01-09-2018
Why every thing is not all together?
Why we need the slices of Bread
1
01-09-2018
And Why we should that much which we could consume
• Add the photo of notice board
All are one/same?
2
01-09-2018
Identifying Market Segments, Targeting and Positioning
• Companies can’t connect with all customers in large, broad, or diverse
market.
• Marketers need to identify the market segments they can serve
effectively.
• Identification of market segments require a keen understanding of
Consumer Behavior (buyer decision process) and strategic thinking
about what makes each segment unique (market environment,
marketing mix).
• Identifying and uniquely satisfying the right market segment are often
the key to marketing success.
In the first unit, we basically learned…
• Marketer must learn to learn customers.
• Learning about customer, their desired values & satisfaction, helps us
to think and develop target and precise marketing strategies.
3
01-09-2018
Steps in Target Marketing Strategy
Identifying Selecting Target Developing
Market Segment Market Market Position
Determine demand Develop measures to Position the offering
pattern gauge segment in relation to
attractiveness competitors
Establish possible
bases of segmentation
Develop marketing
Select the target
Identify potential mix of each target
market
market segment segment
•Target marketing includes three activities:
market segmentation, market targeting, and
market positioning.
•Market segments are large, identifiable,
distinct groups within a market.
4
01-09-2018
Bases for Segmenting Consumer Markets
• Market segment
• A group of customers who share a similar set of needs and wants
• Major segmentation variables are (following factors) Marketers use them
singly or in combination
• Two ways to segment: descriptive characteristics (following three) and
behavioral
Demographic
Geographic segmentation
segmentation
Psychographic
Behavioral segmentation
segmentation
Regardless of which type of segment scheme
we use, we need to balance ….
5
01-09-2018
Which segmentation strategy/es are useful
for the following product
Geographic Segmentation
• Geographical units
• Nations, states, regions, counties, cities, or neighborhoods. The company can
operate in one or a few areas, or it can operate in all but pay attention to local
variations.
• RK SWAMY BBDO Guide to Market Planning
([Link] )
• Nielsen Claritas’ PRIZM – Geoclustering Approach (combination of
geographic data and demographic data)
([Link] )
• Education and affluence
• Family life cycle
• Urbanization
• Race and ethnicity
• Mobility
6
01-09-2018
Geographic Segmentation
Uses of Geographic Segmentation
• Grassroots' marketing: concentrating on making marketing activities
personally relevant to individual customer as possible.
• Success stories
• Nike: sponsored school team, experts conducted clinics and provision of
shoes, clothing and equipment to young athletes.
• Banking System: MSME Branch, Startup Branch, Rural Branch
• Indianisation of Startbucks, McD etc.
• Zip/Pin Code Mapping of customer proximity
7
01-09-2018
Demographic Segmentation
Age and Life Cycle
Life Stage
Gender
Income
Generation
Social Class
Race & Culture
Demographic Segmentation
• Age and life-cycle stage
• Our wants and abilities change with age
• Life stage
• A person’s major concern (e.g., Job, marriage,
divorce, parent’s care etc.)
8
01-09-2018
Demographic Segmentation
Life Choice or Orientation
• Several companies (P&G, Clorox, Colgate-Palmolive etc.) distribute
“Newelywed Kits” to couple registering for marriage.
• More than a quarter of all U.S. households now consist of only one
person (approx. 1.9 trillion market) - DeBeers right hand ring
campaign
9
01-09-2018
Demographic Segmentation
Right Hand Ring for Unmarried Women
Arranged marriage for LGBT Community
Demographic Segmentation
• Gender
• Men and women have different attitudes and behave
differently based on genetic & socialization.
• Research suggests, Men often need to be invited to
touch a product, where as women are likely to pick it
up without prompting.
• Gender differences are shrinking as well as men &
women are expanding their role.
10
01-09-2018
Demographic Segmentation
Income
• Income segmentation is a long-standing practice
• Market are hour glass shaped
11
01-09-2018
Demographic Segmentation
• Generation
Millennials (Gen Y)
Gen X –
Silent Generation
Baby Boomers
Demographic Segmentation Aryan / Dravidian
• Race and culture
• Multicultural Marketing
African Americans
Asian Americans
LGBT
12
01-09-2018
Psychographic Segmentation
• Buyers are divided into groups on the basis of
psychological/personality traits, lifestyle, or values
• Use of psychology and demography to better understand consumer.
VALS Tool for Psychographic Understanding
• Consumer motivation (horizontal dimension) & Consumer
resources (vertical dimension)
• Consumers are primarily inspired by three motivations:
ideals, achievements and self expression.
• Ideals: guided by knowledge & principals
• Achievements: look for products and services that demonstrate
success to their peers
• Self – expression: desire social or physical activities, variety & risk
• Individual Resources: Personality Traits: energy, self-
confidence, intellectualism, innovativeness, impulsiveness,
leadership etc.
13
01-09-2018
VALS Segmentation System
[Link]
Behavioral Segmentation
• Marketers divide buyers into groups on the basis of their knowledge
of, attitude toward, use of, or response to a product
14
01-09-2018
Behavioral Segmentation
• Needs and benefits
• Decision roles in buying process
• Initiator
• Influencer
• Decider
• Buyer
• User
User and usage-related variables
Occasions User status
Attitude Usage rate
Buyer-
Loyalty status readiness
stage
15
01-09-2018
Occasions mark a time of day, week, month,
year, or other well-defined temporal aspects
of a consumer’s life. We can distinguish
buyers according to the occasions when they
develop a need, purchase a product, or use a
product.
User Status
• Every product has its nonusers, ex-users,
potential users, first-time users, and regular
users. Included in the potential-user group are
consumers who will become users in connection
with some life stage or event.
16
01-09-2018
Uses Rate
•We can segment markets into light, medium,
and heavy product users. Heavy users are
often a small slice but account for a high
percentage of total consumption.
Some people are unaware of the product, some are
aware, some are informed, some are interested, some
desire the product, and some intend to buy. To help
characterize how many people are at different stages and
how well they have converted people from one stage to
another.
17
01-09-2018
Loyalty Status
Loyalty Status Marketers usually envision four groups based on
brand loyalty status:
1. Hard-core loyals—Consumers who buy only one brand all the
time
2. Split loyals—Consumers who are loyal to two or three brands
3. Shifting loyals—Consumers who shift loyalty from one brand
to another
4. Switchers—Consumers who show no loyalty to any brand
Attitude
•Five consumer attitudes about products are
enthusiastic, positive, indifferent, negative,
and hostile.
18
01-09-2018
Behavioral Segmentation Breakdown
How Should Business Markets Be Segmented?
Demographic
Operating variables
Purchasing approaches
Purchasing approaches
Situational factors
Personal characteristics
19
01-09-2018
Demographic
• Which industries should we serve?
• What size companies should we serve?
• What geographical areas should we serve?
Operating Variables
• Technology: What customer technologies should we
focus on?
• User or nonuser status: Should we serve heavy users,
medium users, light users, or nonusers?
• Customer capabilities: Should we serve customers
needing many or few services?
20
01-09-2018
Purchasing Approaches
• Purchasing-function organization: Should we serve companies
with a highly centralized or decentralized purchasing
organization?
• Power structure: Should we serve companies that are
engineering dominated, financially dominated, and so on?
• Nature of existing relationship: Should we serve companies
with which we have strong relationships or simply go after the
most desirable companies?
• General purchasing policies: Should we serve companies that
prefer leasing? Service contract? Systems purchases? Sealed
bidding?
• Purchasing criteria: Should we serve companies that are
seeking quality? Service? Price?
Situational Factors
• Urgency: Should we serve companies that need quick
and sudden delivery or service?
• Specific application: Should we focus on a certain
application of our product rather than all applications?
• Size of order: Should we focus on large or small orders?
21
01-09-2018
Personal Characteristics
• Buyer-seller similarity: Should we serve
companies whose people and values are similar
to ours?
• Attitude toward risk: Should we serve risk-taking
or risk-avoiding customers
• Loyalty: Should we serve companies that show
high loyalty to their suppliers?
Effective Segmentation Criteria
Measurable
Substantial
Accessible
Differentiable
Actionable
22
01-09-2018
Measurable
• The size, purchasing power, and characteristics of the
segments can be measured
Substantial:
• The segments are large and profitable enough to
serve. A segment should be the largest possible
homogeneous group worth going after with a tailored
marketing program
23
01-09-2018
Accessible
• The segments can be effectively reached and served
Differentiable:
• The segments are conceptually distinguishable and
respond differently to different marketing-mix
elements and programs
24
01-09-2018
Actionable:
• Effective programs can be formulated for attracting and
serving the segments
What Next
• After Segmentation
25
01-09-2018
Once the firm has identified its market-segment
opportunities, it must decide how many and which
ones to target.
• Marketers are increasingly combining several variables in
an effort to identify smaller, better-defined target groups.
• Seven-step approach
• Needs-based segmentation
• Segment identification
• Segment attractiveness
• Segment profitability
• Segment positioning
• Segment “acid test”
• Marketing mix strategy
Market targeting
26
01-09-2018
Porter’s Five Forces Model
Evaluating and Selecting the Market Segments
• Two factors: the segment’s overall attractiveness and the
company’s objectives and resources.
• How well does a potential segment score on the five
criteria?
• Does investing in it make sense given the firm’s objectives,
competencies, and resources?
• Marketers have a range or continuum of possible levels of
segmentation that can guide their target market decisions.
• Full Market Coverage: a firm attempts to serve all customer
groups with all the products they might need.
27
01-09-2018
Evaluating & Selecting the Market Segments
• Figure 9.4: Possible Levels of Segmentation
Undifferentiated marketing: mass marketing; the firm ignores segment
differences and goes after the whole market with one offer
• Product with a superior image that can be sold to the broadest
number of buyers via mass distribution and mass
communications
• Appropriate when all consumers have roughly the same
preferences and the market shows no natural segments
• Creates the largest potential market, which leads to the lowest
costs, which in turn can lead to lower prices or higher margins
• Narrow product line keeps down the costs of research and
development, production, inventory, transportation, marketing
research, advertising, and product management
• Undifferentiated communication program also reduces costs.
28
01-09-2018
Differentiated marketing: marketers define
multiple segments and design, price, disclose, and
deliver the product or service and also fine-tune
the marketing program and activities to better
reflect competitors’ marketing.
•Typically creates more total sales
than undifferentiated marketing
•Increases the costs of doing
business.
Multiple Segment Specialization
• Selective specialization - a firm selects a subset of all the
possible segments, each objectively attractive and
appropriate. There may be little or no synergy among the
segments, but each promises to be a moneymaker.
• The multisegment strategy also has the advantage of
diversifying the firm’s risk
• A supersegment is a set of segments sharing some
exploitable similarity.
• With product specialization, the firm sells a certain product
to several different market segments.
• With market specialization, the firm concentrates on serving
many needs of a particular customer group, such as by
selling an assortment of products only to university
laboratories
29
01-09-2018
Single-Segment Concentration: the firm
markets to only one particular segment.
• Through concentrated marketing, the firm
gains deep knowledge of the segment’s needs
and achieves a strong market presence.
• It also enjoys operating economies by
specializing its production, distribution, and
promotion.
• If it captures segment leadership, the firm can
earn a high return on its investment
A niche is a more narrowly defined customer
group seeking a distinctive mix of benefits within a
segment.
• Niche customers have a distinct set of needs;
they will pay a premium to the firm that best
satisfies them
• The niche is fairly small but has size, profit, and
growth potential and is unlikely to attract
many competitors
• A niche marketer gains certain economies
through specialization.
30
01-09-2018
Individual Marketing leads to “segments of one,”
“customized marketing,” or “one-to-one marketing
1. Identify your prospects and customers
• Don’t go after everyone.
• Build, maintain, and mine a rich customer database with information
from all the channels and customer touch points
2. Differentiate customers in terms of (1) their needs and (2) their value to
your company
• Spend proportionately more effort on the most valuable customers
(MVCs).
• Apply activity-based costing and calculate customer lifetime value.
Estimate net present value of all future profits from purchases,
margin levels, and referrals, less customer-specific servicing costs
3. Interact with individual customers to improve your knowledge about
their individual needs and to build stronger relationships
4. Customize products, services, and messages to each customer
Legal and Ethical Issues with Market Targets
• Some consumers resist being labeled
• Market targeting also can generate public controversy when marketers
take unfair advantage of vulnerable groups (such as children) or
disadvantaged groups (such as inner-city residents) or promote
potentially harmful products
• Socially responsible marketing calls for targeting that serves not only
the company’s interests but also the interests of those targeted
• Campaign for a Commercial-Free Childhood members feel preschoolers
are incredibly susceptible to advertising and that schools’
endorsements of products make children believe the product is good
for them.
31
01-09-2018
One-to-one marketing
Identify your prospects and customers
Differentiate customers in terms of their needs and
value to your company
Interact to improve your knowledge about
customers’ needs and to build relationships
Customize products, services,
and messages to each customer
Legal and Ethical Issues
• Marketers must avoid
consumer backlash
• Labeling consumers
• Vulnerable groups
• Disadvantaged groups
• Potentially harmful products
32