Download MARKET SEGMENTATION

Chapter Overview:
1. What is Market Segmentation
2. Levels of Market Segmentation
3. Bases for Segmenting Markets
3 Steps in Target Marketing
(S T P)
0 Segmentation Marketing
0 Identify bases for segmenting the market
0 Develop segment profiles
0 Target Marketing
0 Develop measure of segment attractiveness
0 Select target segments
0 Market Positioning
0 Develop positioning for target segments
0 Develop a marketing mix for each segment
Market Segmentation
0 CONCEPT AND DEFINITION
The concept of market segment is based on the
fact that the market of commodities are not
homogeneous but they are heterogeneous.
Market represent a group of customer having
common characteristics but two customer are
never common in their nature, habits, hobbies,
income and purchasing techniques.
Defining Market Segmentation
0 According to Philip Kotler ,
“Market segmentation is subdividing a market into distinct and
homogeneous subgroups of customers,
where any group can conceivably be
selected as a target market to be met
with distinct marketing mix.”
Market Segmentation
0Market Segmentation is a method
of “dividing a market (Large) into
smaller groupings of consumers or
organizations in which each segment
has a common characteristic such as
needs or behavior.”
LEVELS OF MARKET
SEGMENTATION
Evolving Marketing Strategies
0 Mass Marketing:
0 The term mass market refers to a large,
undifferentiated market of consumers with
widely varied backgrounds.
0 Products and services needed by almost
every member of society are suited for the
mass market. Such items as electric and gas,
utilities, soap, paper towels and gasoline,
for example, can be advertised and sold to
almost anyone, making them mass market
goods.
1. Mass Marketing
0 An attempt to appeal to an entire market with one
basic marketing strategy utilizing mass production,
mass distribution and mass promotion of one
product for all buyers. Also called undifferentiated
marketing.
0 The appeal of mass marketing is in the potential for
higher total profits. Companies that employ the
system expect the larger profit to result from:
0 (1) expanded volume through lower prices, and
0 (2) reduced costs through economies of scale made
possible by the increased volume.
0 Henry Ford applied the concept in the automobile
industry. His Model-T was conceived and marketed
as a "universal" car — one that would meet the needs
of all buyers.
Mass Marketing
Henry Ford epitomized this strategy when he
offered the Model- T Ford in one color , black.
Ford Model-T was the first to mass market automobiles. Ford mass produced by assembly line,
mass distributed through dealers, and mass promoted one product for all buyers.
2. SEGMENT MARKETING
A market segment consists of a large identifiable
group of customers within a market who share a similar
set of needs and wants, purchasing power, geographical
location, buying attitudes, or buying habits.
Identifiable Group with in a Market with Similar
• Similar Needs & Wants
• Purchasing Power
• Geographical Location
• Buying Attitudes
Example:
Automakers may identify four broad segments in the car market.
Buyers who are primarily seeking:
1. Low-cost Basic Transportation
Toyota Wigo, Mitsubishi Mirage, Honda Brio, Kia Picanto, Hyundai
Eon & i10, Tata Indigo
2.Driving Thrills & High Performance
Toyota 86, Subaru BRZ, Subaru WRX STI,
Ford Mustang, Chevrolet Camaro, Nissan GTR
3. Luxurious Driving Experience
Lexus LFA, Mercedes, BMW, Audi, Bently, Meserati
4. Supercar / Hypercar
McLaren, Ferrari, Bugatti, Lamborghini, Pagani, Renault
5. Car Safety Features
Volvo Top Safety Features
Volvo 360 Degrees Surround Camera; Blind Spot Information System,
Lane Keeping Warning, Volvo Adaptive Cruising, Park Assist Pilot,
Active High beam Headlights
Safety Features
Subaru Forester
Strong Utilitarian Body Structure, Eye Sight Camera
Off-road Safety with X Mode , Best crash-test ratings in its class
Safety Features
Ford Focus & Ford Explorer
Ford Focus: Active City Stop, Blind Spot Warning, Self-parking
Ford Explorer: Inflatable seatbelt
Safety?
FLEXIBLE MARKET OFFERING
0 Consists of the product and
service elements that all segment
members value, plus options
(additional charge) that some
segment members value.
0 Even in segments, 100 % of their
needs are not the same.
FLEXIBLE MARKET OFFERING
0 Consists of two parts.
1.Naked Solution : - products and
services that all members of the
segment values.
2.Discretionary options : - that some
segment members value. Each option
might carry an additional charge.
FLEXIBLE MARKET OFFERING
0 Need: Low Cost Basic Transportation
1. Naked Solution: Mitsubishi Mirage
2. Discretionary options: 2 Trims in 4 variants to
choose from
Mirage GLX (MT) – P503,000
Mirage GLX (CVT) – P553,000
^P50K (CVT)
Mirage GLS (MT) – P598,000
^P95K (Trim)
Mirage GLS (CVT) – P648,000
(MT) – Manual Transmission
(CVT) – Continuous Variable Transmission (Automatic)
FLEXIBLE MARKET OFFERING
Manual or CVT?
FLEXIBLE MARKET OFFERING
Mirage GLX (MT) - P503K
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0
0
0
0
0
0
0
0
0
0
0
0
Ignition key starter
Key entry
Option: SAT-NAV system
Option: Touch screen multimedia
entertainment
2 Speakers
Non leather wrapped steering wheel
Manual control air con
Driver side airbag only
14” steel rim w/ hubcaps
No fog lamps
No rear spoiler
2 front doors power windows
Option: ABS w/EBD
Mirage GLS (MT) – P598K
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Start/stop push button starter system
Keyless entry system
SAT-NAV equipped touch screen
multimedia entertainment
0
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6 Speakers
Leather wrapped steering wheel
Automatic climate control air con
Twin airbags
15” alloy wheel
0
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Fog Lamps
Rear spoiler
Central locking 4 door power windows
ABS w/ electronic brace-force distribution
FLEXIBLE MARKET OFFERING
Delta Airlines
offers all economy passengers a seat
and soft drinks. It charges economy
passengers extra for alcoholic
beverages.
2. NICHE MARKETING
Group of customers seeking a distinctive mix of
benefits who are ready to pay extra premium.
A niche is a more narrowly defined customer
group typically a small market whose needs are
not being well served. Marketers usually identify
niches by dividing a segment into sub segments
or by defining a group seeking a distinctive mix
of benefits.
 Niche = segment sub – segments
NICHE MARKETING
Ex. Car buyers who are primarily seeking
for thrills and high performance.
[MT] Manual Transmission
[CVT] Continuous Variable Transmission with
Paddle shifter
NICHE MARKETING
3. LOCAL MARKETING
0 Marketing programs tailored to the
needs & wants of local customer
groups in trading areas,
neighborhoods , etc.
0 This trend is called grass roots
marketing.
LOCAL MARKETING
4. INDIVIDUAL MARKETING
0 Ultimate segmentation – segments of 1 or
customized marketing or one-to-one
marketing.
0 Customerization – empower the consumers
to design the product or service offering of
their choice.
Bases for Segmenting
Consumer Markets
GEOGRAPHIC SEGMENTATION
Divides the market into different
geographical units such as nations,
regions, states, counties, or cities.
Mcdonalds globally, sell burgers aimed at local
markets, for example, burgers are made from
lamb in India rather then beef because of
religious issues.
In Mexico more chilli sauce is added and so on.
Tereyaki burger in Japan.
Toyota Motor Corporation
DEMOGRAPHIC SEGMENTATION
Demographic segmentation is the most
popular segmentation method because
consumer needs, wants, and usage often
vary closely with demographic variables
and are easier to measure than other
types of variables.
Demographic Segmentation
Income Level
Age
Family
Ethnicity
Education
Dr. Rosenbloom
Age and life-cycle stage segmentation is the process of offering different
products or using different marketing approaches for different age and lifecycle groups.
As people age their needs and wants change, some organizations develop specific
products aimed at particular age groups for example nappies for babies, toys for
children, clothes for teenagers and so on.
Gender segmentation is commonly used within the cosmetics, clothing and
magazine industry.
Income segmentation is another strategy used by many organizations.
Products and services are also aimed at different lifecycle segments.
Holidays are developed for families, the 18-30's singles, and for those in
their 50's.
Gender
Geographic Segmentation
Psychographic Segmentation
Psychographic segmentation divides buyers
into different groups based on social class,
lifestyle, or personality traits.
Swatch targets
those with an
active lifestyle
Behavioral Segmentation
Behavioral segmentation divides buyers
into groups based on their knowledge,
attitudes, uses, or responses to a
product
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Occasion
Benefits sought
User status
Usage rate
Loyalty status
Behavioral Segmentation
Occasion segmentation divides buyers into
groups according to occasions when they get
the idea to buy, actually make purchases, or
respond to a product.
Benefit segmentation requires finding the major
benefits people look for in the product class,
the kinds of people who look for each benefit,
and the major brands that deliver each benefit.
Behavioral Segmentation
User status divides buyers into ex-users,
potential users, first-time users, and regular
users of a product.
Usage rate divides buyers into light, medium,
and heavy product users.
Loyalty status divides buyers into groups
according to their degree of loyalty
Segmentation Criteria
[MASDA]
To be useful, a market segment must be:
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Measurable
Accessible
Substantial
Differentiable
Actionable
Requirements for Effective Segmentation
Segmentation Criteria
Measurable examples include the size,
purchasing power, and profiles of the
segments.
Accessible refers to the fact that the market can
be effectively reached and served.
Substantial refers to the fact that the markets are
large and profitable enough to serve.
Differentiable refers to the fact that the markets
are conceptually distinguishable and respond
differently to marketing mix elements and
programs.
Actionable refers to the fact that effective
programs can be designed for attracting and
serving the segments.