2. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
At the end of this module the learning
outcomes are.
1. Why there is a need to segment
markets?
2. What are the various levels of
market segmentation?
3. What are bases for segmenting
consumer markets?
4. How the markets are targeted?
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3. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
SUGGESTED READINGS
1. Marketing Management by
Philip Kotler, chapter 9 &10th
edition.
2. Marketing Management by
Ramaswami and Namkumari,
Chapter 6.
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4. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
MARKET SEGMENTATION
The need
Cannot serve all customers of this
universe.
No company has that kind of resources.
Customers
Too numerous
Diverse in their buying requirement
Need to identify the market segments
that it can serve more effectively
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5. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
MARKET SEGMENTATION.
- The universe is heterogeneous.
- Divide the universe into market
segments, where buying or need
requirements is same i.e.
homogenous.
- Attack one or few market segments.
- This is target marketing.
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6. TARGET MARKETING
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Steps in the Targeting Process:
Market Segmentation
Market Targeting
Market Positioning
7. TARGET MARKETING
Target marketing requires marketers to take three
major steps:
Identify and profile distinct groups of buyers who differ
in their needs and preferences (market segmentation).
Select one or more market segments to enter (market
targeting).
For each target segment, establish and communicate
the key distinctive benefit(s) of the company’s market
offering (market positioning).
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8. MARKET Mass Marketing
SEGMENTATION AND SELECTING
TARGET MARKETS
Seller engages in mass production.
Mass distribution.
Mass promotion of one product for all buyers.
Example
Coke in 60 & 70s,
Sold in India
One size 200 ml.
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9. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Arguments for mass market.
Creates largest potential market
Leads to lower cost
Lead to lower prices.
Higher margins
Why criticised
Market fragmentation
Splintering of the market
Mass media proliferation.
Distribution channel proliferation
Difficult to practice “one size fits all’’ marketing.
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10. USING MARKET SEGMENTATION
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Levels of Micromarketing
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11. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
MARKET SEGMENTATION LEVELS
1. Segment Marketing
Consists of a large identifiable group within a market
with similar wants, purchasing power, attitudes or
buying habits
Each segment’s buyers are assumed to be quite
similar in needs /wants
No two buyers all alike
Flexible market offerings
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12. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Flexible market offering consists of two parts
1. Naked solution
- Consists of products and service
elements that all segment members
value
1. Options
- That some segment members value
- Each option carries additional prices.
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13. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Example – Segment Marketing
Delta Airlines
· Economy Class passenger
- Seat
- Food
- Soft Drink
All of them – naked solution
· Charges extra
- Alcoholic beverages
- Earphones
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14. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Segment marketing – benefits
- More fine tuned product
- Price it appropriately for the target
audience
- Fewer competitors
- Easier choice of
• Distribution channels
• Communication channels
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15. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Niche marketing
- Narrowly defined group
- Needs are not well serviced
- Seeking a distinctive mix of benefits
- Fairly small market size
- Normally attract one or two players
- Customers willing to pay a
premium price.
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16. MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
1. High end designer wear like Gucci, Chanel,
Tarun Tahiliani etc.
2. Automobiles like Ferrari, Maserati, Lamborghini
etc.
WHAT IS A NICHE TODAY MAY BECOME A
SEGMENT TOMORROW AND VICE VERSA!!
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17. 2. Ostrichesonline.com
- Selling Ostrich derived products
- On line
- 2 million $ sales in 1998
- Visitors can buy
· Ostrich meat
· Feathers
· Leather jackets
· Videos
· Eggshells
· Skin care products derived from ostrich
· Body oil
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18. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
3. Local marketing
- Needs of local customer groups
Example Kraft Cheese
· Helps supermarket chains
· Identify cheese assortment and shelf
layout
· Optimise cheese sales in
- Low
- Middle
- High income stores
- Different ethnic groups
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19. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
4. Individual marketing
- Ultimate level of segmentation
- Segment of one.
- One-to-one marketing.
- Customised to individuals
- Tailor made
- Cobbler designed shoes.
- Customised industrial products
Use of new technologies
- Computers.
- Databases
Customised offering.
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20. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Example
1. Dilip Chhabria -Designer cars
- Customised cars
- Small market
- About 500 a year
- Each car is unique, high prices
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21. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Turning to Mass customisation
It is the ability to prepare on a mass basis
individually designed products and
communication to meet each
customer’s requirements.
Example.
Levi’s Jeans
- Customer measurements.
- Jeans ready in 8 hrs.
Mattel
Barbie com
Design your own Barbie doll.
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22. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
- Choose Doll’s
• Skin tone
• Eye colour
• Haircolor.
• Clothes
• Accessories
• Her likes and dislikes.
- When Barbie delivered.
• Doll’s name on the package
• Computer generated paragraph about her
personality
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26. SEGMENTING CONSUMER
MARKETS
Nation or country
State or region
City or metro size
Density
Climate
Bases for Segmentation
Geographic
Demographic
Psychographic
Behavioral
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27. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
Example Geographic
Ford Ikon in India
1. World car
2. Changes for India
1. Higher suspension
2. Larger size air conditioner, higher ambient
temperature
3. Lower average speeds
4. Handle adulterated fuel
5. Petrol / diesel adulterated with kerosene
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28. SEGMENTING CONSUMER
MARKETS
Age, race, gender
Income, education
Family size
Family life cycle
Occupation
Religion, nationality
Generation
Social class
Bases for Segmentation
Geographic
Demographic
Psychographic
Behavioral
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30. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
a. Lifestyle
Nestle Classic
- Pleasure of making coffee
· Adding milk, sugar, coffee in hot
milk
Nestle “3 in 1
- Office goers
- Paucity of time
- Espresso feeling
- Milk sugar coffee premixed
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31. b. Personality
- Targeting consumer personality
- Customer of Ford
Independent
Impulsive
Masculine
Alert to change
Self confident
- Customers of Chevrolet
Conservative.
Thrifty
Prestige.
Conscious.
Avoid extremes
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32. MARKET SEGMENTATION AND SELECTING
TARGET MARKETS
C. VALUES
Tourists to Disneyland
• Fun seekers
• Families visit
Tourists to Udayan child welfare unit at Kolkatta
• Stay and meet poor children
• Share thoughts
• Donate
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33. SEGMENTING CONSUMER
MARKETS
Occasions
Benefits
User status
Usage rate
Loyalty status
Buyer-readiness
Attitude
Bases for Segmentation
Geographic
Demographic
Psychographic
Behavioral
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34. SEGMENTING CONSUMER
MARKETS
Multi-attribute segmentation via
geoclustering combines multiple
variables to identify smaller, better-defined
target groups
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35. MARKET TARGETING STRATEGIES
Evaluating and selecting market
segments requires assessing the
segment’s overall attractiveness in
light of company’s objectives and
resources.
Five patterns of target market
selection can then be considered.
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37. MARKET TARGETING STRATEGIES
Targeting multiple segments may result
in cost economies
Higher costs using differentiated
marketing include:
Product modification cost
Manufacturing cost
Administrative cost
Inventory cost
Promotion cost
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38. For details and bookings contact:-
Parveen Kumar Chadha… THINK TANK
(Founder and C.E.O of Saxbee Consultants)
Email :-saxbeeconsultants@gmail.com
Mobile No. +91-9818308353
Address:-First Floor G-20(A), Kirti Nagar, New
Delhi India Postal Code-110015