Segmentation

What is a market segment?

 Subgroup of people or organizations
sharing one or more characteristics that
cause them to have similar product
needs
Market Segmentation

 Process of dividing a market into

meaningful groups that are relatively
similar and identifiable.
 Market Segmentation
People
People or
or organizations
organizations with
with
Market
Market needs
needs or
or wants
wants and
and the
the ability
ability and
and
willingness
willingness to
to buy
buy
AA subgroup
subgroup of of people
people or
or
Market
Market organizations
organizations sharing
sharing one
one or
or more
more
Segment
Segment characteristics
characteristics that
that cause
cause them
them to
to
have
have similar
similar product
product needs.
needs.
The
The process
process ofof dividing
dividing aa market
market
Market
Market into
into meaningful,
meaningful, relatively
relatively similar,
similar,
Segmentation
Segmentation identifiable
identifiable segments
segments or or groups.
groups.
The Concept of Market
Segmentation
 The Importance of
Market Segmentation
● Markets have a variety of product
needs and preferences

● Marketers can better define

customer needs

● Decision makers can define objectives

and allocate resources more accurately
LEVELS OF MARKET
SEGMENTATION
 MASS MARKETING
 SEGMENT MARKETING
 NICHE MARKETING
 LOCAL MARKETING
 INDIVIDUAL MARKETING
NICHE MARKETING
 What is an attractive niche ?
 A distinct set of needs
 A premium can be charged
 Not likely to attract competition
 Gains certain economies through
specialization
 Sufficient size, profit and growth
potential
Local Marketing
 When the marketing mix is altered to
suit the local conditions
eg. Giving a higher/ lower discount
than what’s prevailing in the rest of the
markets
or implementing a different promotion
scheme
Individualized Marketing
 When the firm deals with each
customer on a one – to – one basis
 When products are customized for the
customer
Market Segmentation -
Purposes
 To enable the marketer to
 tailor marketing mixes to meet the needs
of one or more specific segments.
 develop a competitive advantage
 more accurately define marketing
objectives and better allocate resources
MARKET –SEGMENTATION
PROCEDURE
 STEP ONE-Survey Stage
 STEP TWO-Analysis Stage
 STEP THREE-Profiling Stage
Criteria for Successful
Segmentation
 Substantial
 Measurable
 Differentiable
 Actionable
 Accessibility
Bases for Segmenting
Consumer Markets
 Geographic
 Climate
 Region
 City Size
 Density
DEMOGRAPHIC
 AGE  EDUCATION
 FAMILY SIZE  RELIGION
 FAMILY LIFE CYCLE  NATIONALITY
 GENDER  SOCIAL CLASS
 INCOME
 OCCUPATION
Bases for Segmenting
Consumer Markets . . .
 Psychographics
 Personality
 lifestyles
Bases for Segmenting
Consumer Markets…….
 Behavioral
 Occasions
 Benefit
 “features tell, benefits sell”
 Usage rate
 “80/20”principle
Benefit Segmentation
of the Snack-Food Market
 Bases for Segmenting
Consumer Markets . . .
 Loyalty status

 Usage status

 Readiness stage

 Attitude toward product

Target Market
A group of people or
organizations for which
an organization designs,
implements, and
maintains a marketing
mix intended to meet the
needs of that group,
resulting in mutually
satisfying exchanges.
MARKET TARGETING
 Evaluating the market segments
 Segments overall attractiveness
 Company’s objectives and resources
 Selecting the market segment
Single-segment concentration
Selective specialization
Product specialization
SELECTING MARKET
SEGMENT
 Market specialization
 Full market coverage

 Undifferentiated marketing
 Differentiated marketing
Company
Company
Marketing
Marketing Market
Market
Mix
Mix

A. Undifferentiated Marketing

Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing
Marketing Segment
Mix Segment22
Mix
Segment
Segment33
C. Concentrated Marketing
Segmentation, Targeting,
and Positioning
 Undifferentiated (mass) marketing
Ignores segmentation opportunities
Such products rarely succeed
 Differentiated (segmented) marketing
Targets several segments and designs
separate offers for each.
Coca-Cola, Procter & Gamble (soaps and
detergents) are few examples.
 POSITIONING
 IT IS THE ACT OF DESIGNING THE
COMPANY’S OFFERING AND IMAGE TO
OCCUPY A DISTINCTIVE PLACE IN
TARGET MARKET’S MIND.
HOW MANY DIFFERENCES TO
PROMOTE
 ONE CENTRAL BENEFIT
 NUMBER ONE POSITIONING INCLUDE
“BEST QUALITY”,”BEST
VALUE”,”SAFEST”, “FASTEST”

 USP
 DOUBLE BENEFIT POSITIONING
 TRIPLE BENEFIT POSITIONING
MAJOR POSITIONING
ERRORS
 UNDERPOSITIONING
Some companies discover that buyers
have only vague idea of the brand.The
brand is seen as just another entry in
marketplace.
 OVERPOSITIONING
Buyer may have too narrow an
image of brand
 CONFUSED POSITIONING
Buyers might have a confused
image of the brand resulting from the
company’s making too many claims or
changing the brand positioning too
frequently.
 DOUBTFUL POSITIONING
Buyers may find it hard to believe
the brand claims in the view of the
product’s features ,price .
POSITIONING STRATEGIES
 Attribute Positioning
 Benefit Positioning
 Use or Application Positioning
 User Positioning
 Competitor Positioning
 Product Category Positioning
 Quality or Price Positioning
Choosing a Positioning
Strategy
 Identify a set of possible competitive
advantages on which to build a
position.
 Choose the right competitive
advantages.
 Select an overall positioning strategy.
Identifying Possible
Competitive Advantages
 Key to winning target customers is to
understand their needs better than
competitors do and to deliver more
value.
 Competitive advantage – extent to
which a company can position itself as
providing superior value.
 Achieved via differentiation.
DIFFERENTIATION
 Differentiation is the act of designing a
set of meaningful differences to
distinguish the company’s offering from
competitor’s offerings.
 Differentiation Variables

Product Services Personnel Channel Image

Form Ordering Competence Coverage Symbols

ease
Features Delivery Courtesy Expertise Media

Performance Installation Credibility Performance Atmosphere

Conformance Customer Reliability Events

training
Durability Customer Responsive
consulting ness
 DIFFERENTIATION TOOLS

 Performance Quality – low, average, high, superior

 Conformance Quality – identical units, meet specs.
 Durability – expected operating life
 Reliability – probability of it not malfunctioning
within a specified time period
 Reparability – ease of fixing a product
 Style – look and feel to the buyer
 Design: The Integrating Force for all above
features
 Services Differentiation
 Ordering Ease
Differentiation Tools
 Installation
 Customer Training
 Delivery – speed, accuracy, care
 Quick response system
 Customer
Consulting
 Maintenance
and Repair
Differentiation Tools
 Channel Differentiation
 Image Differentiation
 Identity – way company sees itself/products
 Image – way customers see company/products
 Symbols, Colors
 Physical site/store – artifacts, lights,
entrances
 Events and Sponsorship
 Choosing the Right
Competitive Advantages
 Not all brand  The best competitive
differences are advantages are those that
meaningful and meet seven key criteria.
worthwhile, nor do all  Important

differences make a  Distinctive

good differentiator.  Superior

 Communicable

 Each difference has  Preemptive

the potential to create  Affordable

company COSTS as well  Profitable

as consumer value.
PRODUCT LIFE CYCLE

1. Products have limited life.

2. Product sales pass through distinct stages.

3. Profits rise and fall at different stages.

4. Products require different approaches in each

life-cycle stage.
Product Life-Cycle Alternate
Patterns