the aim of market segmentation has always been to create a unique value offer to as many customers...

8/3/2019 The Aim of Market Segmentation Has Always Been to Create a Unique Value Offer to as Many Customers as Possible

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THE AIM OF MARKET SEGMENTATION HAS ALWAYS BEEN TO CREATE A UNIQUE VALUE OFFE

TO AS MANY CUSTOMERS AS POSSIBLE. ANALYZE THIS STATEMENT WITH A CONSUMER NO

DURABLE EXAMPLE ACROSS DIFFERENT COUNTRIES

SubmittedB

Mr. Attada Ekalavya - 7


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Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 2

INTERNATIONAL MARKET SEGMENTATION

Market segmentation is the process in marketing of dividing a market into distinct subsets (segments)

that behave in the same way or have similar needs. Because each segment is fairly homogeneous in

their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they

are likely to have similar feelings and ideas about a marketing mix comprised of a given product or

service, sold at a given price, distributed in a certain way, and promoted in a certain way. Broadly,

markets can be divided according to a number of general criteria, such as by industry or public versus

private sector. Small segments are often termed niche markets or specialty markets. However, all

segments fall into either consumer or industrial markets. Although it has similar objectives and it

overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite

different. The process of segmentation is distinct from targeting (choosing which segments to address)

and positioning (designing an appropriate marketing mix for each segment). The overall intent is to

identify groups of similar customers and potential customers; to prioritize the groups to address; to

understand their behaviour; and to respond with appropriate marketing strategies that satisfy the

different preferences of each chosen segment. Improved segmentation can lead to significantly

improved marketing effectiveness. With the right segmentation, the right lists can be purchased,

advertising results can be improved and customer satisfaction can be increased.

BASIS FOR SEGMENTING CONSUMER MARKETS:

Geographic

Nations, regions, states, counties, cities, neighborhoods, climate, population density etc.

Demographic

Age, gender, family size, family life cycle, income, occupation, education, religion, race,

nationality etc.

Psychographic

Social class, lifestyle, personality etc.


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Behavioral

Purchase occasion, benefits sought, user status, user rate, loyalty status, readiness status,

attitude toward product etc.

BASIS FOR SEGMENTING BUSINESS MARKETS:

Demographics

Industry, company size, location

Operating variables

Technology, user/non-user status, customer capability

Purchasing approaches

purchasing function organization

power structure

nature of existing relationships

general purchase policies

purchasing criteria

Situational factors

Urgency, specific application, size of order

Personal characteristics

Buyer-seller similarity, attitudes towards risk, loyalty


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WHY SEGMENTATION?

According to the Peter Francese a consultant to Ogilvy & Mather an advertising megalith, & the author

of the research report 2010 America

There is no more Average American." Fifty years ago, the concept of John Doe, an average American

in a relatively even society where vast numbers of people had similar consumer needs, was real. A

societal uniformity existed that has not been equalled since. The 2010 census results will put a nail in

that coffin.

America, or for that matter most of the developed countries, are multicultural nations. In the US no race

or ethnicity comprises a majority of the population anymore. No segment forms a majority in their 10

largest cities. Also family life has diversified. Twenty five years earlier, two-thirds of the population

consisted of married couples. However same is not the case today, as more & more no. of people

prefers living alone.

All this has resulted in a diverse population which makes it almost impossible to sell a product by mass

marketing .The right market for your product needs to be selected before making any other move.

Choosing the right markets is one of the most important strategic decisions you can make for your

business. Resources spent on choosing the wrong markets are resources not spent on choosing the right

markets.

Grouping customers into market segments is standard business practice. The more a market suffers

from over supply and under demand - the new status quo in a relentlessly globalizing economy for both

hi tech and low tech goods and services the more vital it becomes to identify, and perhaps help create

attractive sub markets and provide tailor value propositions for them. That is what apple has done with

the iPod and iTunes under Steve Jobs leadership. The iPod and iTunes have not only boosted Apples

bottom line, and quite separately increased the sales of its Macintosh computers, but have also

accelerated the growth of the mp3 player market as a whole.

Segmentation is both a science and an art. It demands a high degree of insight into customers and

competitors. You cannot do it well using only methods based on simple demographics. How, for

example, would you segment the dog food market? You might start of, as some have done, on the basis

of type of dog old dogs versus small dogs, big dogs versus little dogs. But think how much greater


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insight you might gain from examining the relationship between owner and dog, and the emotional

relationship embodied in the owners choice of dog food: dog as grandchild ( indulgence), dog as child

(love), dog as best friend (health and nutrition) and dog as dog (cheap/ convenient fuel).

When we accept the fact that average consumers and average people dont exist, we can use market

and consumer segmentation to:

increase marketing effectiveness,

generate greater customer satisfaction,

create savings,

And to identify strategic opportunities and niches.

Even when a company can afford to target an entire market, it is more successful if products andcommunications are adapted to individual segments.

REQUIREMENTS OF MARKET SEGMENTS

In addition to having different needs, for segments to be practical they should be evaluated against the

following criteria:

Identifiable: the differentiating attributes of the segments must be measurable so that they can be

identified.

Accessible: the segments must be reachable through communication and distribution channels.

Substantial: the segments should be sufficiently large to justify the resources required to target

them.

Unique needs: to justify separate offerings, the segments must respond differently to the different

marketing mixes.

Durable: the segments should be relatively stable to minimize the cost of frequent changes.


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THE PROCESS OF SEGMENTATION

Steps in Segmentation Process

1. Identify the target market

The first and foremost step is to identify the target market. The marketers must be very

clear about who all should be included in a common segment. Make sure the individuals

have something in common. A male and a female cant be included in one segment as

they have different needs and expectations.

Burberry stocks separate merchandise for both men and women. The management is very

clear on the target market and has separate strategies for product promotion amongst both

the segments.

A Garnier mens deodorant would obviously not sell if the company uses a female model

to create awareness.

Segmentation helps the organizations decide on the marketing strategies and promotional

schemes.

IDENTIFY THE

TOTAL

MARKET

DETERMINE

THE

SEGMENTINGDIMENSIONS

PROFILE EACH

SEGMENT

ASSESS

SEGMENT

ATTRACTIVENESS

SELECT

TARGET

MARKET


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Maruti Suzuki has adopted a focused approach and wisely created segments within a

large market to promote their cars.

Lower Income Group - Maruti 800, Alto. ..

Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz. ..

High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara.

Suzuki Grand Vitara would obviously have no takers amongst the lower income group.

The target market for Rado, Omega or Tag Heuer is the premium segment as compared to

Maxima or a Sonata watch.

2.

Identify expectations of Target Audience

Once the target market is decided, it is essential to find out the needs of the target

audience. The product must meet the expectations of the individuals. The marketer must

interact with the target audience to know more about their interests and demands.

Kelloggs K special was launched specifically for the individuals who wanted to cut

down on their calorie intake.

Marketing professionals or individuals exposed to sun rays for a long duration need

something which would protect their skin from the harmful effects of sun rays. Keeping

this in mind, many organizations came with the concept of sunscreen lotions and creams

with a sun protection factor especially for men.

3. Create SubgroupsThe organizations should ensure their target market is well defined. Create subgroups

within groups for effective results.

Cosmetics for females now come in various categories.

Creams and Lotions for girls between 20-25 years would focus more on fairness.


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Creams and lotions for girls between 25 to 35 years promise to reduce the signs of

ageing.

4. Review the needs of the target audienceIt is essential for the marketer to review the needs and preferences of individuals

belonging to each segment and sub-segment. The consumers of a particular segment must

respond to similar fluctuations in the market and similar marketing strategies.

5. Name your market SegmentGive an appropriate name to each segment. It makes implementation of strategies easier.

A kids section can have various segments namely new born, infants, toddlers and so on.

6. Marketing StrategiesDevise relevant strategies to promote brands amongst each segment. Remember you cant

afford to have same strategies for all the segments. Make sure there is a connect between

the product and the target audience. Advertisements promoting female toiletries cant

afford to have a male model, else the purpose gets nullified.

A model promoting a sunscreen lotion has to be shown roaming or working in sun for the

desired impact.

7. Review the behaviorReview the behavior of the target audience frequently. It is not necessary individuals

would have the same requirement (demand) all through the year. Demands vary,

perceptions change and interests differ. A detailed study of the target audience is

essential.

8. Size of the Target MarketIt is essential to know the target market size. Collect necessary data for the same. It helps

in sales planning and forecasting.


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Benefits of Segmentation:

The Organisation gets to know its customers better.

Provides guidelines for resource allocation.

It helps focus the strategy of the organisation.

Limitations of the Segmentation:

Targeting multiple segments increases marketing costs.

Segmentation can lead to proliferation of products.

Narrowly segmenting a market can hamper the development of broad-brand equity.

FOCUS ON CUSTOMER NEEDS

Haagen-Dazs continuously researches its market because this is exactly what got them into the business

in the first place. Effective marketing is based on three key elements, the marketing philosophy, and

market segmentation and consumer behaviour. Haagen-Dazs has been noted to practise the consumer

driven philosophy whereby they rely on research to discover consumer preferences, desires and needs

before production actually begins. This philosophy stresses the need for marketing research to be

conducted in order to better understand where or who a market is and to develop a strategy targeted

toward that group. The core business they are in is production of ice-cream. This industry primarily

focuses on consumer tastes and preferences and only research can help identify these.

However, it is not enough that research is conducted only prior to production of a particular flavour.

They need to constantly research the movement of this flavour in the market and get feedback from

customers about this. Market research has given Haagen-Dazs many advantages, such as, *Unique

environmental insight, which they used to spot opportunities others overlooked - Reuben Mattus found


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a segment in the market he believed to be un-served, namely, the adult ice-cream lover segment. While

other companies focussed on enticing kids with ice cream, Mattus decided to tap the older, mature

segment that had the disposable income to 'indulge' them.

*Are proactive to competitor moves by following them closely - Haagen-Dazs quite readily met all of

competitors' Ben & Jerry's moves by continuously introducing new flavours focussing on their niche

while others lost focus and were mass marketing heir ice creams. This helps makes them fiercely

competitive constantly striving to defend their turf.

*Identify customer wants thus focussing energies on giving them exactly what they want - research

helped them realise that Japanese love tea and hence introduced the Green Tea flavour which was an

instant success in that market .

They are not the only ones undertaking market research. The UK Super Premium ice cream market had a

retail value of 56 million in the UK in February 2000. Ben & Jerry's accounted for fully 83 per cent of the

overall growth in the UK Super Premium market in 2000. Multiple grocers account for 70 per cent of all

Super Premium ice cream sold in the UK, and in September 2000 Ben & Jerry's secured parity with

Haagen-Dazs in terms of sales through this channel, with Ben & Jerry's securing a 52 per cent share of

the market as against 48 per cent for Haagen-Dazs . In the U.A.E. though, despite being of reasonably

higher price, the brand established itself quite comfortably as a 'must try' product among the elite and

middle-class. This is exactly what Haagen-Dazs had hoped to achieve when it first came here. The

management were counting on the expat population of the U.A.E. who were already familiar with the

brand to spread word of mouth about its high quality, unique flavours and prestige associated.

MARKET SEGMENTATION As simple as it looks; every little detail of the ice cream is meticulously

planned for the final consumer to buy the product. Of the money that goes into paying for the ice

cream, nearly 80% is returned into marketing costs for the company. The rest of the 20% represents the

actual production costs. Consumers are an integral part of the industry and the market research helps

identify the core market segments that Haagen-Dazs caters to.

Market segmentation is the process of identifying a specific set of characteristics that differentiate one

group of consumers from the rest. In respect to ice creams, although many people eat them, the market

can quite easily be segmented on bases of taste and price. Some individuals prefer high-quality ice

cream made with real sugar and cream because of its taste while others cannot tell the difference in


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quality and would buy primarily based on price and availability. Lower-priced competitors are into mass

marketing while premium priced ice creams makers have followed a niche strategy to target that one

single segment consisting of affluent upper-middle to upper class segment.

Haagen-Dazs uses a few main segmentation bases for dividing their market, namely, demographic,

socio-cultural and psychographic. Under demographic segmentation, they focus on the income bracket

of consumers. Their products are mainly aimed at the affluent with higher disposable income to spend

on frivolous luxuries like super-premium ice cream. Although they do not segregate flavours by gender

they do tend to highlight he romantic and sensuous image of ice-cream by featuring couples in all their

international adverts. They tend to link their ice creams directly to sex in order to highlight that the

indulgence and pleasure felt is similar in both cases and just as fulfilling for inner desires. This leverage

gives it extreme importance among the adult population as they can understand this feeling and hence

relate consumption of this product directly to this feeling.

The socio-cultural segmentation looks at various cultures and nationalities and their preferences.

Certain cultural groups tend to have similar needs especially when it comes to food, confectionery and

drinks. For this, Haagen-Dazs has taken into account various national tastes and preferences in their

innovative product line by introducing flavours like Cheesecake ice cream for the UK, Green Tea ice

cream for Japan, Belgian chocolate for those in East Europe, and so on.

Finally, probably the most important type of segmentation bases in this case is the psychographic

segmentation. To be attracted to eating super-premium ice cream, people need to be part of a

particular lifestyle segment. They should technically be among those that enjoy the luxury and

indulgence associated with the brand. Haagen-Dazs has been portrayed to be a reflection of pleasure

and for this reason, the brand creates an ambience behind its cafes too by ensuring that furniture is cosy

and in deep shades of browns, burgundy and red to add a feeling of cocooning and intimacy.

Using these segmentation means, Haagen-Dazs has narrowed down its business to cater to specifically

two main target markets, namely, *Affluent, pleasure seeking adults who are generally brand conscious,

innovators & trend followers *Health conscious, young adults who are interested in desserts but prefer

natural ingredients and low fat substitutes By identifying only two target segments and focussing on a

small but profitable segment of the market, Haagen-Dazs is practising a niche market strategy. They

have been fairly successful in identifying and catering to this segment and this can be determined by


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their growth from gourmet stores in New York City to its global presence now in over 54 countries.

Identification which segments is profitable to market to be not enough. Companies need to design a

marketing mix to cater to each of these segments. The next section discusses Haagen-Dazs current

marketing mix for the mentioned segments.

Segments Based on Consumer Predispositions

Markets can be segmented based on differences in consumers' wants, needs, and attitudes. We've

already examined in our health club study the value inherent in creating 'benefit segments' that

focus on different wants and needs held by consumers in each segment. Additional

predispositions also can lead to meaningful segmentation schemes. Markets can be segmented

based on how knowledgeable people are of a particular product category. Different promotional

programs may be required to communicate with those who know little about the product versus

those who don't.

Sometimes marketers may want to differentiate between customers who have experienced

specific types of problems with products or brands versus those who have not. It is possible that

customers who frequently encounter problems of specific types may have a common set of

characteristics that can suggest how the problem should be addressed.

Segmenting markets based on consumers' media viewing habits may reveal consistent

differences in the types of media consumers prefer (i.e. preferences for specific television shows,

radio stations, magazines, and newspapers) and how these differences vary with key customer

demographic and psychographic traits. This information then can be used to more effectively

target advertising and other communications to customer groups.

Steps in Segmentation Process

9. Identify the target marketThe first and foremost step is to identify the target market. The marketers must be very

clear about who all should be included in a common segment. Make sure the individuals


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have something in common. A male and a female cant be included in one segment as

they have different needs and expectations.

Burberry stocks separate merchandise for both men and women. The management is very

clear on the target market and has separate strategies for product promotion amongst both

the segments.

A Garnier mens deodorant would obviously not sell if the company uses a female model

to create awareness.

Segmentation helps the organizations decide on the marketing strategies and promotional

schemes.

Maruti Suzuki has adopted a focused approach and wisely created segments within a

large market to promote their cars.

Lower Income Group - Maruti 800, Alto. ..

Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz. ..

High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara.

Suzuki Grand Vitara would obviously have no takers amongst the lower income group.

The target market for Rado, Omega or Tag Heuer is the premium segment as compared to

Maxima or a Sonata watch.

10.Identify expectations of Target AudienceOnce the target market is decided, it is essential to find out the needs of the target

audience. The product must meet the expectations of the individuals. The marketer must

interact with the target audience to know more about their interests and demands.

Kelloggs K special was launched specifically for the individuals who wanted to cut

down on their calorie intake.


14/17


Marketing professionals or individuals exposed to sun rays for a long duration need

something which would protect their skin from the harmful effects of sun rays. Keeping

this in mind, many organizations came with the concept of sunscreen lotions and creams

with a sun protection factor especially for men.

11.Create SubgroupsThe organizations should ensure their target market is well defined. Create subgroups

within groups for effective results.

Cosmetics for females now come in various categories.

Creams and Lotions for girls between 20-25 years would focus more on fairness. Creams and lotions for girls between 25 to 35 years promise to reduce the signs of

ageing.

12.Review the needs of the target audienceIt is essential for the marketer to review the needs and preferences of individuals

belonging to each segment and sub-segment. The consumers of a particular segment must

respond to similar fluctuations in the market and similar marketing strategies.

13.Name your market SegmentGive an appropriate name to each segment. It makes implementation of strategies easier.

A kids section can have various segments namely new born, infants, toddlers and so on.

14.Marketing StrategiesDevise relevant strategies to promote brands amongst each segment. Remember you cant

afford to have same strategies for all the segments. Make sure there is a connect between

the product and the target audience. Advertisements promoting female toiletries cant

afford to have a male model, else the purpose gets nullified.


15/17


A model promoting a sunscreen lotion has to be shown roaming or working in sun for the

desired impact.

15.Review the behaviorReview the behavior of the target audience frequently. It is not necessary individuals

would have the same requirement (demand) all through the year. Demands vary,

perceptions change and interests differ. A detailed study of the target audience is

essential.

16.Size of the Target Market

It is essential to know the target market size. Collect necessary data for the same. It helpsin sales planning and forecasting.

Benefits/Strengths of Segmentation

Organizations get to know its customers better.

Provides guidelines for resource allocation.

It helps focus the strategy of the organization.

Limitations/Disadvantages of Segmentation

Targeting multiple segments increases marketing costs.

Segmentation can lead to proliferation of products.

Narrowly segmenting a market can hamper the development of broad-brand equity.

Segmentation of consumer non-durable across different countries

Non-durable goods

A good which is immediately used by a consumer or which has an expected lifespan of

three years or less. Examples of non-durable goods include food and clothing. (opposite of

durable goods, Also called soft good.)

Segmentation of Coca Cola:


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Coca Cola segments its market in a number of ways. Coca Cola's, customer segmentation is

mainly by their market demographically based on age, income and family size. Coca Colas

behavioral segmentation has been a key to the companys success.

Age is one of the most significant parts of the segmentation of Coca Cola. Coca Cola introduces

Coca Cola diet for the people who are suffering from diabetic and for those who are likely to

avoid sugar and for the aged people specially 40 plus. Coca Cola mainly produces the Coca cola

and the main customer of Coca cola is young people whose age is 10 to 35.

The other important thing is the taste and quality. The coco content used to prepare the drink also

varies from country to country.

Coca cola also segment the market on the income basis by making little pack. They have an

awesome price rang to all class of people. They introduce different price of containers with

different size for the people whose income is different. They think about student, poor people,

and middle class people economic condition for their pricing. Coca Cola mainly serves 500ml,

1L, 1.5L and 2L pack Cola in India, Bangladesh, Pakistan, etc..

Family size basis is also a base segmentation for Coca Cola. In our society, by their marketing

targeting, we have families with different family size. So Coca Cola makes a variation in their

served bottle size into many ways such as 500ml, 1L, 1.5L, 2L pack. People can easily choose a

suitable pack based on their family size.

Bibliography

http://courses.unt.edu/kt3650_7/sld006.htm

http://www.12manage.com/description_market_segmentation.html

http://www.managementstudyguide.com/market-segmentation-steps.htm

http://www.netmba.com/marketing/market/segmentation/

http://ankandhk.hubpages.com/hub/PEPSIvsCOCACOLAmarketing-strategy
http://courses.unt.edu/kt3650_7/sld006.htmhttp://courses.unt.edu/kt3650_7/sld006.htmhttp://www.12manage.com/description_market_segmentation.htmlhttp://www.12manage.com/description_market_segmentation.htmlhttp://www.managementstudyguide.com/market-segmentation-steps.htmhttp://www.managementstudyguide.com/market-segmentation-steps.htmhttp://www.netmba.com/marketing/market/segmentation/http://www.netmba.com/marketing/market/segmentation/http://ankandhk.hubpages.com/hub/PEPSIvsCOCACOLAmarketing-strategyhttp://ankandhk.hubpages.com/hub/PEPSIvsCOCACOLAmarketing-strategyhttp://ankandhk.hubpages.com/hub/PEPSIvsCOCACOLAmarketing-strategyhttp://www.netmba.com/marketing/market/segmentation/http://www.managementstudyguide.com/market-segmentation-steps.htmhttp://www.12manage.com/description_market_segmentation.htmlhttp://courses.unt.edu/kt3650_7/sld006.htm


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the aim of market segmentation has always been to create a unique value offer to as many customers...

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