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How can a company divide a market into segments?
How should a company choose the most attractive target
markets?
What are the requirements for effective segmentation?
SEGMENTATION
Dividing market into well defined slices
Similarity within segment and differences between segments
MARKET SEGMENT
A group of customers who share similar set of needs and wants
…. Marketer’s
task is to identify the
appropriate number and nature of market
segments and decide which one (s) to target.
Homogeneous preferences
market in which all of the consumers have roughly the same preference,
so there are no natural segments
Diffused preferences:
consumer preferences may be scattered throughout the space
indicating great variance in consumer preferences.
One brand might position in the center to appeal to the most people; if
several brands are in the market, they are likely to position throughout
the space and show real differences to reflect consumer-preference
differences
Clustered preferences:
The market might reveal distinct preference clusters, called natural
market segments
Geographic
Demographic
Behavioral
Psychographic
GEOGRAPHIC SEGMENTATION
Divides markets into geographical units
Nations, states, Regions, cities
Rural vs. Urban
DEMOGRAPHIC SEGMENTATION
Age and life cycle
Life stage
Gender
Income
Generation
Millenials (or Gen Y) : 1977-1994
Gen X : 1964-1978
Baby boomers : 1946-1964
Silent generation : 1925-1945
Social class
Dividing buyers into groups on User and usage related variables
the basis of their knowledge of,
attitude toward, use of , or Occasions
response to a product Benefits
Decision Roles : people play 5 User Status
roles in buying decision
Non users, exusers, potential users,
Initiator first time users, and regular users
Influencer Usage Rate
Light, medium or heavy product
Decider usages
Buyer Buyer-Readiness
User Loyalty Status
Hard core loyals, split loyal, shifting
loyals, switchers
Attitude
Enthusiastic, positive, indifferent,
negative, hostile
Aware
Ever tried
Recent trial
Occasional user
Regular user
Most often used
Hard core
Consumers who buy only one brand all the time
Split loyals
Consumers who are loyal to two or three brand
Shifting loyals
Consumers who shift loyalty from one brand to another
Switchers
Consumers who show no loyalty to any brand
Lifestyle
E.g. Marketing badminton shuttle vs. Bean bag
Personality
E.g. woodland shoes
Values
Marketing toilets to people in rural Bihar
Marketers evaluate each segment to determine how many and
which ones to target and enter
Consider two factors:
The segment’s overall attractiveness
Size, growth, profitability, scale economies, and low risk
The company’s objectives and resources
Marketers use a three-step procedure for identifying market
segments:
Survey stage.
Exploratory interviews and focus groups to gain insight into customer
motivations, attitudes, and behavior.
Collect data on attributes and their importance ratings, brand awareness and
brand ratings, product-usage patterns, attitudes toward the product category,
and respondents’ demographics, geographics, psychographics, and
mediagraphics
Analysis stage.
Factor analysis to the data to remove highly correlated variables, then applies
cluster analysis to create a specified number of maximally different segment
Profiling stage.
Each cluster is profiled in terms of its distinguishing attitudes, behavior,
demographics, psychographics, and media patterns, then each segment is
given a name based on its dominant characteristic.