SEGMENTING and TARGETING

DIVIDE AND RULE

Slide 9-25Dilbert Comic StripIs segmenting markets agood marketing thing?

HLL expands Pears soap to kids segmentTitan Watches: Time to tap the potential of different segmentsTitan Edge the worlds slimmest watch; Nebula in solid gold and precious stones; the Gold and Steel collection; Raga 9 to 5 for the woman achiever; Flip Indias first and only reversible watch with two movements and dial faces; and Fastrack in the sporty casual category.Taking women on a ride(Bajaj Wave DTS-i)

Himalaya Herbal Healthcare serves a growing niche market(FMHG)

What segments are being targeted?

Nokia cell phones Company has divided its customers into different segments based on their involvement levels ,product usage, income level and lifestyleProduct offerings under four broad heads: Live, Connect, Achieve and Explore. "While the 'Connect' category phones would appeal to someone whose requirements are very simple and basic, the N-series multimedia phones would fall under the 'Explore' category,In the Indian context, the 1,100 range of phones would fit under the 'Connect' category where the emphasis is on the phones being simple and user friendly. Similarly, the Nokia E-series instruments have been classified for the 'Achieve' users for whom the phone is far more than just something you use to make calls.

Soft drink preferencessome segmentation variablesPreferred taste: Cola, lime, no taste, natural juice, ice teaCalorie/taste tradeoff: taste more important, some importance of both, will sacrifice taste for low caloriesUsage occasion: Multi-pack for home; single can/bottle; fountain drinkPrice sensitivity/brand loyalty: Willingness to pay more for brand

Some combined segments:1.Price sensitive, non-brand loyal ,cola-taste, full-flavor segment, multi-pack2.Price insensitive, cola taste, brand loyal, low calorie, multi-pack3.Price insensitive, natural juice, taste sensitive, single serving

Market SegmentationDivision of the total market into smaller, relatively homogeneous groups

No single marketing mix can satisfy everyone. Therefore, separate marketing mixes should be used for different market segments.

Steps in Market Segmentation, Targeting, and Positioning

Step 1. Market SegmentationBases for Segmenting Consumer Markets

Geographic

DemographicAge, gender, family size and life cycle, or income PsychographicSocial class, lifestyle, or personality

BehavioralOccasions, benefits, uses, or responsesNations, states, regions or cities

Market SegmentationThis CTR relates to Table 7-1 on p. 203 and the material on pp. 202-209.Bases for Segmenting Consumer MarketsGeographic Segmentation. Geographic segmentation divides the market into different geographic units based upon physical proximity. While location determines how geographic segmentation is done, it is also true that many consumer products have attribute differences associated with regional tastes.Demographic Segmentation. Dividing the market into groups based upon variables such as sex, age, family size, family life cycle, income, education, occupation, religious affiliation, or nationality are all demographic segmentations. Consumer needs often vary with demographic variables. Demographic information is also relatively easy to measure. Age and life-cycle stage, sex, and income are three major demographic bases for segmentation.Psychographic Segmentation. Psychographic Segmentation divides the market into groups based on social class, life style, or personality characteristics. Psychographic segmentation cuts across demographic differences. Social class preferences reflect values and preferences that remain constant even as income increases. Life style describes helps group markets around ideas such as health, youthful, or environmentally conscious. Personalities may transcend other differences in markets and may be transferred to products themselves.Behavioral Segmentation. Behavioral Segmentation divides markets into groups based on their knowledge, attitudes, uses, or responses to a product. Types of of behavioral segmentation are based upon occasions, benefits sought, user status, usage rates, loyalty, buyer readiness stage, and attitude.

Step 1. Market SegmentationLevels of Market SegmentationMass MarketingSame product to all consumers (no segmentation)Segment MarketingDifferent products to one or more segments(some segmentation)MicromarketingProducts to suit the tastes of individuals or locations (complete segmentation)Niche MarketingDifferent products to subgroups within segments( more segmentation)

Stages in Market OrientationThis CTR relates to the discussion on pp. 197-202.Stages in Market OrientationSellers traditionally have passed through three stages of orientation or philosophy of identifying markets that lead to greater use of segmentation, targeting, and positioning strategies:Mass Marketing. In mass marketing, the seller produces, mass distributes, and mass promotes one product to all buyers. The argument for mass marketing is that it [should] lead to the lowest costs (through economies of scale) and prices and create the largest potential market. Segment Marketing. Here the seller identifies market segments, selects one or more of them, and develops products and marketing mixes tailored to meeting the needs of those selected segments. As more competitors adopt this practice, fragmentation of the market leads to Niche Marketing. Here the seller focuses on subgroups within market segments who may seek a special combination of benefits.Micromarketing. This is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

Response-based segmentation:Putting the horse before the cart

Urban India is getting saturated. In the cities, everyone who can afford a television has one. If you want to maintain high growth, you have to penetrate into rural India.- K. Ramachandran, Chief Executive Philips Electronics India

Step 1. Market SegmentationRequirements for Effective Segmentation

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

Segments must be effectivelyreached and served.

Segments must be large or profitable enough to serve.

MeasurableAccessibleSubstantialDifferential

Actionable

Segments must respond differently to different marketing mix elements & actions.

Must be able to attract and serve the segments.

Effective SegmentationThis CTR relates to the material on pp. 215.Requirements for Effective SegmentationMeasurability . This refers to the degree to which the size and purchasing power of the segments can be measured. The accuracy and availability of measures of market potential are important.Accessibility. This refers to the degree to which a market segment can be reached and served. Identifying a segment is useless if the marketer has limited access to the customer.Substantiality. This refers to the degree to which the segments are large or profitable enough to service.Actionability. This is the degree to which an effective marketing program can be designed for attracting and serving segments. Company resource limitations figure prominently in actionability issues.

Step 2. Market TargetingEvaluating Market SegmentsSegment Size and GrowthAnalyze sales, growth rates and expected profitability.

Segment Structural AttractivenessConsider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and ResourcesCompany skills & resources relative to the segment(s).Look for Competitive Advantages.

Evaluating Market SegmentsSegment Size and Growth. The company must collect and analyze data on current dollar sales, projected sales-growth, and expected profit margins for each market segment.Segment Structural Attractiveness. Long run attractiveness includes an assessment of current and potential competitors, the threats of substitutes, and the power of buyers and suppliers.Company Objectives and Resources. The companys resources and core business strengths should also fit well with the market segment opportunities.Evaluating Market SegmentsThis CTR relates to the material on pp. 215-216.

Five patterns for target market selection

Slide 9-32FIGURE 9-5 Selecting a target market for your fast-food restaurant next to an urban university (target market is shaded)

Slide 9-36FIGURE 9-6 Advertising actions to reach specific student segments

FIGURE 9-A Market-product grid showing the size of markets for pillows for three different segments of sleepers

TaskWhat segments are being targeted?ReebokMc Donalds

You can please some people all of the timeand all people some of the time, but youcannot please all people all of the time.

Market SegmentationThis CTR relates to Table 7-1 on p. 203 and the material on pp. 202-209.Bases for Segmenting Consumer MarketsGeographic Segmentation. Geographic segmentation divides the market into different geographic units based upon physical proximity. While location determines how geographic segmentation is done, it is also true that many consumer products have attribute differences associated with regional tastes.Demographic Segmentation. Dividing the market into groups based upon variables such as sex, age, family size, family life cycle, income, education, occupation, religious affiliation, or nationality are all demographic segmentations. Consumer needs often vary with demographic variables. Demographic information is also relatively easy to measure. Age and life-cycle stage, sex, and income are three major demographic bases for segmentation.Psychographic Segmentation. Psychographic Segmentation divides the market into groups based on social class, life style, or personality characteristics. Psychographic segmentation cuts across demographic differences. Social class preferences reflect values and preferences that remain constant even as income increases. Life style describes helps group markets around ideas such as health, youthful, or environmentally conscious. Personalities may transcend other differences in markets and may be transferred to products themselves.Behavioral Segmentation. Behavioral Segmentation divides markets into groups based on their knowledge, attitudes, uses, or responses to a product. Types of of behavioral segmentation are based upon occasions, benefits sought, user status, usage rates, loyalty, buyer readiness stage, and attitude.Stages in Market OrientationThis CTR relates to the discussion on pp. 197-202.Stages in Market OrientationSellers traditionally have passed through three stages of orientation or philosophy of identifying markets that lead to greater use of segmentation, targeting, and positioning strategies:Mass Marketing. In mass marketing, the seller produces, mass distributes, and mass promotes one product to all buyers. The argument for mass marketing is that it [should] lead to the lowest costs (through economies of scale) and prices and create the largest potential market. Segment Marketing. Here the seller identifies market segments, selects one or more of them, and develops products and marketing mixes tailored to meeting the needs of those selected segments. As more competitors adopt this practice, fragmentation of the market leads to Niche Marketing. Here the seller focuses on subgroups within market segments who may seek a special combination of benefits.Micromarketing. This is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.Effective SegmentationThis CTR relates to the material on pp. 215.Requirements for Effective SegmentationMeasurability . This refers to the degree to which the size and purchasing power of the segments can be measured. The accuracy and availability of measures of market potential are important.Accessibility. This refers to the degree to which a market segment can be reached and served. Identifying a segment is useless if the marketer has limited access to the customer.Substantiality. This refers to the degree to which the segments are large or profitable enough to service.Actionability. This is the degree to which an effective marketing program can be designed for attracting and serving segments. Company resource limitations figure prominently in actionability issues.Evaluating Market SegmentsSegment Size and Growth. The company must collect and analyze data on current dollar sales, projected sales-growth, and expected profit margins for each market segment.Segment Structural Attractiveness. Long run attractiveness includes an assessment of current and potential competitors, the threats of substitutes, and the power of buyers and suppliers.Company Objectives and Resources. The companys resources and core business strengths should also fit well with the market segment opportunities.Evaluating Market SegmentsThis CTR relates to the material on pp. 215-216.