Week 3

Identify Market Segments

Lecture Outline

Bases for Segmenting Consumer Markets.

Different Levels of Market Segmentation.
Bases for Segmenting Business Markets
Target Marketing
Differentiation and Positioning of Market Offerings

Learning Outcomes

To be able to understand the different levels of Market Segmentation.

To identify the requirements for Effective Segmentation.
To understand how can a company choose the most attractive target markets

To understand the process of dividing market into segments.

Effective Targeting Requires

Identify and profile distinct groups of buyers who differ in their needs and
preferences
Select one or more market segments to enter
Establish and communicate the distinctive benefits of the market offering

Segmentation is a means to target marketing. Target marketing is the

choice of specific segments to serve. It is up to the firm to evaluate the
segments and decide which one to serve. It should examine two broad issues:

1.

Relative attractiveness of the market segments

2.

Companys capability to compete in various segments

Four levels of Micromarketing

Segments

Niches

Local areas

Individuals

Market Segment?
A market segment consists of a group of customers who share a similar set of
needs and wants. Or
Segmentation is the process of dividing the market of a product or service in
smaller groups of customers.
The customers of one group should:
Buy the product for the same purpose
Use the product in the same way
Buy the product in the same way

But the customers in one segment should be different from customers of

any other segment in one or more of the above parameters

Examples:
Sportspersons use Nike shoes to enhance their performance
whereas the same shoes are used by us as casual shoes
People drive cars in different manners. Some are rough
drivers while others drive it easy on the road
The grocery are bought either from the neighbourhood stores or

at upscale stores at malls

Customer Value Proposition

Segmentation refers to the process of identifying clusters of customers who

desire the same value proposition

Customer Value proposition is a unique mix of product and services attributes,
customer relations, and corporate image that a company offers

Customer value Proposition defines how the organization will differentiate

itself from competitors to attract, retain and deepen relationships with target
customers

An effective process of segmentation should result in a different sets of

internal processes for each segment, because only a unique set of internal
processes will create a unique value proposition for the customer

Flexible Marketing Offerings

Naked solution:

Discretionary

Product and service

options: Some

elements that all

segment members

segment members

value options but not

value

all

Preference Segments

Homogeneous preferences exist when consumers want the

same things
Diffused preferences exist when consumers want very

different things
Clustered preferences reveal natural segments from groups

with shared preferences

The Himalaya Drug

Company serves a
growing niche market

by focusing on
ayurvedic medicines
and health supplements

The Long Tail

Chris Anderson explains the long tail equation:

The lower the cost of distribution, the more you can

economically offer without having to predict demand;

The more you can offer, the greater the chance that you
will be able to tap latent demand for minority tastes;
and
Aggregate enough minority taste, and you may find a
new market.

Segmenting Consumer Markets

Geographic
Demographic
Psychographic

Behavioral

Geographic Segmentation

International Markets
National Markets

Regional Markets
Sub Regional Markets

Local Markets

Demographic Segmentation

Age and Life Cycle

Life Stage
Gender
Income
Generation
Social Class

Bank Al Habib
targets
senior citizens

Dove Targets Women

Psychographic Segmentation
Beliefs & Values
Perception

Attitudes
Lifestyle
Personality

Behavioral Segmentation

Decision Roles

Behavioral Variables

Occasions
Initiator

Benefits

Influencer

User Status

Decider

Usage Rate

Buyer
User

Buyer-Readiness
Loyalty Status
Attitude

The Brand Funnel Illustrates Variations in the

Buyer-Readiness Stage

Aware
Ever tried

Recent trial
Occasional user

Regular user
Most often used

Loyalty Status

Hard-core

Split loyals
Shifting loyals
Switchers

Behavioral Segmentation Breakdown

Segmenting for Business Markets

Demographic
Operating Variable

Purchasing Approaches
Situational Factors
Personal
Characteristics

Steps in Segmentation Process

Needs-based segmentation
Segment identification
Segment attractiveness

Marketing-Mix
Strategy

Segment profitability

Segment positioning
Segment acid test

Patterns of Target Market Selection

Cont

Cont..

Pepsi used Mega Marketing in India

Positioning
Positioning is the perception or the image that customers have of the company
and its products

This Perception is the stimulus of the customers attitude and behaviour towards
companys products.

Customers positive perception will drive the business and negative will sink it

Elements of Positioning

Target Market
Undifferentiated Targeting
Differentiated Targeting or Multi Segment Targeting

Concentrated Targeting

Positioning , Differentiation & Marketing

Mix
Product Differentiation
Promotional Differentiation
Distribution Differentiation
Price Differentiation
Repositioning
It involves changing target markets or the differential advantage or
both.

Four generic Repositioning Strategies

Same Product and Target Market, change in image of product
Product Repositioning
Intangible Repositioning
Tangible Repositioning

What u think Now ?

Is mass marketing dead?

Take a position:
1. Mass marketing is dead.

or

2. Mass marketing is still a viable way to build a profitable brand.