By Agung Utama

A company cannot serve all customers in a broad market

The customers are too numerous and diverse in their buying requirements

A company need to identify the market segments it can serve effectively

Mass marketing The starting point for discussing

segmentation is mass marketingMass production, mass distribution

and mass promotions of one product for all buyers

Pro : creates the largest potential market, which leads to lowest cost, lower price or higher margins.

Contra : The proliferations of advertising media and distribution channel is making it difficult and increasingly expensive to reach a mass audience.

Micro marketing1) Segment marketing

Segment market : consists of a group of customers who share a similar set of wants.

Segment differ from sector The marketer’s task : Identify the segment

and decide which one (s) to target. The benefits :

Can create a more fine tuned product or service

Can price it appropriately fot the target segment

Can more easily select the best distribution and communication channels

Have a clear picture of its competitors

2. Niche marketing A more narrowly defined group seeking a

distinctive mix of benefits. Identified by dividing segments into sub

segments Example : heavy smokers includes two niches :

trying to stop and who do not care. Characterization of attractive niche

1) Have a distinctive of needs2) Pay a premium3) Has size, profit and growth potential4) Gains certain economies through

specialization.

3. Local Marketing Target marketing is leading

to marketing programs tailored to the needs and wants of local customer groups.

Citibank provide different mixes of banking services in its branches, depending on neighborhood or demographics.

Pro: see national advertising as wasteful because it fails to local needs

Contra : It drives up manufacturing and marketing cost by reducing economics of scale.

4. Individual customer marketing Ultimately every individual has a unique set of

wants and needs. I the past centuries, producers customized their

offering to each customer . The tailor fitted a suit and a cobbler made

shoes for each individual. Mass customization : ability of a company to

prepare a mass basis individually designed products, services, program, and communications to meet each customers requirements.

1. Homogenous preferences• A market where all consumers

have roughly the same preferences.

• The market shows no natural segments. The existing brands would be similar and cluster around the middle of the market

2. Diffused preferences• A market where consumer

preferences may be scattered throughout the space, indicating that customers vary greatly in their preferences

• The first brand to enter the market is likely to position in the centre to appeal to the most people. A second competitor could locate nect to the first customer group tnd and fight for market share or it could locate in a corner to attract a

2. Diffused preferences• A market where

consumer preferences may be scattered throughout the space, indicating that customers vary greatly in their preferences

• The first brand to enter the market is likely to position in the centre to appeal to the most people. A second competitor could locate next to the first brand and fight for market share or it could locate in a corner to attract a customer group that was not satisfied with the centre brand

3. Clustered preferenceThe market might reveal distinct preferences clusters, called natural market segments. The first firm in this market has three options. It might position in the centre, hoping to appeal to all groups. It might position in the largest market segment, or it might develop several brands, each positioned in a different segment.

1. Needs Based Segmentationgroup customers in to segments based on similar needs and benefits sought by customer.

2. Segment IdentificationFor each needs based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable.

3. Segment AttractivenessDetermine the overall attractiveness of each segment using criteria such as: market growth, competitive intensity and market access.

4. Segment Profitability5. Segment Potitioning

for each segment, create a value proposition and product price positioning strategy based on that segment’s unique customer needs and characteristics.

6. Segment Acid TestCreate a test attractiveness of each segment’s positioning strategy

7. Marketing Mix strategy

MeasurableThe size, purchasing power and characterisric of the segments can be measured.

SubstantialThe segments are large and profitable enough.

AccesibleThe segments can be effectively reached and served.

Differentiableconceptually distiguishable and respon diffrently to different marketing mix elements and programs.

ActionableEffective programs can be formulated for attracting and serving the segments

Basis for segmenting consumer markets

geographic segmentationDividing the market into different geographical unit such as nations, state, regions, counties, cities, or neighborhood

Demographic segmentationThe market is divided into groups on the basis of variable such as : age, famili size, famili life cycle, gender, income, occupation, education, religion, generation, nationality, social class, etc.

Pcycographic SegmentationBuyers divided into different groups on

the basis of lifestyle, or personality or values.

Behavioral SegmentationBuyers are divided into groups on the basis of their knowledge, attitude toward use of or response to a product.Other behahioral variables : ocasions, user status, usage rate, loyalty status, buyer readiness, and attitude.

Once the firm has identified its market segment opportunities, it has to decide how many and which ones to target.

Market targeting related to select one or more market segments to enter.

Five patterns of target market selection:1. Single-segment concentration /concentrated

marketing.The firms make a single product that it sells to a single segment. The company gains a strong knowledge of the segment’s needs and strong market pressence.Example: Volks Wagen concentrates on the small car market and Porsche on the sport car market.

Single segment concentrationM1 M2

M3

P1

P1

P1

2. Selective Specialization/Multi Segment Strategy

The firm selects a number of segments, each objectively attractive and appropriate.

This strategy has the advantage of diversifying the firm’s risk

There may be little or no synergy among the segments, but each promises to be a money maker

Selective SpecializationM1 M2

M3

P1

P1

P1

3. Product SpecializationThe firms make a certain product that it sells to several segments.The advantages of the strategy is a strong reputation in the specific product area.

Product SpecializationM1 M2

M3

P1

P1

P1

4. Market Specialization The firm concentrates on serving

many needs of particular customer group.The advantage of this strategy is gaining a strong reputation in serving this customer group and became a channel for additional products the customer groups can use.

Market SpecializationM1 M2

M3

P1

P1

P1

5. Full Market Coverage The firms attempts to serve all customer

groups with all the products they might need. Only very large firms such IBM, Coca Cola, General Motors, Toyota can undertake a full market coverage strategy.

Large firm can cover a whole market in two broad ways: undifferentiated marketing and differentiated marketing.

In undifferentiated marketing, the firms ignores segment differences and goes after the whole market with one offer.

In differentiated marketing, the firms operates in several market segments and design different products for each segment.

Full Market CoverageM1 M2

M3

P1

P1

P1