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CONSUMER SEGMENTATION

Segmentation & Targeting

Market Segment
• A subgroup within the market who share certain relevant characteristics • A group of customers with certain characteristics in common & whose needs can be met with a distinct marketing mix

Definitions • The analytical division of the market into discrete groups of customers that share common attributes. . needs and who have similar buying processes. • The identification of subsets of buyers within a market who share similarities.Segmentation & Targeting Market segmentation .

.Segmentation & Targeting Niche Marketing • A niche is more narrowly defined group. • Marketers divide it into sub-segments • Niches are fairly small and attract few competitors • Customers are willing to pay more • Niche has a size. profit and growth potential. typically a small market whose needs are not well served.

• Individual Marketing.Segmentation & Targeting Local & Individual Marketing • Target marketing is leading to marketing programs being tailored to the needs and wants of the local customer groups( Trading areas. even individual stores). neighborhoods. . The ultimate level of segmentation leads to “ segments of one” customized marketing or “ one to one Marketing”.

First brand to enter the market is likely to position in the center to appeal to most people. a second close to the first.. . • Diffused preferences: Consumers preferences are scattered. would try to share the market or can locate in the corner to attract a consumer group not satisfied with the existing brand.Segmentation & Targeting Patterns Of Market Segmentation • Homogenous preferences: Market where all consumers have roughly the same preference. they vary a lot in their preferences.

The first firm in this market has three options:– Position in the centre and appeal all – Position in the largest market segment( concentrated marketing) – Several brands for separate segments . called natural market segments.Segmentation & Targeting Patterns Of Market Segmentation • Clustered preferences: The market might reveal distinct preference clusters.

2 Some Bases for Segmenting Consumer Markets Levis Dockers Demographic Knorr Soup Behavior Geographic Segmentation Southwest Airlines Benefit Colgate Toothpaste Psychological BMW .Slide 8-6 Table 8.

Segmentation & Targeting Segmenting by Usage and Commitment Advertising and promotion targeted to:      Heavy users Nonusers Brand-loyal users Switchers/Variety seekers Emergent Consumers – Point of entry marketing strategy .

Segmentation & Targeting Demographic Segmentation        Age Gender Race Marital Status Income Education Occupation .

Segmentation & Targeting Ad in Context Example How about this ad? What is the target demographic for this ad campaign? 11 .

Segmentation & Targeting Geographic Segmentation      Country / State Rural / Urban Region City Neighborhood .

Segmentation & Targeting Psychographics and Lifestyle Segmentation Lifestyle Opinions Activities Interests Lifestyle segmentation provides insight into consumer’s motivations .

Segmentation & Targeting Benefit Segmentation Prestige? Safety? Fuel Economy? .

Ch # 7-Segmentation. Targeting & Positioning Ways to segment Geographic Region Urban/Sub urban Demographic Age Gender Occupation Socio-economic group Behavioral Rate of usage Benefits sought Loyalty status Readiness to purchase Psychographic Life style Personality Social status .

they vary a lot in their preferences. • Diffused preferences. First brand to enter the market is likely to position in the center to appeal to most people.Consumers preferences are scattered. . a second close to the first. would try to share the market.Market where all consumers have roughly the same preference.Segmentation & Targeting Patterns Of Market Segmentation • Homogenous preferences.

The market might reveal distinct preference clusters.Segmentation & Targeting Patterns Of Market Segmentation • Clustered preferences. The first firm in this market has three options:– Position in the centre and appeal all – Position in the largest market segment( concentrated marketing) – Several brands for separate segments . called natural market segments.

in Avoid terms of Competitive advantage Strong Possible Competitive advantage Possible Attractive segment Possible Secondary target Secondary target Prime target .Segmentation & Targeting Choice of market segments Unattractive Average segment segment Absence of Strongly Avoid Competitive avoid advantage Avg.

Segmentation strategies • Undifferentiated: Ignore segments • Concentrated or focused: Concentrate on a single segment (Small firms) • Differentiated: Different marketing mix for each segment (Large firms) .

Segmentation & Targeting Undifferentiated Strategy • Also known as market aggregation • Targets entire market with the same marketing mix – segments ignored • Used when segments cannot be identified or where aggregation proves more profitable than segmentation • Ford’s Model T car were sold as the universal car – “any car as long as it is black” .

Segmentation & Targeting Concentrated strategy • Marketing effort directed at a single highly defined segment • Niche marketing – Rolex watches • Used when one group is especially attractive for the organization to target • A useful strategy for smaller firms – avoids a head on collision with major players • Provides scope for competitive advantage in a small niche in the market .

Segmentation & Targeting Differentiation Strategy • Multi segment approach • Separate mix for each segment • Expensive In terms of product & marketing cost • Only possible for large firms .

1998 .6 Sample Positioning Map: Automobiles Luxurious •Mercedes Cadillac• Lincoln• •Chrysler •Buick •BMW •Pontiac •Chevrolet •Nissan Dodge• •Toyota •VW Functional •Saturn Sporty •Porsche •Lexus Traditional Mercury• Ford• Irwin/McGraw-Hill © The McGraw-Hill Companies.. Inc.Slide 8-10 Figure 8.

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