Market segmentation and targeting
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The document discusses market segmentation and targeting. It defines the market and various concepts of markets, including place, commodity, demand, exchange, and space concepts. It also covers features and types of markets based on geographical area, business volume, competition, control, delivery, and nature of products. The objectives of market segmentation are identified as identification of market opportunities, optimum utilization of resources, and evaluation of competitors. Finally, the document discusses bases for segmentation in consumer markets, including geographic, demographic, psychographic, and behavioral segmentation variables.
Market segmentation and targeting
- 3. What is Market? • The word market is derived from the Latin word "Marcatus" which means place for performing the business activities. • In narrow view, market is the place where buying and selling for needs and wants for getting satisfaction is performed. In broad view market is not only place of buying and selling, it is also a process of exchange. • According to American Marketing Association “A market is the aggregate demand of the potential and existing buyers of a product.” • In broad sense market is a group of customers with need to satisfy, money to spend and willingness or desire to spend money to create exchange relationship. Market is the number of people who have some need and want, have resources, and are also willing to participate in a mutually satisfying transaction. 7/18/2017 3
- 4. Various concepts of market i. Place concept:- It is traditional concept of market. According to this concept market is an easy place where buyers and sellers meet together for the purpose of buying and selling. Ghorahi Bazar, Narayanpur Bazar, lamahi Bazar, Kapurkot bazar, Mana tower etc. ii. Commodity Concept:- According to commodity concept, market is the activity of selling and buying of commodity or product or services. Sellers and buyers complete exchange process for their mutual interest. iii. Demand Concept:- According to demand concept, market is the total or aggregate demand of all actual and potential customers for a specific product over a specific period. iv. Exchange Concept:- Exchange is an act of giving one thing and receiving another in return. According to exchange concept, market is the exchange process, in which sellers exchange their products or services with money. Buyers pay money for product or services. v. Space concept:- Space concept of market is internet based market. Thus it is also known as internet market. Customers can select goods and services searching websites and internet. Digital technology, product or services, buyers and sellers, direct transaction etc. are the distinct features of space concept market.7/18/2017 4
- 5. Features of market i. commodity ii. Price iii. Buyers and sellers iv. Area. 7/18/2017 5
- 6. Types of Market A. On the basis of geographical area i. Local Market ii. Regional Market iii. National Market iv. Global Market B. On the basis of business volume i. Wholesale market ii. Retail market C. On the basis of competition i. Monopoly market ii. Perfect competition iii. Imperfect competition D. On the basis of control i. Regulated market ii. Unregulated market E. On the basis of delivery i. Spot market ii. Future market F. On the basis of Nature of products i. Commodity market ii. Service market iii. Money market iv. Foreign exchange Market v. Labor market vi. Security market 7/18/2017 6
- 8. Background • Companies today recognize that they cannot appeal to all buyers in the marketplace, or at least not to all buyers in the same way. • Buyers are too numerous, too widely scattered, and too varied in their needs and buying practices. • Moreover, the companies themselves vary widely in their abilities to serve different segments of the market. Rather than trying to compete in an entire market, sometimes against superior competitors, each company must identify the parts of the market that it can serve best and most profitably. • Thus , most companies are being more choosy about the customer with whom they want built relationships. Most have moved away form mass marketing and toward market segmentation and targeting. • Instead of scattering their marketing efforts (the short gun approach), firms are focusing on the buyers who have greater interest in the values they create best (the rifle approach) 7/18/2017 8
- 9. • Companies have not always practiced market segmentation and targeting from very beginning. • Most of the time in 19th and 20th century, most of the marketing organizations such as ford motors, Coca-Cola etc. practiced mass marketing- mass production, mass distribution, and mass promoting about the same product in about same way to all consumers. • These companies argued that mass marketing creates the largest potential market which leads to the lowest costs due to economics of scale. • But however, many factors now make mass marketing more difficult. Today marketers find it very hard to create a single product or program that appeals or satisfies to all of diverse people in market. • As well as, customers are bombarded with message, information etc. in medias like TV, radio, magazines, newspapers, telephone etc. • So no surprisingly, many companies are retreating form mass marketing and tuning segmented marketing. 7/18/2017 9
- 10. Market Segmentation Markets consists of buyers, buyers differ in one or more ways, they may differ in their wants, income level, location, buying attitudes, buying practices, occupation etc. Through market segmentation, companies divide large heterogeneous markets into smaller homogeneous segments that can be reached more efficiently and effectively with products and services that match their unique needs. It may be defined as a process of splitting or dividing potential customers into certain groups or segments sharing similar levels of needs. It is Dividing a market into distinct group of buyer with different needs, characteristics or behavior who might require separate product or marketing mix. It is creating sub-sets of a market based on similar characteristics of consumers with similar demands and providing them with a product to satisfy their need in a much better way than it could have been otherwise 7/18/2017 10
- 11. Market Segmentation In conclusion, market segmentation is the process of dividing total market into several small parts on the basis of customers need, wants, buying purpose, buying habit, age, education, gender, religion, income, place etc. Market segmentation is made in a way that, generally, the characteristics of the entire customer within a segment are similar. It is customer oriented mission in which total market is divided into several parts of same characteristics by identifying customers' needs or wants to supply them with their demands. 7/18/2017 11
- 12. • Above figure shows three major steps in target marketing. The first is market segmentation- dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes. • Second step is target marketing- evaluation each market segments' attractiveness and selecting on or more of the segments to serve on. • The last on is market positioning- setting the competitive positioning for the product and creating a detailed marketing mix. Market Segmentation Identify bases for segmenting market. Develop segment profiles. Target Marketing Develop measure of segment attractiveness. Select target segments. Market Positioning Develop positioning for target segments. Develop a marketing mix for each segment 7/18/2017 12
- 14. Objectives Of market segmentation • Market segmentation divides a big heterogeneous market. It helps to collect a detailed information of every set of customer. • Firm can do the comparative analysis of market segment and decides which segment is more profitable and effective. • Firm can leave unprofitable market segment. So market segment helps to marketing manager to identify the possible market opportunities. 7/18/2017 14 1. Identification of market opportunities
- 15. Objectives Of market segmentation • Targeting the market provides details of the customers and their needs. It helps marketers in production. • To serve profitable market segment firms should utilize resource properly. If market is segmented, marketers can produce the product according to the desire of consumers. • So the product will meet the demand of the consumers and there will not be the waste of resource. 7/18/2017 15 2. Optimum utilization of resources
- 16. Objectives Of market segmentation • The objective of market segmentation is to reduce negative effect of such competition. • Firm can easily evaluate the market strategies of competitors if it is segmented. • Marketers can make better marketing strategies than competitors in segmented market. 7/18/2017 16 3. Evaluation of competitors
- 17. Bases for Segmentation in Consumer Markets 7/18/2017 17
- 18. There is no single way to segment a market. Marketers has try different segmentation variables, alone and in combination, to find the best way to view market structure Some of the segmentation variable are: Geographic Demographic Psychographic Behavioralistic 7/18/2017 18
- 19. 1. Geographic Segmentation Geographic segmentation calls for dividing the market into different geographical units. A company may decide to operate in one or few geographical areas, or operate in all areas but pay attention to geographical differences in needs and wants. The following are some examples of geographic variables often used in segmentation. • Region: by continent, country, state, or even neighborhood • Size of metropolitan area: segmented according to size of population • Population density: often classified as urban, suburban, or rural • Climate: according to weather patterns common to certain geographic regions 7/18/2017 19
- 20. 2. Demographic Segmentation • It divides the market in to groups based on variables such as age, gender, family size and lifecycle, income, occupation, education religion race generation and nationality. • Demographic segmentation is mots popular base for segmenting customer market groups. Because- Consumer needs, wants and usage rates often vary closely with demographic variables. Demographic variables are easier to measure then most other types of variables. Even when marketers first define segments using other bases, such as benefits sought or behavior, they must know segment demographic characteristics in order to assess the size of the target market and to reach it efficiently. 7/18/2017 20
- 21. 2. Demographic Segmentation Some demographic segmentation variables include: • Age • Gender • Family size • Family lifecycle • Generation: baby-boomers, Generation X, etc. • Income • Occupation • Education • Ethnicity • Nationality • Religion • Social class 7/18/2017 21
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- 25. 3. Psychographic Segmentation Psychographic segmentation of market consist of following variables: • Social class:- lower lowers, upper lowers, working class, middle class, • Lifestyle: achievers, strivers, strugglers. • Personality: authoritarian, ambitious, gregarious 7/18/2017 25
- 26. 4. Behavioral Segmentation Behavioral segmentation is based on actual customer behavior toward products. The behavioral variables include: Occasion: regular, occasion, special occasion. Benefits: quality, service, economy, convenience. User status: nonuser, ex-user, potential user, first time user, regular user. User rate: light user, medium user, heavy user. Loyalty status: none, medium, strong, absolute. Attitude towards product: enthusiastic, positive, indifferent, negative, hostile. 7/18/2017 26