Process of Segmentation

1. Survey

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2.

Formation of segments
3. Customer profile

4. 5.

Analysis & Evaluation

Selection of target markets

EFFECTIVE SEGMENTATION
Measurable Differentiation Substantial Actionable Accessible

2. Formation of segments
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1. Build-up approach (Small no. of customers) 2. Break-down approach (Large no. of customers)

5 broad bases for segmentation

1. 2. 3. 4. 5. Buyers potential & general characteristics Lifestyle & the way & means of buyers Desirable values Attitude towards brands Buying behavior

STRATEGY
Single segment concentration Selective specialization Product specialization Market specialization Full market coverage (Undifferentiated & differentiated mkting)

PATTERNS OF MARKET SEGMENTATIONAmity Business School 1. Based on PREFERENCES

HOMOGENOUS No branding DIFFUSED Many brand CLUSTERED Mkt for shoes, cars, is based on different attributes.

2. NEED BASED MARKET SEGMENTATION MARKET PARTITIONING : Hierarchy of attributes consumer follow in choosing a brand. Eg : Washing powder NEED SIZE BRAND FORMS Cheap Small Moderate Medium Large Expensive Super large Family Pack

Local Dealer Surf Surf Excel Ariel Nirma Bar Cake Powder Liquid

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3. Customer profiling
Positioning & manipulation of marketing mix.

4. Analysis & Evaluation of Segments

Demand potential Competition analysis in each segment. Forecasting

5. Selection of target markets

Significance of SEGMENTATION

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1. 2. 3. 4. 5. 6. 7. 8.

Manufacturing the product with the market demand. Working for economic functioning. Tapping opportunity and doing away with the threat. Enables the company for appropriate marketing mix. Overall monitoring of all marketing operations. Increased sales & market share. Providing growth opportunities to smaller firm. Improving the products.

SEGMENTING CONSUMER MARKET

GEOGRAPHIC SEGMENTATION :
cities or neighborhood.

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Nations, states, regions, countries,

DEMOGRAPHIC SEGMENTATION : Based on age, family size, family life

cycle, gender, income, occupation, education, religion, race, generation, nationality & social class.

PSYCHOGRAPHIC SEGMENTATION: Based on Lifestyle, value &

personality.

BEHAVIORAL SEGMENTATION: On basis of decision roles, occasions,

benefits, user status, usage rate loyalty status, readiness stage, attitude towards product. MULTI-ATTRIBUTE SEGMENTATION (GEOCLUSTERING): Combining several variables for identifying smaller better defined target group.

TARGETING MULTIPLE SEGMENTS

BENEFITS
MOBIL Classifications
2. Generations F: 27% Fast
3. True Blues: 16% Branded 4. Home Bodies: 21 % Convenience 5. Price Shoppers: 20% Low Price

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1. Road Warriors: 16% (Premium Products & Quality)

LOYALITY [Competition Based Segmentation]

1. Hard-Core Loyal
2. Split loyals 3. Shifting loyals

4. Switchers

Segmenting the Indian Market : The Income Route Amity Business School

Very Rich 1.2 Consuming Class 32.5 Climbers 32.5

Aspirants 44.0

Destitutes 33.0

Socio-Economic Pyramid of Indian Markets

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C1&C2 Skilled Workers D1&D2 Same as above with SSC Qualification

E1&E2 Primarily unskilled labour

Psychographic Segmentation
(Psychology +Demographics)
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SRI Consulting Business Intelligence (SRIC-BI) VALS TM Based on responses derived from questionnaire featuring 4 demographic and 35 attitudinal questions. 80,000 surveys per year.

INNOVATORS
Primary Motivation

High Resources High Innovation

Achievement Achievers Strivers SelfExpression Experiences Makers

Ideals Thinkers Believers

SURVIVORS

Low Resources Low Innovation

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Amity Business School

Product-Related Segmentation Dividing a consumer population into homogeneous groups based on characteristics of their relationships to the product
Can take the form of segmenting based on:
Benefits that people seek when they buy Usage rates for a product Consumers brand loyalty toward a product

 Benefits

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Focuses on the attributes that people seek in a good or service and the benefits that they expect to receive from that good or service Groups consumers into segments based on what they want a product to do for them

Usage Rates
Segmenting by grouping people according to the amounts of a product that they buy and use Markets often divided into heavy-user, moderate-user, and light-user segments The 80/20 principle (Praedos Law)

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Brand Loyalty
Segmenting consumers grouped according to the strength of brand loyalty felt toward a product Frequent flyer programs of airlines and many hotels

 Using Psychographic Segmentation

Psychographic profiles produce rich descriptions of potential target markets Greater detail aids in matching a companys image and its offerings with the types of consumers who are likely purchasers

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Amity Business School

Using Multiple Segmentation Bases

Increase accuracy in reaching the right markets Combine multiple bases
Geographic and Demographic Product-related with income and expenditure patterns Others

SEGMENTING BUSINESS MARKET

DEMOGRAPHIC: Industry, Company size, Location.

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OPERATING VARIABLES: Technology, User or Non-user status, Customer capabilities. PURCHASING APPROACHES: Purchasing function organization, Power structure, Nature of existing relationships, General purchase policies, Purchasing criteria.

SITUATIONAL FACTOR: Urgency, Specific application, Size of order.

PERSONAL CHARACTERSTICS: Buyer-seller similarity, Attitudes towards risk & Loyalty. BUSINESS BUYERS can be FIRST TIME PROSPECTS, NOVICES, SOPHISTICATES. INDUSTRIAL BUYERS can be PROGRAMMED, RELATIONSHIP, TRANSACTION & BARGAIN HUNTERS.

TARGETING
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1. Standardization
2. Differentiation 4 Ps, People, Images, Service, Channel 3. Focus Positioning Simply, positioning is how target market is defined to the competitors. [A] Marketing environment [B] Competitive advantage

Strategies for Reaching School Amity Business Target Markets

Undifferentiated Marketing: when a

firm produces only one product or product line and promotes it to all customers with a single marketing mix.

Differentiated Marketing: when a firm

produces numerous products & promotes them with a different marketing mix designed to satisfy smaller segments.

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Concentrated Marketing (niche marketing): when a firm commits all of its marketing resources to serve a single market segment Micromarketing: involves targeting potential customers at a very basic level, such as by ZIP code, specific occupation, lifestyle, or individual household

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Selecting and Executing a Strategy

No single, best choice strategy suits all firms Determinants of a market-specific strategy:
Company resources Product homogeneity Stage in the product life-cycle Competitors strategy

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Positioning: a marketing strategy that emphasizes serving a specific market segment by achieving a certain position in buyers minds
Attributes Price/quality Competitors Application Product user Product class

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Positioning map Graphic illustration that shows differences in consumers perceptions of competing products Reposition Marketing strategy to change the position of its product in consumers minds relative to the positions of competing products

PRODUCT DIFFERENTIATION
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FORM CONFORMANCE DURABILITY

FEATURES STYLE RELIABILITY

PERFORMANCE QUALITY DESIGN REPAIRABILITY

SERVICE DIFFERENTIATION
ORDERING EASE DELIVERY INSTALLATION CUSTOMER TRAINING CUSTOMER CONSUTING MAINTENANCE & REPAIR MISC.

PERSONNEL DIFFERENTIATION CHANNEL DIFFERENTIATION IMAGE DIFFERENTIATION

SYMBOL, COLORS, SLOGAN & SPECIAL ATTRIBUTES PHYSICAL PLANT EVENTS & SPONSORSHIP USING MULTIPLE IMAGE BUILDING TECHNIQUES

Positioning Strategies
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1. Product Attributes 2. Benefits 3. Usage Occasions 4. Users 5. Against a Competitor 6. Away from a Competitor 7. Product Classes

Positioning Differences
1. Important 2. Distinctive 3. Superior 4. Communicable 5. Preemptive 6. Affordable 7. Profitable

Market Positioning
Choosing a Positioning Strategy Identifying Possible Competitive Advantage Product Differentiation i.e. Features, Performance, Style & Design, or Attributes Image Differentiation i.e. Symbols, Atmospheres, Events

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Services Differentiation i.e. Delivery, Installation, Repair Services, Customer Training Services
Personnel Differentiation i.e. Hiring, Training Better People Than Competitors Do

Market Positioning
Choosing a Positioning Strategy
Choosing the right Competitive advantage

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Product Differentiation
Form Features Performance Quality Conformance Quality

Durability

Reliability

Repairability

Style

Design

Selecting an Overall Positioning Strategy

Price
More More More for More The same More for the Same

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Less More for Less The same for less Less for much less

The Same Less

Competition
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Indication of the health of the industry. spurs new product development. induces market leaders to enhance efficiency of their existing products, introduce their new variants & even enter new product markets. Understand changing needs, expectations and perceptions of different market segments. Motivates firms to make their products feature rich and versatile. Development of New Intermediation processes and new roles of Channel members (IT). Competition helps enlarge distribution base in any industry by bringing in new players. Makes products and services reach customer much more conveniently. Thus, strengthens the fit between customer needs and companys products, thus creating a loyal customer. Competition shortens product life cycles.

INDUSTRY ANALYSIS
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1. 2. 3. 4. 5.

Basic facts of Industry Industry environment Industry Structure Barriers in the Industry Industry attractiveness (Potential, Growth, profitability, Nature of Competition) 6. Industry Performance 7. Industry Practices 8. Emerging Trends / likely Future patterns