Identifying Market Segments

 A company cannot serve all

customers in a broad market

 The customers are too numerous and

diverse in their buying requirements

 A company need to identify the

 Mass marketing

 The starting point for discussing

segmentation is mass marketing

Mass production, mass distribution

and mass promotions of one product for all buyers

Pro : creates the largest potential

market, which leads to lowest cost, lower price or higher margins.

Contra : The proliferations of

 Micro marketing

1) Segment marketing

 Segment market : consists of a group of

customers who share a similar set of wants.

 Segment differ from sector

 The marketer’s task : Identify the segment

and decide which one (s) to target.

 The benefits :

 Can create a more fine tuned product or

service

 Can price it appropriately fot the target

segment

 Can more easily select the best

distribution and communication channels

2. Niche marketing

 A more narrowly defined group seeking a

distinctive mix of benefits.

 Identified by dividing segments into sub

segments

 Example : heavy smokers includes two niches :

trying to stop and who do not care.

 Characterization of attractive niche

1) Have a distinctive of needs 2) Pay a premium

3) Has size, profit and growth potential 4) Gains certain economies through

3. Local Marketing

 Target marketing is leading

to marketing programs tailored to the needs and wants of local customer groups.

 Citibank provide different

mixes of banking services in its branches, depending on neighborhood or

demographics.

 Pro: see national

advertising as wasteful

because it fails to local needs

 Contra : It drives up

manufacturing and

4. Individual customer marketing

 Ultimately every individual has a unique set of

wants and needs.

 I the past centuries, producers customized their

offering to each customer .

 The tailor fitted a suit and a cobbler made

shoes for each individual.

 Mass customization : ability of a company to

prepare a mass basis individually designed products, services, program, and

1. Homogenous preferences

• _{A market where all consumers}

have roughly the same preferences.

• _{The market shows no natural}

segments. The existing brands would be similar and cluster around the middle of the market

2. Diffused preferences

• _{A market where consumer}

preferences may be scattered throughout the space, indicating that customers vary greatly in their preferences

• _{The first brand to enter the}

market is likely to position in the centre to appeal to the most

people. A second competitor could locate nect to the first

2. Diffused preferences • _{A market where}

consumer preferences may be scattered

throughout the space, indicating that

customers vary greatly in their preferences

• _{The first brand to enter}

the market is likely to position in the centre to appeal to the most

people. A second

3. Clustered preference

The market might reveal

distinct preferences clusters,

called natural market segments. The first firm in this market has three options. It might position in the centre, hoping to appeal to all groups. It might position in the largest market segment, or it might develop several brands, each positioned in a different

1.

Needs Based Segmentation

group customers in to segments

based on similar needs and benefits

sought by customer.

2.

Segment Identification

3. Segment Attractiveness

Determine the overall attractiveness of each segment using criteria such as:

market growth, competitive intensity and market access.

4. Segment Profitability

5. Segment Potitioning

for each segment, create a value

proposition and product price positioning strategy based on that segment’s unique customer needs and characteristics.

6. Segment Acid Test

Create a test attractiveness of each segment’s positioning strategy

 Measurable

The size, purchasing power and characterisric of the segments can be measured.

 Substantial

The segments are large and profitable enough.

 Accesible

The segments can be effectively reached and served.

 Differentiable

conceptually distiguishable and respon

diffrently to different marketing mix elements and programs.

 Actionable



Basis for segmenting

consumer markets

 geographic segmentation Dividing the market into

different geographical unit such as nations, state, regions, counties, cities, or

neighborhood

 Demographic segmentation The market is divided into

groups on the basis of variable such as : age, famili size, famili life cycle, gender, income,

 Pcycographic Segmentation

Buyers divided into different groups on the basis of lifestyle, or personality or values.

 Behavioral Segmentation

Buyers are divided into groups on the basis of their knowledge, attitude toward use of or

response to a product.

Other behahioral variables : ocasions, user status, usage rate, loyalty status, buyer

 Once the firm has identified its market segment

opportunities, it has to decide how many and which ones to target.

 Market targeting related to select one or more

market segments to enter.

 Five patterns of target market selection:

1.Single-segment concentration /concentrated

marketing.

The firms make a single product that it sells to a single segment. The company gains a strong

knowledge of the segment’s needs and strong market pressence.

 Single segment concentration

M1 M2 M3

P 1

P 1

2. Selective Specialization/Multi Segment Strategy

 The firm selects a number of

segments, each objectively attractive and appropriate.

 This strategy has the advantage of

diversifying the firm’s risk

 There may be little or no synergy

 Selective Specialization

M1 M2 M3

P 1

P 1

3. Product Specialization

The firms make a certain product that it sells to several segments.

The advantages of the strategy is a strong reputation in the specific

 Product Specialization

M1 M2 M3

P 1

P 1

4. Market Specialization

 The firm concentrates on serving

many needs of particular customer group.

The advantage of this strategy is

gaining a strong reputation in serving this customer group and became a

 Market Specialization

M1 M2 M3

P 1

P 1

5. Full Market Coverage

 The firms attempts to serve all customer

groups with all the products they might

need. Only very large firms such IBM, Coca Cola, General Motors, Toyota can undertake a full market coverage strategy.

 Large firm can cover a whole market in two

broad ways: undifferentiated marketing and differentiated marketing.

 In undifferentiated marketing, the firms

ignores segment differences and goes after the whole market with one offer.

 In differentiated marketing, the firms

 Full Market Coverage

M1 M2 M3

P 1

P 1