, vacation)

Family Life Cycle

Full Nest I (youngest child under 6 -- spend on baby food, toys; buy home and furniture)

Full Nest III (older children, -- major expense is college; may travel and replace furniture)

Full Nest II (youngest child is older than 6 - spending money on children)

Agesex-

Dabur, ITC (cigrette), Gillete, Sahnaaz hussain beauty parlours, kaya kalp macdonalds, Automobile, companies(cars)

Size and strc. of familyIncomeEducation level-

Hindustan uniliver Computer manufacturers,

 Psychographic:

Social class Lifestyle Personality

Decision Roles Initiator Influencer Decider Buyer User

Behavioral Variables Occasions Benefits User Status Usage Rate Buyer-Readiness Loyalty Status Attitude

3. User Status Nonusers Ex-users Potential users First-time users Regular users

4. Light Medium Heavy Product users

Aware Ever tried Recent trial Occasional user Regular user Most often used

Hard-core

Split loyals Shifting loyals Switchers

 Five

I.
II. III. IV. V.

attitude groups Enthusiastic Positive Indifferent Negative Hostile

Choose any one product and explain the market segmentations by the company to increase the sale. Detail structure of Company strategy is required

Assignment for the Day

Demographic Operating Variable Purchasing Approaches Situational Factors Personal Characteristics

Bases for Segmenting Business Markets

Business markets can be segmented with some of the same variables used in consumer market segmentation, such as geography, benefits sought, and usage rate, but business marketers also use other variables. Bonoma and Shapiro proposed segmenting the business market with the variables shown below. The demographic variables are the most important, followed by the operating variables down to the personal characteristics of the buyer.

Demographic:

1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve?

Operating Variables:

4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services?

Purchasing Approaches:

7. Purchasing-function organization: Should we serve companies with highly centralized or decentralized purchasing organizations? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and soon? 9. Nature of existing relationships: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10. General purchase policies: Should we serve companies that prefer leasing? Service contracts? Systems purchases? Sealed bidding? 11. Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?

Situational Factors

12. Urgency: Should we serve companies that need quick and sudden delivery or service? 13. Specific application: Should we focus on certain applications of our product rather than all applications? 14. Size of order: Should we focus on large or small orders?

Personal Characteristics

15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours? 16. Attitudes toward risk: Should we serve risk-taking or risk- avoiding customers? 17. Loyalty: Should we serve companies that show high loyalty to their suppliers?

Needs-based segmentation Segment identification Segment attractiveness Segment profitability Marketing-Mix Strategy

Segment positioning
Segment acid test

Measurable Substantial

Accessible
Differentiable Actionable

 Is mass marketing dead? Take a position: 1. Mass marketing is dead.

or
2. Mass marketing is still a viable way to build a profitable brand.

 Think of various product categories. How would you classify yourself in terms of the various segmentation schemes? How would marketing be more or less effective for you depending upon the segment involved?

Thank you