cb group viii

8/4/2019 Cb Group Viii

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MARKET SEGMENTATION AND TARGETING


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MARKET SEGMENTATIONy Definition

Dividing a market into distinct groups with

distinct needs, characteristics, or behaviour who mightrequire separate products or marketing mixes.

y Dividing a big heterogeneous market into smallhomogenous unit.


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The Need for Market Segmentationy Understanding customers and satisfying their needs

better than the competition.

y Mass Markety Target Market


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Requirements of Market Segments

y Identifiable: the differentiating attributes of the segmentsmust be measurable so that they can be identified.

y Accessible

:the segments must be reachable throughcommunication and distribution channels.

y Substantial: the segments should be sufficiently large tojustify the resources required to target them.

y Unique needs: to justify separate offerings, the segmentsmust respond differently to the different marketing mixes.

y Durable: the segments should be relatively stable tominimize the cost of frequent changes.


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Bases for Market SegmentationConsumer markets can be segmented on the followingcustomer characteristics.

y

Geographicy Demographic

y Psychographic

y Behavioralistic


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Geographic Segmentationy The following are some examples of geographic

variables often used in segmentation.

y Region: by continent, country, state, or evenneighborhood

y Size of metropolitan area: segmented according to sizeof population

y Population density: often classified as urban,suburban, or rural

y Climate: according to weather patterns common tocertain geographic regions


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Demographic SegmentationSome demographic segmentation variables include:y Agey Gender

y Family sizey Family lifecycley Generation: baby-boomers, Generation X, etc.y Incomey Occupation

y Educationy Ethnicityy Nationalityy Religiony Social class


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Psychographic Segmentationy Some psychographic variables include:

yActivities

y Interestsy Opinions

yAttitudes

yValues


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Behavioralistic

Segmentati

on

y Behavioral segmentation is based on actual customerbehavior toward products. Some behavioralistic variablesinclude:

yBenefits sought

y Usage ratey Brand loyaltyy User status: potential, first-time, regular, etc.y Readiness to buyy Occasions: holidays and events that stimulate purchases.

Behavioral segmentation has the advantage of usingvariables that are closely related to the product itself. It is afairly direct starting point for market segmentation.


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Bases for Segmentation in Industrial

Marketsy Industrial customers tend to be fewer in number and

purchase larger quantities.

yIndustrial markets might be segmented oncharacteristics such as:

y Location

y Company type

y Behavioral characteristics


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TARGET MARKETINGy Definition

Target Marketing involves breaking a market into involvesbreaking a market into segments and then concentratingthe marketing efforts on one or a few key segments. Targetmarketing can be the key to a businesss success.

y Segmentation is actually the prelude to target marketselection.

y

After the process of segmentation the next step is for theorganization to decide how it is going to target theseparticular group(s).


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Threetargeting optionsy Undifferentiated marketing

y Differentiated marketing strategy

y Concentrated Marketing


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Undifferentiated Marketingy Sometimes referred to as mass marketing the firm may

decide to aim its resources at the entire market with

one particular product.C

ocaC

olas original marketingstrategy was based on this form. One product aimed atthe mass market in the hope that a sufficient amountof buyers would be attracted., although there are nowchanges in their product line to cater for growingdietary and caffeine free needs of consumers.


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Differentiated Marketingstartgeyy Differentiated marketing strategy- Where the firm

decides to target several segments and develops

distinct products/services with separate marketingmix strategies aimed at the varying groups. Anexample of this would be airline companies offeringfirst, business (segment 1) or economy class tickets(segment 2) , with separate marketing programmes toattract the different groups.


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Concentrated MarketingyWhere the organization concentrates its marketing

effort on one particular segment. The firm will develop

a product that caters for the needs of that particulargroup. For example Rolls Royce cars aim its vehicles atthe premium segment, same as Harrods within theUK.


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FACTORS TO BE CONSIDERED WHILE

TARGET MARKET SELECTIONy Attractiveness of a Market Segmenty Size of the segment (number of customers and/or number of units).y Growth rate of the segment.y Competition in the segment.y Brand loyalty of existing customers in the segment.y Sales potential for the firm in the segment.y Expected profit margins in the segment.

Suitability of Market Segments to the Firm

y Whether the firm can offer superior value to the customers in the segment.y The impact of serving the segment on the firm's image.y Access to distribution channels required to serve the segment.y The firm's resources vs. capital investment required to serve the segment.

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