Mkt segmentation
- 2. Market: A set up where two or more parties engage in exchange of goods, services and information is called a market. Ideally a market is a place where two or more parties are involved in buying and selling. • The two parties involved in a transaction are called seller and buyer. • The seller sells goods and services to the buyer in exchange of money. There has to be more than one buyer and seller for the market to be competitive. 2
- 3. Types of Markets • Physical Markets - Physical market is a set up where buyers can physically meet the sellers and purchase the desired merchandise from them in exchange of money. Shopping malls, department stores, retail stores are examples of physical markets. • Auction Market - In an auction market the seller sells his goods to one who is the highest bidder. • Non Physical Markets/Virtual markets - In such markets, buyers purchase goods and services through internet. In such a market the buyers and sellers do not meet or3
- 4. Examples - Rediff shopping, eBay etc. • Market for Intermediate Goods - Such markets sell raw materials (goods) required for the final production of other goods. • Black Market - A black market is a setup where illegal goods like drugs and weapons are sold. • Knowledge Market - Knowledge market is a set up which deals in the exchange of information and knowledge based products. • Financial Market - Market dealing with the exchange of liquid assets (money) is called a financial market. 4
- 5. Market Segmentation: Segmentation refers to a process of bifurcating or dividing a large unit into various small units which have more or less similar or related characteristics. Market segmentation involves dividing large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. 5
- 6. • A market segment is a small unit within a large market comprising of like minded individuals. • One market segment is totally distinct from the other segment. • A market segment comprises of individuals who think on the same lines and have similar interests. • The individuals from the same segment respond in a similar way to the fluctuations in the market. 6
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- 8. 1.Geographic Segmentation Geographic segmentation refers to the classification of market in to various geographical areas. A marketer can’t have similar strategies for individuals living at different places. 2.Demographic segmentation Demographic market segmentation is one of the most common approaches to segmenting markets. With this strategy, a company simply divides the larger market in to groups based on several defined traits . Age, race, gender, marital status, occupation, education and income are among the commonly considered demographics segmentation traits. 8
- 9. 3.Psychographic segmentation Psychographic segmentation means dividing the market into groups based on social class, lifestyle or personality characteristics. Psychographics or lifestyle segmentation has become increasingly common as companies look to identify consumers based on interests and activities in lieu of demographics. As an example of this strategy's benefits, consider the lifestyle of an outdoor adventurer. Camping enthusiasts, for instance, typically have few consistent demographic traits. Campers are a diverse group. Thus, marketers would likely target a segment of outdoor hobbyists or campers for new camping equipment through outdoor programs or magazines. 9
- 10. 4.Behavioristic Segmentation: In this method consumers are classified into market segments not the basis of their knowledge, attitude and use of actual products or product attributes.The following variables might be used for this purpose: (а) Purchase Occasion: • Buyers may be differentiated on the basis of when they use a product or service. For example, air travellers might fly for business or vacation. Therefore, one airline might promote itself as a business flyer while another might target the tourists. 10
- 11. (b) Benefits Sought :The major benefit sought in a product is used as the basis of classify consumers. • High quality, low price, good taste, speed, sex appeal are examples of benefits. For example, some air travelers prefer economy class (low price), while others seek executive class (status and comfort). (c)User Status: • Potential buyers may be classified as regular users, occasional users and non- users. Marketers can develop new products or new uses of old products by targeting one or another of these groups. 11
- 12. Reasons why firms segment markets Target markets Obviously the main reason is to help identify potential target markets 12 Market understanding Splitting the overall market into smaller groups helps managers have a much greater understanding of the marketplace, as they gain knowledge of differing consumer needs within the same market Marketing mix It is then easier to develop a marketing mix is based upon the needs of a precise market Competitive position It can be easier to compete against existing firms by focusing upon a smaller, more defined, group of consumers New opportunities Creative approaches to market segmentation may generate new opportunities Avoid mass-marketing In today’s environment, it is generally quite difficult to be successful as a mass-marketer. More offerings Firms are better able to position multiple products in the same overall market by defining and understanding multiple segments. Niche marketing Some firms find success as niche marketers(pursuing very narrowly defined segments) and this specialized approach becomes their basis of their competition advantage
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- 14. • a) Measurable: The size, needs, purchasing power, and characteristics of the customers in the segment should be measurable. Quantification should be possible. • b) Divisible: The segments should be differentiable. There must be clear-cut basis for dividing customers into meaningful homogeneous groups. They should respond differently to different marketing mixes. There should be differences in buyer's needs, characteristics and behaviour for dividing in groups. • c) Accessible: The segment should be reachable and serviceable. It should be accessible through existing marketing institutions, such as distribution channels, advertising media and sales force. There should be middlemen to distribute the products 14
- 15. • d) Substantial: The segment should be substantial. It should be large enough in terms of customers and profit potential. IT should justify the costs of developing a separate marketing mix. • e) Actionable: It should be actionable for marketing purposes. Organizations should be able to design and implement the marketing mix to serve the chosen segment. 15
- 16. STEPS IN TARGET MARKETING: 16
- 17. Three main activities of target marketing are segmenting, targeting and positioning. These three steps make up what is commonly referred to as the S-T-P marketing process. Companies and marketers use this step-by-step approach to target marketing to figure out which segments offer the best profit potential and how to effectively market to them. SEGMENTATION Segmenting means breaking up the market into smaller, homogeneous segments. Within S-T-P, it is a virtual brainstorming step whereby the business considers all possible market segments. Segmenting strategies include demographics, lifestyle, geographic and behavioral approaches. Demographics segmentation means you break up markets based on personal traits like age, race, marital status, gender and income. 17
- 18. segmenting means you divide customers by hobbies and interests. Geographic segmentation makes local, state, regional, national or international markets key. Behavioral segmenting is based on such things as usage patterns and benefits sought from the product. TARGETING Following the brainstorming of possible segments in step one, the next step is to pick a select market to target or focus on. Companies often focus on one market segment at a time with marketing and ad campaigns. Whichever market is the most attractive from a profit standpoint or long-term potential is usually selected first. Factors including size of the market, growth potential and competitive intensity impact the perceived opportunity in targeting a given market. 18
- 19. POSITIONING Positioning is how the company wants the targeted market to perceive its brand or product. Some companies make quality a key positioning message and try to market their product as top quality for the target market segment. Other qualities commonly used to differentiate include service, unique features, environmental friendliness, family friendliness, safety, reliability, durability and low cost. The key is to stand out from competitors with a unique message that appeals to the interests of the targeted market. 19
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