Market segmentation
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1) Companies should segment markets to identify groups of customers with similar needs and buying behaviors. This allows companies to develop tailored products, pricing, and marketing strategies for each segment. 2) Key criteria for evaluating market segments include whether they are measurable, substantial, accessible, differentiable, and actionable. Effective segments respond differently to marketing strategies. 3) Companies can segment consumer and business markets based on geographic, demographic, psychographic, behavioral, situational, and personal characteristics. The goal is to identify segments that the company is well-suited to target. 4) Rather than targeting all segments, companies typically select a few target segments to focus their marketing efforts on through strategies like single segment concentration, selective special
Market segmentation
- 1. IDENTIFYING MARKET SEGMENTS & SELECTING TARGET MARKETS BY: Jonathan T. Luanzon
- 2. Introduction “ The customers are to “ Many companies instead numerous & diverse in of scattering their their buying marketing effort ( a requirements, a shotgun approach), they company needs to focus on the buyers they have the greatest chance identify the market of satisfying ( a rifle segments it can serve approach)…” effectively…” What criteria can a How can a company company use to choose the identify the market most attractive target segments that make up a markets? market?
- 4. Introduction FIGURE OUT HOW TO EARN IT…
- 5. Levels of market segmentation In mass marketing, the seller engages in mass production, mass distribution & mass promotion of one product for all buyers In micromarketing, it is focused on certain levels such segments, niches, local areas and individuals
- 6. Levels of market segmentation SEGMENT MARKETING NICHE MARKETING A market segment consists of A niche is a more narrowly defined groups of similar wants. group of seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a Benefits over mass marketing segment into sub – segments. An attractive niche is characterized - The company can create as follows: more fine tuned product or - The customers in the niche service offering and price it have a distinct set of needs appropriately for the target segment - They will pay a premium - The company can easily to the firm that best satisfies select the best distribution & their needs communication channels - The niche is not likely to - The company can also have attract other competitors clearer picture of its - The nicher gains certain competitors, economies through specialization - and the niche has size, growth & potential.
- 7. Levels of market segmentation LOCAL MARKETING INDIVIDUAL MARKETING Target marketing is leading to The ultimate level of marketing programs tailored segmentation leads to “ to the needs and wants of segments of one”, local customer groups customized marketing” or “ ( trading areas, one to one marketing”. neighborhood, even individual Ultimately, every individual stores) has a unique set of wants and preferences. Those favoring localizing a company’s marketing see a national advertising as Mass customization is the wasteful because it fails to ability of the company to address local needs. prepare a mass basis individually designed products, services, programs and communications to meet customer requirements.
- 8. Patterns of market segmentation 1) Homogenous preferences Shows a market where all the consumers have roughly the same preferences. The market shows no natural segments 2) Diffused preferences Shows that customers vary greatly in their preferences 3) Clustered preferences The market might reveal distinct preference clusters called natural market segments.
- 9. Steps in segmentation process Description 1) Needs - Based Group customers into segments based on similar needs Segmentation & benefits sought by customer in solving particular consumption problem. 2) Segment For each needs – based segment, determine which Identification demographics, lifestyles & usage behaviors make the segment distinct & identifiable Using predetermined segment attractiveness criteria, 3) Segment determine the overall attractiveness of each Attractiveness segment. 4) Segment Determine segment profitability. Profitability For each segment, create a “value proposition” & 5)Segment product price positioning strategy based on that Positioning segment’s unique customer needs & characteristics 6)Segment “Acid Create “segment storyboards” to test the attractiveness Test” of each segment’s positioning strategy. 7) Marketing Mix Expand segment positioning strategy to include all Strategy aspects of the marketing mix
- 10. Effective market segments Measurable The size, purchasing power & characteristics of the segment can be measured The segments are large & profitable enough to Substantial serve The segments can be reached & served. Accessible The segments are conceptually distinguishable & Differentiable respond differently to different marketing mix element & programs. Actionable Effective programs can be formulated for attracting & serving the segments.
- 11. Bases for segmenting consumer markets Geographic Demographic Psychographi Behavioral c Region Age Lifestyle Occasions City size Family Size Personality Benefits Density Family life cycle User Status Climate Gender Usage Rate Income Loyalty Status Occupation Readiness Stage Education Attitude toward product Religion Race Generation Nationality Social Class
- 12. Segmentation variables for business markets Demographic Situational Factors 1) Industry: 12) Urgency 2) Company Size: 3) Location 13) Specific application 14) Size of order Operating Variables 4) Technology 5) User or Non – User Status Personal Characteristics 6) Customer capabilities 15) Buyer seller similarity Purchasing Approaches 16) Attitudes towards risk 7) Purchasing function organization 17) Loyalty 8) Power structure 9) Nature of existing relationships 10) General purchase policies 11) Purchasing criteria
- 13. Segmentation variables for business markets Segments of business buyers A) * First time prospect * Novices * Sophisticates B) > Programmed buyers > Relationship buyers > Transaction buyers > Bargain hunters C) √ Price oriented customers √ Solution oriented customers √ Strategic value customers
- 14. Patterns of target market selection M1 M2 M3 M1 M2 M3 M1 M2 M3 P1 P1 P1 P2 P2 P2 P3 P3 P3 Single Segment Selective Product Concentration Specialization Specialization M1 M2 M3 M1 M2 M3 P1 P1 P2 P2 P3 P3 Market Full Market Specialization Coverage
- 15. Segment by segment invasion plan Customer Groups Airlines Railroads Truckers Large computers Product Mid size computers Varieties Personal computers Company A Company B Company C
- 16. The direction to earn the market share is plotted.. It’s for the company to choose how to traverse and press forward.. E N D Thank you..