Kotler on Marketing

“Don’t buy market

share. Figure out
how to earn it.”

Dr. H. Gayathri
03/27/20 -1-
 Market Segmentation and Market Targeting

Market segmentation is the process of disaggregating the total

market into a number of sub-markets.
 
 Market consists of buyers who will differ in one or more
respects,

 They may differ in their wants, purchasing power,

geographical locations, buying attitudes and buying practices.
These variables can be used to segment the market.

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  Bases for Segmenting Consumer Market :

 The marketing firm may have to investigate different

segmentation variables in order to gain an insight into
the structure of the overall market.

 Generally the organizations use a combination of

variables in order to define a precise market segment.
 Geographic Segmentation
─ Region
─ City
─ Rural and Semi-urban areas
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  Demographic Segmentation :
 It is one of the most straight forward and
meaningful bases for segmenting consumer markets.
The demographic variables are :

 Age & life – cycle stage

Gender
Generation
 Social class / income

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  Psychographic segmentation :

 Life style

 Personality

 Values

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 Behavioural Segmentation – Here, the buyers are
divided into groups on the basis of their knowledge of,
attitude toward, use of, or response to a product.

 Many marketers believe that behavioural variables

like occasions, benefits, user status, usage rate, loyalty
status, buyer – readiness stage, and attitude are useful
for segmenting.

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  Occasions - Buyers are distinguished according to
the occasions

a) When do they develop a need

b) When do they purchase a product
c) When do they use a product

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  Segmentation by usage – consumption rates for
many consumer products are not evenly distributed
across all household. Hence, meaningful segments
could be defined in terms of usage of the product
itself. Eg. : Light, medium and heavy users.
 
 If a firm can identify heavy users – it may be able
to develop special marketing strategy aimed at
winning more of them to the brand. 

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  E.g., heavy users of cigarettes/supari’s etc. in a
particular region could be of working class, between
30 – 40 years of age, watch television more than 2 1/2
hours per day and may prefer to watch regional
programme,
 
 Consumer profiles such as this are obviously helpful to
the marketing firm in developing pricing and
communication strategies,

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  Users Status - Non user, ex-user, potential user, first
time user and regular user.

 Buyer Readiness Stage - Buyers may be in different

stages i.e., some are aware, some are informed, some are
interested, some desire the product and some intend to
buy.

 Loyalty Status – A market can also be segmented

according to the degree of consumers brand loyalty. Kotler
has divided them into 4 groups. According to loyalty
status :
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  a. Hard-core loyals: undivided loyalty to one brand, eg., AA,
A,A,A

 b. Split loyals: Divided loyalty between 2 or 3 brands, eg., A,

B, B, A, B

c. Shifting loyals :Consumers shift loyalty from one brand to

another

 d. Switchers : No brand loyalty at all, instead switches from

one brand to another. eg. B, E, C, A, D

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  A company may usually attract switchers, at
least in the short term, by price reductions or
other forms of sales promotions.
 
 A careful analysis of brand loyalty categories can
tell the firm a lot about its present marketing
strategy and can point the way to improvements.

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  For eg., from an analysis of ‘shifting loyals’ the
firm may learn about possible inadequacies in its
marketing programme that are causing people to
switch brands.

 Attitude : Five groups are Enthusiastic, Positive,

Indifferent, Negative and Hostile. Understanding
attitudes helps in formulating communication
strategies.

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 
  Benefit Segmentation :
 Benefit segmentation uses casual rather than
descriptive variables to group consumers,

 Different people buy the same or similar

products for different reasons, e.g, some people buy a
car purely as a means of transport, while others as a
status symbol or as an extension of their personality.

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  In using benefit segmentation, the companies identify the

profiles of the people seeking each benefit and recognize

the existing competitors products that are close to

delivering each of the benefits, e.g. toothpaste.

 Some of the benefits sought may not be serviced by

existing products – and this will give the firm the

opportunity of capitalizing on an unsatisfied market

segment.

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  Requirements for effective segmentation.

 Measurable, accessible, actionable, substantial and

differentiable.

 Evaluating the market segments.

 Segment size and growth.
 
 Segment structural attractiveness.
 
 Company objective and resources.

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  Selecting the Market Segments
Single – segment concentration.

─Niche Marketing

─Individual Marketing
 Selective specialization.
 Product specialization.
 Market specialization.
 Full market coverage.

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 Industrial Market Segmentation
Characteristic Segment by Question
Demographic Which industry to focus on?
Industry
Can we produce enough for
Company Size large needs?
Location What geographical areas? 
Operating Technology What Customer technologies?
Variables
User / Nonuser Heavy, medium, light
Status nonusers?
Customer Needing many services, few?
Capabilities  

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Purchasing
Approaches Purchasing Centralized or decentralized?
Function
national account vs. field
 
oriented
 Power Structure
  Engineer dominated, finance,
etc.?
Purchasing
Policies Leasing, service, price, bid?
Purchasing
Criteria Quality, service, price?
 

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 Situational Urgency Quick and sudden delivery
Factors or Service
Specific
Application Certain or all applications?

Size of order Large or small orders?

Personal Buyer-Seller Values similar to ours?

Similarity

People Attitudes toward Risk-taking, risk-avoiding

Risk customers?

Purchases Loyalty High loyalty to their

suppliers?
 
Source : Thomas V. Bonoma and Benson P. Shapiro.

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