Marketing Management

WHAT ARE THE DIFFERENT LEVELS OF MARKET SEGMENTATION

POSSIBLE LEVELS OF SEGMENTATION

Full Market Coverage Multiple Segments Single Segments Individuals as Segments

Shivam Verma || IIT Delhi

FULL MARKET COVERAGE



A firm attempts to serve all customer groups with all the products they might need.

Only large firms can undertake a full market coverage strategy

Cam cover a whole market in 2 broad ways Differentiated marketing Undifferentiated marketing



Undifferentiated Marketing or Mass marketing The firm goes after the whole market with one offer to the bradest number of buyers

Mass distribution mass communication Appropriate when all consumers have same preferences and market has no natural segments

Henry Ford, Model-T ford in one colour, black Lowest cost lower prices higher margins Increasing Splintering of market, proliferation of channels & communication is making difficult and expensive to reach mass audience



Differentiated Marketing The firm sell different products to all the different segments of the market

Creates more total sales Increase cost of doing business No generalizations about its profitability are valid


MULTIPLE SEGMENTS


MULTIPLE SEGMENTS


Selective Specialization.

A firm selects subset of possible segments(suprasegments), each attractive and appropriate

May or may not be synergy among the segments

Diversifies the firm’s risk

Example: symphony orchestras

MULTIPLE SEGMENTS


Synergy can be achieved with-

Product specialization- Sells a certain product to several different market segments Building strong reputation on specific product area Product maybe supplanted by entirely new technology

Market specialization- Firm concentrates on serving many needs of a particular customer group Building strong reputation among this customer group Customer group may suffer budgt cuts or shrink in size

SINGLE SEGMENTS


SINGLE SEGMENTS


Markets to only one segment

Example: Porsche on sports cars and Volkswagen on small cars

Deep knowlegde on segment’s need

Strong market presence

Operating economies by specializing its production, distribution and promotion

NICHE MARKETING


NICHE MARKETING


Niche- narrowly defined customer group seeking distinctive mix of benefits within a segment.

Marketers aim to understand customers’s needs so well that hey willingly pay a premium

Example: Revolution plus sized apparel for women.

Niche is fairly small but has size, profit and growth potential (‘chasing the long tail’)

Unlikely to attract competition

INDIVIDUAL MARKETING


INDIVIDUAL MARKETING


Segments of one

One to one marketing

Major source- Internet

Customerization mass customization that empowers consumers to design products and services according to their needs

Firms provide platform and tools and rents to customers the means to design their own product

Raises costs

CREDITS

All Photos are taken from google images


IN WHAT WAYS CAN A COMPANY DIVIDE A MARKET INTO SEGMENTS?

BASES FOR SEGMENTING CONSUMER MARKETS


• Geographic

Segmentation

• Demographi

c Segmentation

• Psychograph

ic Segmentation

BehaviouralSegmentation

GEOGRAPHIC SEGMENTATION Divides into geographical units such as nations, states, regions, countries, cities or neighbourhood

There are differences in consumer preferences, purchase patterns, and behaviours across regions

Hence different market effortsShivam Verma || IIT Delhi

DEMOGRAPHIC SEGMENTATION

Age and life cycle stage Lifestage

Gender Income Shivam Verma || IIT Delhi

AGE AND LIFE CYCLE STAGE

Titan’s Zoop targets 6-14 year-old-children by using design elements that reflect the preferences of the target segment


LIFE STAGE

iBall Aasaan, targeted at citizens, has features that are compatible with the needs of the segment


GENDER

Today, many companies are targeting women, and not just men, for their two-wheeler brands. Mahindra Rodeo, for example, uses Kareena Kapoor as its brand ambassador, suggesting the brand’s qualities of power and style


INCOME

With the increase in income, luxury wristwatch brands such as TAG Heuer are increasing their visibility and presence in the Indian market


SOCIO-ECONOMIC CLASSIFICATION

Rural areas are emerging as important markets for many products and services.


PSYCHOGRAPHIC SEGMENTATION Psychographics is the science of using psychology and demographics to better understand consumers

Buyers are divided into different groups on the basis of psychological/personality traits, lifestyle, or values

Popular and commercially available classification system is Strategic Business Insight’s (SBI) VALS framework.


BEHAVIOURAL SEGMENTATION


BEHAVIOURAL SEGMENTATION


Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product.

•Occassions•User Status•Usage Rate•Buyer Readiness Stage•Loyalty Status•Attitude•Multiple Bases

Needs and Benefits

Decision Roles

User and Usage- Real user and Usage-Related Variables

BUYER-READINESS STAGE

LifeCell uses celebrity endorsements to introduce umbilical cord stem cell banking in India.


BUYER-READINESS STAGE

Example of Marketing Funnel


LOYALTY STATUS


Hard-core loyals- Consumers who buy only one brand all the time

Split loyals- Consumers who are loyal to two or three brands

Shifting loyals- Consumers who shift loyalty from one brand to another

Switchers- Consumers who show no loyalty to any brand

CREDITS

All Photos are taken from google images and Book on ‘Marketing Management’ by Kotler


WHAT ARE THE REQUIREMENTS FOR EFFECTIVE SEGMENTATION ?

STEPS IN SEGMENTATION PROCESS


Needs-Based Segmentation

Segment Identification

Segment Attractiveness

Segment Profitability

Segment Positioning

Segment Acid Test

Marketing-Mix Strategy

BUT NOT ALL SEGMENTATION SCHEMES ARE USEFUL


We need an effective segmentation criteria

EFFECTIVE SEGMENTATION CRITERIA


Market segments must rate favourably on five key criteria:

Measurable

Substantial

Accessible

Differentiable

Actionable

MARKET SEGMENTS SHOULD ALSO BE ATTRACTIVE IN THE LONG RUN


Michael Porter’s five forces can determine the intrinsic long-run attractiveness of a market segment

MARKET SEGMENTS SHOULD ALSO BE ATTRACTIVE IN THE LONG RUN


Threat of intense segment rivalry

Threat of suppliers’ growing bargaining

power

Threat of substitute products

Threat of new entrants

Threat of buyers’ growing bargaining

power

CREDITS All Photos are taken from google images


HOW SHOULD BUSINESS MARKETS BE SEGMENTED?

SEGMENTING BUSINESS MARKETS


Business markets can be segmented using same variables to segment consumer markets Ex- geography, benefits sought, usage rate etc.

But other variables can also be used for business markets Ex- operating variables, situation factors, personal characteristics etc.

MAJOR SEGMENTATION VARIABLES FOR BUSINESS MARKETS


Demographic

Operating Variables

Purchasing Approaches

Situation Factors

Personal Characteristics

SEQUENTIAL PROCESS OF SEGMENT IDENTIFICATION


Example-

1. Macrosegmentation1. End use market to serve- Automobile,

Residential, Beverage containers2. Product application- semifinished

material, building components, aluminium mobile homes

3. Customer size- large customers

2. Microsegmentation1. Distinguished among customers

buying on price, service, quality

FLEXIBLE MARKET OFFERING

NAKED SOLUT

ION

Product and service elements that all segment members value

DISCRETION

ARY OPTIO

NS

Some segment members value options but not all.

Buyer has to pay more


CREDITS



HOW SHOULD A COMPANY CHOOSE THE MOST ATTRACTIVE TARGET MARKETS?

EVALUATING DIFFERENT MARKET SEGMENTS The firm must look at 2 factors:

Overall attractiveness of the segment

Company’s objectives and resources


THE MARKET MUST HAVE ATTRACTIVE CHARACTERISTICS


SizeGrowth

ProfitabilityScale Economies

Low Risk

SOME QUESTIONS THAT SHOULD BE ANSWERED


oHow well does a potential segment score on the effective segmentation five criteria?

oDoes investing in the segment make sense given the company’s long run objectives?

oDoes the company lack one or more necessary competencies to offer superior value?

oWhich level of segmentation is required?

ETHICAL CHOICE OF MARKET TARGETS


oAvoid consumer backlash

oPublic controversy due to unfair advantage of vulnerable groups

oFaulty products

CREDITS



THANK YOU

DISCLAIMER

Created by Shivam Verma, IIT Delhi, during an internship with Prof. Sameer Mathur,

IIM Lucknow,www.IIMInternship.com ”

Education

Marketing Management