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30282164 Market Segmentation

30282164 Market Segmentation

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Published by Farhan Rajani

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Published by: Farhan Rajani on Oct 05, 2012
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EXAMPLE 1 – HINDUSTAN LEVER LIMITED

Hindustan Lever Ltd is a leading FMCG conglomerated in India whose success in
management policies and strategies are taken as an example by many Indian
companies and emulated. The decade of 1980 must have been a memorable one for
Hindustan Levers Ltd (HLL) .For, in a typical David and Goliath war, the giant and an
undisputed market leader in consumer non-durables in India suffered a humiliating
defeat at the hands of a new and small firm, Nirma Chemicals .

Nirma Washing Powder became a national brand soon after 1982, when the Indian
Television went commercial and started color telecast. The product immediately caught

the fancy of the middle-income customers; who was finding it difficult to make both ends
meet with a limited monthly income. Nirma was the lowest priced branded washing
powder available in the grocery and co-operative stores .The middle class housewife
was more than satisfied, as she could now choose a lower priced washing powder
rather than the high priced Surf detergent powder from HLL.

Nirma also had an impact on upper middle income and higher income families where it
was used for washing their inexpensive clothes and linen. Initially, HLL responded by
launching sales promotion campaigns on Surf—by offering a bucket at subsidized price
for every 1 kg of Surf, or by trading premium brands of toilet soap with every kilogram of
Surf. These schemes, however, could not stop the decline in the popularity of Surf. HLL
then launched a head-on attack on Nirma .Without naming it (though it was obvious)
they came up with an advertising commercial comparing 1 kg of surf with 1 kg of low-
priced yellow washing powder and showed that Surf washed more clothes than the low-
priced yellow washing powder—and hence it was economical to buy Surf.

The commercial did not bring in any substantial results. It was at this time (around 1984)
that HLL decided to take a fresh look at the market. Research was conducted
throughout the country which revealed that different income groups of the consumers
had varying expectations from detergents and washing powder, it also showed that
different colors of washing or detergent powders were associated with different types of
fabrics.

For example, yellow colored washing or detergent powders were mainly bought by
middle and lower middle or lower income group people. They washed all their fabrics
and associated whiteness in clothes to a yellow colored powder .Also, middle class
families used the blue colored Rin bar or the white colored Lux flakes for washing their
expensive clothes. The research further indicated that blue or white colored detergent
powders were bought by middle to higher income group people, and these colors were
also associated with washing clothes clean.

In fact, the housewife was known to add “blue to her laundry to give that extra
whiteness to the white clothes. Interestingly, green was also a color that was perceived
to clean extra-dirty clothes.

Armed with this research on color perceptions and income groups, HLL launched the
following :

Sunlight (yellow)
Wheel(green)
Rin (blue)
Surf Ultra(white)

Detergents powders for different market segments. This strategy of segmenting the
markets, understanding its needs and then evolving marketing mix to suit separate
segment needs helped HLL win back its lost market.

In fact Nirma made all other consumer product companies sit up and take a fresh look
at their markets It announced ,for many, a beginning of an era of low priced products for
a highly price sensitive Indian Market , and, to others ,an end of a mass marketing era.

EXAMPLE 2 – TITAN WATCHES

Titan Industries is the world's sixth largest wrist watch manufacturer and India's leading
producer of watches under the Titan, Fastrack, Sonata, Nebula, RAGA, Regalia, Octane
& Xylys brand names. It is a joint venture between one of India's most respected
business organizations, the Tata Group, and the Tamil Nadu Industrial Development
Corporation (TIDCO). Its product portfolio includes watches, accessories and jewellery,
in both contemporary and traditional designs. It exports watches to about 32 countries
around the world with manufacturing facilities in Hosur, Dehradun, Goa and
manufactures precious jewellery under the Tanishq brand name, making it India's only
national jewellery brand. It is a subsidiary of the Tata Group.

After carrying out an in-depth market study, Titan identified three distinct
Market segments for its watches. The segments were arrived at using benefit
And income level as the bases.

1.The first consisted of the high income / elite consumers who were buying a watch
as a fashion accessory not as a mere instrument showing time. They were also
willing to buy a watch on impulse. The price tag did not matter to this segment.

2.The next segment consisted of consumers who preferred some fashion in their
watches but to them price did matter. While they had the capacity to pay the
price required for a good watch, they would not purchase a watch without
comparing various offers in the market.

3.The third segment consisted of the lower-income consumers who saw a watch
mainly as a time-keeping device and bought mainly on the basis of price.

For the first segment, Titan offered Aurum and Royale in the gold/ jewellery
Watch range. They were stylish dress watches in all gold and precious metals.
The prices ranged between Rs.20,000 and Rs. 1 lakh.

For the middle segment, Titan offered the Exacta range in stainless steel, aimed
at withstanding the rigours of daily life. There were 100 different models in the
range. The price range was Rs.500-700. Titan also offered the RAGA range for
women in this segment.

And, for the third segment, Titan first offered the TIMEX watches and later,
when the arrangement with Timex was terminated, the SONATTA range. The
price range was Rs. 350 – 500. It was offered in 200 different models. Titan
also offered the “Dash!” range for children.

EXAMPLE 3 – INDIAN AUTOMOBILE’S SEGMENTED ON BASIS OF PURCHASING
POWER.

The automobile industry in India is the ninth largest in the world with an annual
production of over 2.3 million units in 2008. In 2009, India emerged as Asia's fourth
largest exporter of automobiles, behind Japan, South Korea and Thailand.

India has emerged as one of the world's largest manufacturers of small cars. According
to New York Times, India's strong engineering base and expertise in the manufacturing
of low-cost, fuel-efficient cars has resulted in the expansion of manufacturing facilities of
several automobile companies like Hyundai Motors, Nissan, Toyota, Volkswagen and
Suzuki.

In 2008, Hyundai Motors alone exported 240,000 cars made in India. Nissan Motors
plans to export 250,000 vehicles manufactured in its India plant by 2011. Similarly,
General Motors announced its plans to export about 50,000 cars manufactured in India
by 2011.

In September 2009, Ford Motors announced its plans to setup a plant in India with an
annual capacity of 250,000 cars for US$500 million. The cars will be manufactured both
for the Indian market and for export.[9] The company said that the plant was a part of its
plan to make India the hub for its global production business. Fiat Motors also
announced that it would source more than US$1 billion worth auto components from
India.

According to Bloomberg L.P., in 2009 India surpassed China as Asia's fourth largest
exporter of cars.

Budget car segment

It is the largest segment in Indian market. Here the entry level starts from Rs 1.5 to 3
lakh. Maruti 800Maruti 800 and Omni are the dominant players in these segments. With
the launch of Tata NanoTata Nano with a price range of 1lakh the outlook of this
segment has changed. This segment is sometimes referred to as the small car
segment. Competition in this segment is extreme in Indian market.

Compact car segment

It lies between budget car and family car. Preferred price range is between Rs 3 to 4.5
lakh. Maruti Zen, Fiat Uno, Tata Indica, Santro, Matiz is some of the dominant players in
this segment.

Family car segment

The purchasing capacity of buyers of this segment is somewhat higher than that of the
budget and compact car segment. Price ranges between Rs 4.5 to 6 lakhs.
Maruti Esteem, Daewoo Cielo, and HM Contessa belongs to this segment. In India cars
that are sold in India as ‘Budget Car’ and ‘Compact Car’ do not meet their purpose,
especially in term of space, that they turn to ‘the family car segment’.

Premium car segment

This segment represents the buyer who require true world class luxury car. Price ranges
between Rs 6 to 8 lakh. Ford Escort, Honda City, Mitsubishi Lancer, Audi 1800Lancer,
Opel, Astra etc are some of the major cars in this segment.

Super luxury saloon segment

Buyer in this segment looks for a real super premium segment car. Mercedes Benz
E229, E-250, Rover Montego, Audi 6, BMW are the players in this segment. Obviously,
this is a tiny segment in the Indian context.

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