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Market Segmentation

&
Consumer Behaviour

Segmentation, Targeting & Positioning

Segmentation
The analytical goal is to
measure Consumer Behaviour
and place each person in a
group (segment) that will
minimise the behaviour
between each member of the
segment and maximise the
variance between segments

Why do we need to
segment?
Because people vary so much
from other people needs,
motivations, decision
processes, buying behaviour

Market Segmentation Principles


Segmentation Variables

Geographic
Demographic
Psychographic
Behavioral
Other
No single best way to segment a market.
Often best to combine variables and identify
smaller, better-defined target groups.

Geographic Segmentation
Divide markets into different
geographic units.
Examples:
World Region or Country: North America,
Western Europe, European Union, India, China
etc.
City or Metro Size: New York, Kolkata
Population Density: rural, suburban, urban
Climate: northern, southern, tropical etc.

Demographic Segmentation
Use Differences in:
age, gender, family size, family life
cycle, income, occupation, education,
race, and religion
Most frequently used segmentation
variable
Ease of measurement and high availability.

Psychographic
Segmentation
Psychographic
segmentation divides a
market into different
groups based on social
class, lifestyle, or
personality
characteristics.
People in the same demographic
classification
often have very different lifestyles and

Behavioral Segmentation
Occasion
Special promotions
& labels for
holidays.
Special products for
special occasions.

Benefits Sought
Different segments
desire different
benefits from the
same products.

Loyalty Status
Nonusers, ex-users,
potential users,
first-time users,
regular users.

Usage Rate
Light, medium,
heavy.

Loyalty Status
Segmentation

Hard-core
Split
loyals
Shifting
loyals
Switcher
s

User & Loyalty Status


Segmentation

Requirements for Effective


Segmentation
Segments must be
Measurable
Accessible
Substantial
Differentiable
Actionable

LEVELS OF MARKET
SEGMENTATION
Different levels

1. SEGMENT MARKETING
Consists of a group of
customers who share a
similar set of needs and
wants.
Identifiable Group with
in a Market with Similar

Wants
Purchasing Power
Geographical Location
Buying Attitudes

SEGMENT MARKETING
contd
Market Segments can be defined in
many different ways. One way to
carve up a market is to identify
Preference segments
Suppose ice cream buyers are asked
how much they value sweetness and
creaminess as two product attributes.
Three different patterns can emerge.

Homogeneous preference :
where all the consumer have roughly the same
preferences.
We would predict that existing brand would be similar
and cluster around the middle of the scale in both
sweetness and creaminess.

Diffused preference :
consumers vary greatly in their preferences

Clustered preference :

creaminess

sweetness

Homogeneous Preference
-no natural segments
-all buyers have same preference

creaminess

sweetness

Diffused Preference
-no pattern (or poor research)
-take center position

creaminess

sweetness

Clustered Preference
-natural segments
-increases as number of competitors increases

2. NICHE MARKETING

Group of customers seeking a distinctive mix of benefits


who are ready to pay extra premium.
Niche = segment
sub segments
Eg. Washing detergents
hard & gentle washes .
Surf excel for tough stains ( hard on clothes) & Ezee from
Godrej for delicate clothes.
--- Astha , Sanskar , Q TV focus on religion & spiritualism.
DISTINCT NEEDS
PAY PREMIUM
SPECIALIZATION
LESS COMPETITION
POTENTIAL

3. LOCAL MARKETING

Marketing programs tailored to the needs & wants of local


customer groups in trading areas, neighborhoods , etc.
this trend is called grass roots marketing.

Ex. Spiderman 3 was released in 5 different language in


India including bhojpuri.

Kashmiri silk

Pune
sarees

Evaluating Market
Segments
Segment Size and Growth
Potential
Sales, profitability and growth rates

Segment Structural
Attractiveness
Competition, substitute products,
buyers & supplier power, new
entrants (Porters Five Forces)

Company Objectives and


Resources
Core competencies
What business do we want to be
in?

Targeting Segments - Overview

Market Preference Patterns

Undifferentiated (Mass)
Marketing
Ignores segmentation opportunities

Differentiated (Segmented)
Marketing
Targets several
segments and
designs separate
offers for each.
Coca-Cola (Coke, Sprite, Diet
Coke, etc.)
Procter & Gamble (Tide,
Cheer, Gain, Dreft, etc.)
Toyota (Camry, Corolla, Prius,
Scion, etc.)

Niche Marketing
Targets one or a couple small
segments
Niches have very specialized
interests

Micromarketing
Tailoring products and marketing programs
to suit the tastes of specific individuals
and/or locations.

Flexible Marketing Offerings


Core solution
Product and
service elements
that all segment
members value

Discretionary
options
Some segment
members value
Options may
carry additional
charges

Patterns of Target Market Selection:


Product x Market Matrices

Positioning
The place a product occupies in consumers
minds relative to competing products.

Positioning Example
To (target segment and need) our (brand) is a
(concept) that (point-of-difference).
To busy mobile professionals
who need to always be in the
loop, Blackberry is a wireless
connectivity solution that allows
you to stay connected to people
and resources while on the go
more easily and reliably than the
competing technologies.

Positioning Strategy
Competitive advantages
Points of Parity
Points of Difference => Differentiation
Positioning results from differentiation
and competitive advantages.
Positioning may change over time.

Sources of Differentiation

Product Design
Quality
Additional Services
Image
People (Staff)
Price
Other

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Choosing the Right Competitive


Advantages
The best competitive advantages are

Important
Distinctive
Superior
Communicable
Pre-emptive
Affordable (to company and consumer)
Profitable

Moral: Avoid meaningless differentiation.

Positioning Errors
Under-positioning:
Not positioning strongly enough.

Over-positioning:
Giving buyers too narrow a picture of the product.

Muddled Positioning:
Leaving buyers with a confused image of the product.