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Chapter 5

Identifying Market Segments


and Target
Any mass market is large, broad
and diverse. A marketer needs to
identify which market segment
he/she can serve effectively.

4.1 Shift of Mass Marketing to Micromarketing


Mass Marketing:

The marketer engages mass production, mass distribution


and mass promotion of one product for all buyers. Ex.
Regular Coca-Cola, Writer ball pen, Nabisco Energy
Biscuit etc.

Micromarketing:
Covering comparatively smaller market with more specific product and service
offer. Operated under one out of four different spans.

1. Segment A group of customers who share a similar set of needs and wants
Low cost seekers, Luxury seekers, Quality seekers; Heavy user, moderate user & light
user.

2. Niche More narrowly defined customer group seeking a distinctive mix of


benefits English Shampoo, Recova Age defining cream, Diet coke.

3. Local Areas Marketing program tailored to the need and wants of local
customer groups Nilkhet book market, restaurant in Gulshan and Banani.

4. Individuals Segments of one / customize marketing / One to One marketing


Plastic surgery, Web marketing, wedding planner.

4.2 Segmenting Consumer Market


Bases of Segmentation:
Groups of variables are used to segment the consumer market. All of the variables can be
categorized under four major variables called the bases of segmentation

Geographic
Demographic
Psychographic
Behavioral

4.3 Market Targeting


Marketers are increasingly combining several variables in
an effort to identify smaller, better-defined target group.
Nevertheless, single variable is not well enough to identify a
suitable segment as a target market. Multiple
considerations need to be taken account to decide how
many and which ones to target. Example: Income vs. need

Effective Segmentation Criteria:


Market segments must rate favorably on five key criteria:
1. Measurable : Size, purchasing power, and
characteristics of the segments can be measured.

Age
Income

2. Substantial : Large and profitable enough to serve.

<10k

3. Accessible : Can be effectively reached and


served.

10 25

4. Differentiable : Conceptually distinguishable and


respond differently to different marketing mix
elements.
5. Actionable : Effective programs can be formulated
for attracting and serve the segment.

25 80

>80

<5

5 - 16

16 - 30

>30

Evaluate Different Market Segments:


Market segments can be evaluated under two considerations:

1. Segments Overall Attractiveness


General Attractiveness - Size, Growth, Profitability, Scale of Economics and Low Risk

Structural Attractiveness
Industry Competitors,
Potential Entrants,
Substitute product,
Bargaining power of suppliers,
Bargaining power of customers.

2. Companys Objective,

Competencies and Resources

Selecting the Market Segments:

Single Market Concentration : Fair and handsome


Selective Specialization : Toyota, Sony Ericsson,
Artisti, British American Tobacco.

Product Specialization : Boi Mela


Market Specialization : Johnson & Johnson, Menz
Planet, Dressey Dale,

Full Market Coverage : Coca Cola, Dhaka New


Market.

Additional Considerations in evaluating and selecting segments:


1. Segment by Segment invasion
plan:
A company would be wise to enter one
segment at a time. Figure shows three
computer companies A, B & C are
selling computer to three industries. A
suitable invasion approach made by
company C is shown by the arrow.
Air line example

2. Updating Segmentation Schemes:


Consumer behavior and buying preferences with in a segment is changing continuously.
Marketer must aware of the changes and analysis must be done periodically to cope up
the changes.

3. Ethical Choice of Market targets:


Selecting and activating the target market should not generate public controversy.