Market segmentation week 5

• A market is the aggregate of

consumers of a given product and
consumers vary in their
characteristics buying behaviour.
•. It is feasible to disaggregate the
consumers into segments in such a
manner that in needs characteristics
and buying behaviour, the members
vary significantly among segments.
•Segmentation helps pinpoint the
target market.
Need for Market Segmentation
Market Segmentation helps the marketers to
devise appropriate marketing strategies and
promotional schemes according to the tastes
of the individuals of a particular market
segment.
 A male model would look out of place in an
advertisement promoting female products.
The marketers must be able to relate their
products to the target segments.
Market segmentation helps the marketers to
understand the needs of the target audience
and adopt specific marketing plans
accordingly.
Organizations can adopt a more focused
approach as a result of market segmentation.
Market segmentation also gives the customers a
clear view of what to buy and what not to buy.

 An Omega watch would have no takers amongst

the lower income group as they cater to the
premium segment.

Individuals from the lower income group never

use a Blackberry. In simpler words, the
segmentation process goes a long way in
influencing the buying decision of the consumers.
Market segmentation helps the organizations
to target the right product to the right
customers at the right time.

Geographical segmentation classifies

consumers according to their locations.

 A grocery store in colder states of the country

would stock coffee all through the year as
compared to places which have defined winter
and summer seasons.
Segmentation helps the organizations to
know and understand their customers better.

Organizations can now reach a wider

audience and promote their products more
effectively.
 It helps the organizations to concentrate
their hard work on the target audience and
get suitable results.
Market segmentation is a marketing concept
which divides the complete market set up into
smaller subsets comprising of consumers with a
similar taste, demand and preference.
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.
Market Segmentation
Market segmentation is a two step
process of
Naming broad product- market
Segmenting these broad product
markets in order to select and develop a
suitable market mix.
This approach tries to narrow down the
marketing focus to product-market areas
where the firm is more likely to have a
competitive advantage.
 Bases for Market Segmentation
Descriptive Behavioural
Demographic Segmentation Psychographic Segmentation
Gender Lifestyles
Age Psychological variables:
Family life cycle Personality
Race/Ethnic group Self-image
Education
Income
Occupation Potential Benefit Segmentation
Expected benefits from product
Family size
Religion
Home ownership
Markets use

Geographic Segmentation Usage Rate

Country Heavy users
Region Brand loyalty
Urban/Suburban/Rural
Population density
City size
Climate
Buying Patterns for Different Age Groups
Age Name of Age Group Merchandise
0-5 Young children Baby food, toys, nursery, furniture,
children’s wear
6 - 19 School children Clothing, sports equipment, records,
(including teenagers) school supplies, food,
cosmetics, used cars
20 - 34 Young adults Cars, furniture, houses, clothing,
recreational equipment, purchases
for younger age groups.
35 - 49 Younger middle-aged Larger homes, better cars, second
adults cars, new furniture, recreational
equipment
50 - 64 Older middle-aged Recreational items, purchases
for adults young marrieds and infants
65+ Senior adults Medical services, travel, drugs,
purchases for younger age
groups
The Market Segmentation Process

Identify bases for segmenting markets.

Stage 1
Stage 2 Develop relevant market segment profiles.

Stage 3 Forecast total market potential for each segment.

Stage 4
Analyze competitive forces Determine marketing program
within each segment. to serve each segment.

Forecast own market share for each segment.

Stage 5 Estimate cost benefit for each segment.

Do benefits achieve company goals and justify development of each segment?

Select target market segment(s).

.
Criteria for segmenting a broad product market
Homogeneous (similar) within: The
customer in the segment should be as similar
as possible with respect to their likely
responses to marketing mix variables and their
segmenting dimension
Heterogeneous (different) between: The
customer in different segment should be as
different as possible with respect to their likely
response to marketing mix variables and their
segmenting dimension.
Substantial: The segment should be big
enough to be profitable
Operational : The segmenting dimension
should be useful for identifying customers and
Different levels of market segmentation
The starting point for discussing
segmentation is mass marketing.

 In mass marketing, the seller engages in

mass production, mass distribution & mass
promotion of one product for all buyer. E.g.
Henry ford offered the model T-ford in one
color i.e. black.
The argument for mass marketing is that it
creates the largest potential market, which
leads to lower cost.
Segment Marketing :
A market segment consist of a group of customers
who share a similar set of needs & wants. E.g: We
can distinguish between car buyers who are
primarily seeking low cost basic transportation,
seeking a luxurious driving experience & those
seeking driving thrills & performance.
The marketer does not create the segments, the
marketers task is to identify the segments & decide
one which to target. Segment marketing offers key
benefits over mass marketing. The company can
design better price & deliver the product or service
to satisfy the target market.

.
Niche Marketing
 A niche is a narrowly defined customer
group seeking a distinctive mix of benefits.
Marketers usually identify niches by dividing
a segment into sub segments.

 The customers in the niche have distinctive

sets of needs, they will pay a premium to the
firm that best satisfies their needs, the niche
is not likely to attract other competitors and
the niche has size, profit and growth potential
Crack and ointment for pain is another
product with niche focus. This product is
primarily targeted at women for
prevention of cracked heels
 Itch guard, focuses on niche requirement
of treating itching sensation
Television channels particularly focusing
on religion & spirituality.
Local Marketing
 Target marketing is leading to
marketing programs tailored to the
needs and wants of local customers
groups.

 Many banks in Uganda have

specialized branches that cater to
the needs of corporate customer
Customization
The ultimate level of segmentations leads to
one to one marketing. Today’s customers are
taking more individual initiative in
determining what and how to buy. They log
on to the internet, look up information,
evaluates the product /service and in many
cases, design the product they want.
Companies sees it more efficient as the
marketers can achieve more precision and
effectiveness by addressing individual needs
All market strategy is built on STP
( segmentation, targeting and
positioning)
Segmentation outlines the company's
opportunities, but target market is where the
marketing manager makes his or her money.
Positioning involves implanting the brands
unique benefits, and differentiation in the
customers mind.
Target Market
A market segment that a company chooses to
serve.
A target market consist of a set of buyers who
share common needs or characteristics that
the company decides to serve.
A company discovers different needs and
groups in the market place, targets those
needs and groups that it can satisfy in a
superior way, and then position its offering so
that the target market recognizes the company
distinctive offering and image.
Obese individuals all across the globe look
forward to cutting down their calorie intake.

Marketers understood their need and came up

with Kellogg’s K Special which promises to
reduce weight in just two weeks. The target
market for Kellogg’s K Special diet would
include obese individuals.
Individuals who sweat more would be more
interested in buying perfumes and deodorants
with a strong and lasting fragrance.
Positioning
Positioning involves implanting the brand
unique benefits, and differentiation in the
customers mind.
To simplify the buying process, consumers
organize products, services and companies into
categories and position them in their mind.
E.g. Dettol, Dove, Ariel
A product position is a complex set of
perceptions, impressions, and feelings that
consumers have for the products compared to
competing products.
Consumers will position products with or
without the help of marketers. So marketers
must plan position that will give the product
the greatest advantage in selected target
market, and then must design marketing
mixes to create these planned actions.
A good brand positioning helps guide
marketing strategy by clarifying the brand
essence, what goals it helps the consumer
achieve, and how it does so in a unique way.
Positioning starts with a product, a piece of
merchandise, a service, a company, an institution
and even a person.
Positioning is not what you do to a product
Positioning is what you do to the mind of the
prospect.
Positioning takes three steps
Identifying a set of possible competitive
advantages
Choosing the right competitive strategies
Selecting an overall positioning strategy.
Identifying a set of competitive advantage
Position begins with actually differentiating the
company's marketing offer so that it will give
customer more value than the competitors offer
do.
A company or market offer can be differentiated
by
Product
Service
Channels
People
Image
Product differentiation
Product differentiation takes place along a
continuum. At one extreme are product that
vary little, while at the other extreme they
are highly differentiated on features,
performance, styles and designs.
Service differentiation
Service differentiation can be done through
speedy, convenient or careful delivery.
Installation can also differentiate a company
as can repair. Other possibilities includes
training services or consulting services.
Channel differentiation
Channel differentiation can help a company gain
competitive advantage through coverage,
expertise and performance.
People
A company can differentiate on people. Hiring
and training people better than their competitors.
Image
A company can also differentiate on image. The
chosen symbols, characters, and other image
element must be communicated through
advertising that convey the company's or brand
personality.
Choosing the right competitive advantage
The company must decide how many
differences to promote and which one
Some marketers believe that the best strategy
is to promote only one unique advantage,
which can be called a unique selling point.
Other marketers believe that companies
should position themselves on more than one a
attributes, particularly if one or more
companies are claiming to be best on same
attributes.
Not all brand preferences are meaningful or
worthwhile. The company must carefully select
which differences are worth promoting.
It should be important and deliver highly
valued benefits to target market.
It should be distinctive such that competitors
do not offer the difference
It should be superior such that consumers
cannot obtain the benefits elsewhere.
It should be communicated and visible to
buyers.
It should be pre-emptive such that competitors
cannot easily copy it.
It should be affordable
It should be profitable.
Selecting an overall positioning strategy
When a company has chosen a position, it
must take strong steps to deliver and
communicate the desired position to the
target market.
All the company marketing mix must
support the positioning strategy.
Designing the marketing mix ( Product,
price, place, promotion) involves working
out the tactical details of the positioning
strategy.
Companies often find it easier to come up with a
good positioning strategy than to implement it.
Establishing a position or changing one usually
takes time.
However positions that took years to build can
be lost easily.
A company must take care to maintain the
position through consistent performance and
communication.
Thus, positioning should be part of the broader
strategy planning process and ensure that the
whole marketing mix is viewed as offering
target customers superior value.
Steps to product Positioning
Know your target audience well
It is essential for the marketers to first
identify the target audience and then
understand their needs and preferences.
Every individual has varied interests, needs
and preferences. No two individuals can think
on the same lines.
Know what your customers expect out of you.
The products must fulfill the demands of the
individuals
Identify the product features
The marketers themselves must be well
aware of the features and benefits of the
products. It is rightly said you can’t sell
something unless and until you yourself are
convinced of it.
A marketer selling Nokia phones should
himself also use a Nokia handset for the
customers to believe him.
Unique selling Propositions
Every product should have USPs; at least some
features which are unique. The organizations
must create USPs of their brands and
effectively communicate the same to the target
audience.
The marketers must themselves know what
best their product can do.
Find out how the products can be useful to the
end-users ?
Why do people use “Anti Dandruff Shampoo?”
Anti Dandruff Shampoos are meant to get rid
of dandruff. This is how the product is
positioned in the minds of the individuals
Know your competitors
A marketer must be aware of the competitor’s
offerings. Let the individuals know how your
product is better than the competitors?
Never underestimate your competitors.
Let the target audience know how your
product is better than others.
The marketers must always strive hard to have
an edge over their competitors
Ways to promote brands
Choose the right theme for the advertisement.
Use catchy taglines.
The advertisement must not confuse people.
The marketer must highlight the benefits of the
products
Maintain the position of the brand
For an effective positioning it is essential for
the marketers to continue to live up to the
expectations of the end - users.
Never compromise on quality.
Don’t drastically reduce the price of your
products.
A Mercedes car would not be the same if its
price is reduced below a certain level.
A Rado watch would lose its charm if its price
is equal to a Sonata or a Maxima Watch.
Conclusions
In summary, good marketers should be
experts on markets, and likely segmenting
dimensions. By creatively segmenting
markets, they may spot opportunities –even
breakthrough opportunities, and help their
firms succeed against aggressive competitors
offering similar products.
Segmenting is basics to target marketing.