Identifying Market Segments And Targets: Tutored By: Prof. Sunil D’ Anto

Identifying Market Segments and Targets

Tutored by : Prof. Sunil D’ Anto

Ford’s Model T Followed a Mass Market Approach

Learning Agenda • What are the different levels of market segmentation? • How can a company divide a market into segments? • How should a company choose the most attractive target markets? • What are the requirements for effective segmentation?

Maruti Suzuki Ltd. Product portfolio • • • • • • • • • •

Maruti800 Alto / Alto K10 Suzuki A-Star Zen Estilo Omni Wagon R Esteem Swift SX4 Grand Vitara

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants.

Steps in Segmentation Process Needs-based segmentation Segment identification

Segment attractiveness

Marketing-Mix Strategy

Segment profitability

Segment positioning Segment acid test

Preference Segments (a) Homogeneous preferences

(b) Diffused preferences

(c) Clustered preferences

Segmenting Consumer Markets Geographic Demographic * Psychographic Behavioral

Demographic Segmentation Age and Life Cycle Life Stage

Gender Income Generation Social Class

Titan Targets Children

Bank Al Habib targets senior citizens

Dove Targets Women

Socio-Economic Classes : Rural markets

Psychographic: The VALS Segmentation System

Behavioral Segmentation Decision Roles (B2B) • Initiator • Influencer • Decider • Buyer • User

Behavioral Variables • Occasions • Benefits • User Status • Usage Rate • Buyer-Readiness* • Loyalty Status* • Attitude

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage

• • • • • •

Aware Ever tried Recent trial Occasional user Regular user Most often used

Loyalty Status

Hard-core

Split loyals Shifting loyals Switchers

Behavioral Segmentation Breakdown

The Conversion Model

Convertible

Shallow

Users Strongly unavailable

Weakly unavailable

Average

Entrenched

Nonusers Ambivalent

Available

Flexible Marketing Offerings • Naked solution: Product and service elements that all segment members value > MS Swift

• Discretionary options: Some segment members value options but not all >> MS Swift Lxi, Vxi, etc.

Segmenting for Business Markets Demographic Operating Variable

Purchasing Approaches Situational Factors Personal Characteristics

Four levels of Micromarketing

Segments

Niches

Local areas

Individuals

The Himalaya Drug Company serves a growing niche market by focusing on ayurvedic medicines and health supplements

The Revolution brand of ready-made women’s apparel successfully focuses on the niche segment of plus-size clothes.

Individual marketing: Customerization Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

United Bank Ltd. of Pakistan offers customized Galleria credit cards to its customers Arvind Mill’s Ruff n Tuff Jeans

Pepsi used Megamarketing to enter India

Targeting

Targeting: Effective Segmentation Criteria Measurable Substantial

Accessible Differentiable Actionable

Effective Targeting Requirements… • Identify and profile distinct groups of buyers who differ in their needs and preferences • Select one or more market segments to enter • Establish and communicate the distinctive benefits of the market offering

Patterns of Target Market Selection

Patterns of Target Market Selection (contd.)

Patterns of Target Market Selection (contd.)

Segment-by-Segment Invasion Plan

Marketing Debate  Is target marketing ever bad? Take a position: 1. Targeting minorities is exploitive. or 2. Targeting minorities is a sound business practice.