CB 3 Segmenting)

8/7/2019 CB 3 Segmenting)

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MARKET

SEGMENTATION

Prof. Manu Priya Gaur

[email protected]

Meeting hundred per cent

expectations of ten consumers is better than meeting ten per cent expectations

of hundred consumers



Key Decisions for Marketing Strategy

What geographic area will we operate in?

What timeframe do we have in mind?

Who are our prospects?

What will we offer?In what broad range of price?

To whom will we offer it?

How will we let them know about our offering?

How/where will we engage in exchange with them?

Whom will we compete with?

How Best to Answer?



DEFINING MARKET SEGMENTATION

³process of dividing the totalheterogeneous market into relativelydistinct homogeneous sub-groups of consumers with common needs or

characteristics & selecting one or moresegments to target with distinct marketingprogramme.´

It is basic & universally adopted tool & strategy for identifying special groups of consumers & introducing specialty in theproducts to suit these special groups.



Market SegmentationMarket Segmentation

Market

MarketSegment

MarketSegmentation

People or organizations withneeds or wants and the ability and

willingness to buy

A subgroup of people or organizations sharing one or morecharacteristics that cause them to

have similar product needs.

The process of dividing a marketinto meaningful, relatively similar,identifiable segments or groups.



What is a Market?What is a Market?

PEOPLEPEOPLE

BUT - not just ANYANY people, they have to have

Willingness to buy

Purchasing power (money)

Authority to buy



The Concept of Market SegmentationThe Concept of Market Segmentation



Requirement of Effective Segmentation

Determine whether the market isheterogeneous.

Must be some logical basis to identify &

divide the population.

Comparison of estimated sales potential,

costs & profits of each segments can be

estimated.

Segment must have enough profitpotential.

It must be possible to reach the target

segment effectively.



How Segmentation Helps«««

Used to uncover needs & wants

Used to guide in redesigning, repositioning or targeting

Help in identifying the appropriate promotional media.

Evaluation of Marketing Programmes

Creating the competition effectively

Helps in preparing marketing Budget

Use of segmentation in marketing strategies

Uses of segmentation in marketing opportunities

Decision makers can define objectives and allocate resources.



Criteria for SegmentationCriteria for Segmentation

SubstantialitySubstantiality

IdentifiabilityIdentifiabilityMeasurabilityMeasurability

AccessibilityAccessibility

ResponsivenessResponsiveness

Segments are large or profitable

enough to serve.

Size, purchasing power, profiles of segments can be measured.

Segments can be effectivelyreached and served. with

marketing mix.Effective programs can be designed

to attract and serve the segments



Segmentation StrategiesSegmentation Strategies

Mass MarketingMass Marketing ex. Tata Salt,ex. Tata Salt, Shakti Shakti

Bhog Bhog aataaata

Concentrated MarketingConcentrated Marketing ex. Rollsex. RollsRoyce, designer jewellery Royce, designer jewellery

Differentiated MarketingDifferentiated Marketing ex. Diet ex. Diet

coke, Shampoos for dry hair, normal tocoke, Shampoos for dry hair, normal to

oily hair. Nokia & consumer durableoily hair. Nokia & consumer durable

goods.goods.



Segmentation BasesSegmentation Bases

Characteristics of

individuals, groups,or organizations used

to divide a total market

into segments.

Variables



Bases Of SegmentationBases Of Segmentation

Hybrid SegmentationBenefits Sought

Psychographics

Demographics

Geographic Sociocultural

Use Situation

Use-Related

Psychological



Geographic Segmentation

Segmenting markets by region of the country or world, market size, market density, or climate.

Region of the country or worldRegion of the country or world

(Southwest, Mountain state,(Southwest, Mountain state, Alska Alska))City sizeCity size(M(Metropolitanetropolitan, Small cities, Towns ), Small cities, Towns )

Market densityMarket density(Urban, Suburban, rural)(Urban, Suburban, rural)

ClimateClimate

(Temperate, Hot, Humid, Rainy)(Temperate, Hot, Humid, Rainy)



Benefits of Regional SegmentationBenefits of Regional Segmentation

New ways to generate sales in sluggish andNew ways to generate sales in sluggish and

competitive marketscompetitive marketsScanner data allow assessment of bestScanner data allow assessment of best

selling brands in regionselling brands in region

Regional brands appeal to local preferencesRegional brands appeal to local preferencesReact more quickly to competitionReact more quickly to competition

Ex.

Bru Coffee preffered in South India

Lipton Tea has market in North India Boroline, Colgate, Everyday, Dettol, enjoy premium position in Eastern India

Dalda is as a strong brand in rural India

Health conscious people of urban India would prefer Saffola or Sunflower.

Hero Honda quality assurance for rural locations



Demographics Segmentation

Age Age

age is another way to divide the

market into segments since so many products are based upon

³time of life´

(Under 12, 12(Under 12, 12--17, 1817, 18--34, 3534, 35--49, 5049, 50--64)64)

Ex.Ex.

diapers for babies

toys for children- Leo toys,Leo toys, FunskoolFunskool

entertainment for ³over 19´

Cartoon network

Jhnadu Kesari jeewan



Gender Gender

gender is an obvious way to divide the market into segments

since so many products are gender-specific. Male & Female. clothing

medical products

sports products/services

entertainment

Ex. Fair & Lovely, Nivea for men, Shaving creams



Marital StatusMarital Status

Single, married, divorced, living together, widowed,Single, married, divorced, living together, widowed,dual income.dual income.

Bachelor spend on entertainment, clothingBachelor spend on entertainment, clothing

Married on investment, household appliancesMarried on investment, household appliancesEgEg.. TanishqTanishq, small microwaves, two, small microwaves, two--cup coffeecup coffee

maker.maker.



OccupatiOccupati --

. ar r . ar r

usi ss classBusi ss class

Pr f ssi alsPr f ssi als

Blue collar sBlue collar s

White collar sWhite collar s

Social ClassSocial Class--

..Upward class

Upward classBackward classBackward class

Middle ClassMiddle Class

High ClassHigh Class

Lower classes.Lower classes.



Psychographics Segmentation

³The use of psychological attributes, lifestyles and

attitudes in determining the behavioral profiles of differentcustomers´

Psychographic profiles on a target market segment are

obtained by doing a lot of questionnaires and surveys to

ask people if they agree/disagree with certain statementsmade about particular activities, interests or opinions

AIO - activities, interests, and opinions

1. Passive / Uncertain

2. Mature

3. Home Economists

4. Active/Convenience

5. Modern Shoppers

6. Traditional Home/Family Oriented



How time is spentHow time is spent

Importance of thingsImportance of things

around themaround themBeliefsBeliefs

SocioeconomicSocioeconomic

characteristicscharacteristics

Lifestyle SegmentationLifestyle Segmentation



E xamples of Life-style Orientation



Needs-motivation - Shelter, safety, security,

affection, self-worth

Personality - Extroverts, novelty

seekers, aggressive.

Perception - Low risk, moderate ±risk,high-risk

Attitudes - Positive attitude,

negative attitude

Psychological Segmentation

Enjoy car driving prefer elegant sports cars

Likes car but skeptical about advertising claims

Don¶t like driving want safety features

View cars as necessary evil



E mphasis on power need

Symbol of success & achievement



Cultures - American, French, Italian, Chinese

Religion - Catholic, Jewish, Moslem e.t.c.

Subculture- Asian, Hispanic, Caucasians

Social-Class- Lower, Middle, Upper.

Family Life-cycle ± Bachelors, Young married, full

nesters.

Sociocultural Segmentation



Family Life Cycle StagesFamily Life Cycle Stages

1. Young Single

2. Young Married with no Children (DINKS)3. Young - married with children

- divorced without children

- divorced with children

4. Middle Aged

a. married without childrenb. divorced without children

c. married with children

d. divorced with children

e. married without dependent children

f. divorced without dependent children

5. Older

(i) older married (ii) older unmarried (divorced, widowed)

6. Other- SSWDs

single separated widowed / divorced



Benefits Segmentation

The process of grouping customers into market segments

according to the benefits they seek from the product.

Conveneience, Social acceptance, longlasting, economy

People buy something because it causes a benefit

Many marketers now consider benefit segmentation one of themost useful methods of classifying markets´

ie. atches

ie. Diet coke - less sugar, lose weight

ie. Colgate Total ± decay prevention, Extra white toothpaste,

better smile

ie. Aquafresh, Promise.



Benefit SegmentationBenefit Segmentation

of the Snackof the Snack--Food MarketFood Market



Use Situation

Time - Leisure work, rush, morning, night.

Objective - Personal, gift, snack, fun, achievement.

Location - Home, work, friends, members, friend¶s

home.

Person - Self, family members, friends, peer, boss

Ex. Archies card

Hallmark

Titan WatchesCelebration



Use-Related

Usage rate - Heavy users, medium users,

light users, non users Ex. Cigrates, Beverages

Awareness - Unaware, aware, interested,

Status enthusiastic

Brand - None, some, strong

Loyalty

Ex. Videocon, P&G

Dividing a market by the amount of product bought or consumed .



Hybrid Segmentation

oo Psychographic Psychographic--Demographic Demographic ProfilesProfiles--

Useful in creating consumer profile, it revelinformation for segmenting mass market, decision

for type of promotional appeals & media.

oo GeodemographicsGeodemographics--

Based Based onon premise premise that that people people whowho livelive closeclose toto oneone

another another areare likely likely toto similar similar ecoeco.. status,status, interest,interest,

taste,taste, preferences, preferences, lifestylelifestyle..

oo SRI SRI VALSVALS-- (Values(Values && LifeLife stylesstyles ) )

ThisThis segmented segmented consumer consumer according according toto their their valuesvalues

&& lifelife stylesstyles inin USAUSA..



V ALS 2V ALS 2

Principle Oriented Action Oriented

Achievers

Actualizers

Strugglers

Strivers

Fulfilleds

Believers

Experiencers

Makers

Abundant Resources

Minimal Resources

Status Oriented



V ALS has 2 dimension:V ALS has 2 dimension:

11.. Self Self--orientationorientation-- goalsgoals ,, behavior,behavior, patternpattern of of attitude,attitude, activities,activities, helphelp individualindividual toto reinforce,reinforce,

sustainsustain or or modifymodify self self imageimage..33 basicbasic self self

orientationorientation::

a)a) PrinciplePrinciple- -orientationorientation- - choiceschoices areare guidedguided byby

beliefs,beliefs, principle,principle, notnot byby feeling,feeling, desire,desire, eventsevents..

b)b) StatusStatus- -orientationorientation- - influencedinfluenced byby action,action, approvalapproval

&& opinionsopinions of of othersothers..c)c) Action Action- -orientationorientation- - desiredesire physicalphysical && socialsocial

activity,activity, varietyvariety && riskrisk takingtaking



V ALS Consumer Segment:V ALS Consumer Segment:

ActualisersActualisers

Resources: highestResources: highest

Established leaders in businessEstablished leaders in business

Active with high self esteem Active with high self esteem

Leading edge of changeLeading edge of change Guided by principles or byGuided by principles or by

desires, fond of reading, not fonddesires, fond of reading, not fond

of T.V of T.V

Finer things in lifeFiner things in life




FulfilledFulfilled

Resources: highResources: high Mature, responsibleMature, responsible

WellWell--educated professionalseducated professionals

WellWell--informedinformed Rational decision makersRational decision makers

Open to new ideas and socialOpen to new ideas and social

changechange

Like home & familyLike home & family

Open mindedOpen minded

Purchase products for durability,Purchase products for durability,

functionality .functionality .



VALS onsumer Segment:VALS onsumer Segment:

Believer Believer

Resour ces: lowResour ces: low Lar gest segmentLar gest segment

onser ati e, pr edictableConser ati e, pr edictable

Modest incomesModest incomes Li es center ed on f amil ,Li es center ed on f amil ,

r eligion communit , nationr eligion communit , nation

Fond of watching .V, little Fond of watching .V, little

r eading.r eading.



V ALS Consumer Segment:V ALS Consumer Segment:AchieversAchievers

Resources: highResources: high Successful, workSuccessful, work--orientedoriented

Satisfaction from homes andSatisfaction from homes andfamiliesfamilies

Conservative, respect statusConservative, respect statusquoquo

Favor established productsFavor established productsthat show off their successthat show off their success

Choices based on desire toChoices based on desire toenhance position.enhance position.




StriversStrivers

Resources: lowResources: low

Depend on others, blue collar Depend on others, blue collar

workersworkers

Believe money representBelieve money representsuccesssuccess

Style is importantStyle is important

Read less, prefer to watch T.V

Read less, prefer to watch T.V

Easily boredEasily bored




ExperiencersExperiencers

Resources: highResources: high Youngest segmentYoungest segment

High energyHigh energy²²physical andphysical and

social activitiessocial activities

Spend heavily on clothing, fastSpend heavily on clothing, fast

food, and music, sportsfood, and music, sports

Like new products andLike new products and

servicesservices Seek excitement, variety inSeek excitement, variety in

lives to take risk.lives to take risk.




MakersMakers

Resources: lowResources: low

Traditional family valuesTraditional family values

Practical, self Practical, self--sufficientsufficient

Focus on family, work, physicalFocus on family, work, physicalrecreationrecreation

Little interest in broader worldLittle interest in broader world

Suspicious of new ideas,Suspicious of new ideas,respect authority.respect authority.




SurvivorsSurvivors Resources: lowestResources: lowest

Motivation: doesn¶t fit with anyMotivation: doesn¶t fit with any

of the three, resources too lowof the three, resources too low Oldest segmentOldest segment

Tend to be brand loyalTend to be brand loyal



Segmentation for Industrial Markets



The competitive advantage of a firm lies in being everything to a

select few. To be everything to everyone is sure recipe for a

strategic failure.

CB 3 Segmenting)

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