Identifying Market Segments and targets

Identifying Market Segments and targets

Chapter -8

q     Mass Marketing to Target Marketing.

•          Identifying market segment

•           Selecting one or more of them

•           Then developing product and  marketing programs tailored to each.[value proposition]

q     Segment Marketing

        A market segment consists of a group of customers who share a similar set of needs and wants.

§         Market Segmentation: determining distinct groups of buyers (segments) with different needs, characteristics, or behavior who might require separate products and marketing mix.

§         Market Targeting: The process of evaluating each segment’s attractiveness and selecting one or more segments to enter.

§         Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers.

•         Market Segmentation

• Bases for Segmenting Consumer Markets:
1. Geographic Segmentation
2. Demographic Segmentation
3. Psychographic Segmentation
4. Behavioral Segmentation

1. Geographic Segmentation: Dividing a market into different geographical units such as nations, states, regions, counties, cities or neighborhoods.
2. Demographic Segmentation: Dividing a market into groups based on demographics variables such as age, sex, family size, family life cycle, income, occupation, education, religion, race, and nationality.

•         Major Segmentation Variables for:  Consumer Markets

a.      Age

b.      Family size

c.      Life Cycle

d.      Gender

e.      Income

f.        Generation

g.      Occupation

h.      Education

i.        Religion

j.        Race

k.      Nationality

l.        Social Class

•         Age and Life cycle segmentation:  Dividing a market into different age and life-cycle groups.

•         Gender segmentation:  Dividing a market into different groups based on gender.

•         Income segmentation:  Dividing a market into different income groups.

3.      Psychographic Segmentation: Dividing a market into different groups based on social class, lifestyle, or personality characteristics. Social class: society’s relatively permanent & ordered divisions whose members share similar values, interests, and behaviors.

a.      Lowers-Lowers Class

b.      Upper-Lowers Class

c.      Working Class

d.      Middle Class

e.      Upper-Middle Class

f.        Lowers-uppers Class

g.      Uppers Class.

• Lifestyles: A person’s pattern of living as expressed in his or her activities, interests and opinions (AIO).

• 4. Behavioral Segmentation: Dividing a market into different groups based on consumer knowledge, attitude, use, or response to a product.

q     Dividing the market into groups based on variables such as:

a.      Occasions

b.      Benefits

c.      User status

d.      Usage rate

e.      Loyalty status

f.        Readiness stage

g.      Attitude toward product

1. Occasion Segmentation: Dividing a market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item.
2. Benefit Segmentation: Dividing a market into groups according to the different benefits that consumers seek from the product.
3. Usage Rate: Dividing a market into light, medium, and heavy product users.
4. Loyalty Status: Dividing a market into groups according to their  degree of loyalty:
• Hard-core loyal
• Split loyal
• Shifting Loyal

§         Switchers

5. Usage Status:
• Ex-user
• Potential user
• Regular user
• First time user
• Non-user
6. Six buyer readiness stages:

Awareness-knowledge-likings, preferences-convictions-purchase

q     Multivariable:

a.        Geoodemographic

b.       Psychodemographic

• Bases for Segmenting Business Markets
1. Geographic Segmentation
2. Demographic Segmentation (Industry, company size)
3. Behavioral Segmentation
• Bases for Segmenting International Markets
• Intermarket Segmentation: Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries.

• Bases for Segmenting International Markets
1. Geographic Location
2. Economic Factors
3. Political and Legal Factors
4. Cultural Factors

r     Requirements for effective segmentation:

For segmentation to be effective, each segment must be measurable, accessible, substantial, differentiable, and actionable.

1.       To be viable, a segment must first be measurable. In other words, you must be able to determine the size, purchasing power, and profiles of the members of the segment.

2.      The segment must also be accessible.

3.      The segment must be substantial as well—the largest relatively homogenous group you can hope to reach with a customized marketing plan.

4.      Segments must also be differentiable. Each segment, in other words, must respond differently to the marketing mix.

5.      Finally, the segment must be actionable. That is, the organization should have the resources to serve the segments.

§         Target market: A set of buyers sharing common needs or characteristics that the company decides to serve.

1.       Undifferentiated Marketing

A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. i.e. any idea marketing or software. 

2.      Differentiated Marketing (Segmented)

A market-coverage strategy in which a firm decides to target several market segments and designs separate offers to each. i.e. Unilever, Coke etc.

3.      Concentrated Marketing (Niche)

A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. i.e. Ritz-Carlton or Motel 6.

4.      Micro Marketing

The practice of tailoring products or marketing programs to the needs and wants of specific individuals and local customers groups --- includes

1.  Local Marketing
2.  Individual marketing
3.  

a.      Local Marketing

Tailoring brand and promotion to the needs and wants of the local customer groups – cities, neighborhoods and even specific stores.

b.      Individual Marketing

Tailoring products or marketing programs to the needs and wants of individual customers also- labeled “marketing of one-to-one marketing, customized marketing, and markets of one marketing.

5.   Product’s Position: the way the product is defined by consumers on important attributes - the place the product occupies in consumers’ minds relative to competing products.

6.   Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits, that justify competitive advantage.

a.      One way marketers try to achieve an advantage is through product differentiation.

Product Differentiation i.e. Features, Performance, Style & Design, or Attributes. Volvo provides new and better way of safety.  Intel, for example, has clearly differentiated its product from those of its competitors along the lines of consistency and reliability. Not only does it promise the most powerful microprocessors money can buy, it also delivers them so reliably that few computers appear without the "Intel Inside" sticker. Firms may also differentiate their products along the lines of durability and repairability.

b.      The second one is services differentiation i.e. Delivery, Installation, Repair Services, Customer service, Training Services. Micron is an example. It not only offers customers the ability to custom-build their own computers, it also backs up its products with first-rate technical-support services. DHL, Bank like Standard Chartered bank.

c.      In addition, by offering consumers the convenience of placing their orders online, Micron enjoys the advantage of channel differentiation. Amazon.com, Caterpillar, Dell computer etc.

d.      Through people differentiation, firms like Nordstrom, with its staff of polite, knowledgeable clerks, hire and train better people than its competitors. Personnel Differentiation i.e. Hiring, Training Better People than Competitors Do. Unilever Bangladesh is a great example.

e.      Finally, through image differentiation, firms offer distinctive products, often linking those products to a memorable symbol or environment that projects an appealing image i.e. Symbols, Atmospheres, Events. Ritz-Carlton, McDonalds, Mercedes.