Identifying Market

Segments and Targets

8-2

Effective Targeting Requires…

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.

8-3

Four Levels of Micromarketing

Segments Niches Local areas Individuals

8-4

Segment Marketing

Targeting a group of customerswho share a similar set of

needs and wants.

8-5

Flexible Marketing Offerings

Naked solutionProduct and

service elements that all segment members value

Discretionary optionsSome segment

members valueOptions may carry

additional charges

8-6

The Experience Economy

Experience Services Goods Commodity

8-7

Customerization

Combines operationally drivenmass customization with customizedmarketing in a way that empowers

consumers to design theproduct and service offering

of their choice.

8-8

Segmenting Consumer Markets

Geographic Demographic Psychographic Behavioral

8-9

Market Segmentation

Occupation

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Karnataka, Punjab, Haryana, Rajasthan

Major metropolitan areas, small cities, towns

Urban, suburban, exurban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusSexAge Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, married, divorced, living together, widowed

Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over

Education Some high school, high school graduate, some college, college graduate, postgraduate

Professional, blue-collar, white-collar, agricultural, military

8-10

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, affection, sense of self-worth

Extroverts, novelty seeker, aggressive

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers

American, Italian,Indian, Chinese, Mexican, French, PakistaniCatholic, Protestant, Jewish,Hindu, Muslim, other

African-American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Attitudes Positive attitude, negative attitude

Sociocultural Segmentation

8-11

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyalty

Awareness status

Usage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective

Time Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievement

Home, work, friend’s home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money

Geodemographics Based on geography and demography

Demographic/Psychographics

Combination of demographic and psychographic profiles of consumer segments profiles

SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler

Hybrid Segmentation

8-12

Psychographic Segmentation

VALS Four groups with higher resources

Innovators- Successful, sophisticated, active, take charge people with high self esteem.

Thinkers-Mature, satisfied and reflective people who are motivated by ideals and value order, knowledge, and responsibility.

Achievers-Successful goal-oriented people who focus on career and family.

Experiencers- Young, enthusiastic, impulsive people who seek variety and excitement.

8-13

Four groups with lower resources Believers – Conservative, Conventional, and

traditional people with concrete beliefs. Strivers -Trendy and fun loving people who are

resource constrained. Makers – Practical, down-to-earth, self sufficient

people who like to work with their hands. Survivors – Elderly passive people who are

concerned about change.

(www.sric-bi.com)

Psychographic Segmentation

8-14

Behavioral Segmentation

Decision Roles Initiator Influencer Decider Buyer User

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

8-15

Steps in Segmentation Process

Needs-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment acid test Marketing mix strategy

8-16

Effective Segmentation Criteria

Measurable Substantial Accessible Differentiable Actionable

8-17

DISCUSSION

Is Mass Marketing dead?

8-18

DISCUSSION

Think of various product categories. How would you classify yourself in terms of the various segmentation schemes? How would marketing be more or less effective for you depending on the segment involved? How would you contrast demographic versus behavioral segment schemes? Which ones do you think would be most effective for marketers trying to sell to you?

8-19

HSBC

HSBC is known as world’s local bank. Established in 1865 to finance the trade

between China and the United Kingdom. Second largest bank in the world. Serves 100 million customers through

9,500 branches in 79 countries.

8-20

HSBC

The company is organised by business line:Personal financial servicesConsumer financeCommercial bankingCorporate investment banking and marketsPrivate banking

8-21

HSBC

HSBC is organized by the geographic segment:Asia-PacificUK/EurozoneNorth America/NAFTASouth AmericaMiddle East

8-22

HSBC

Sir John Bond in November 2003:Our position as the world’s local bank enables

us to approach each country uniquely, blending local knowledge with a world wide operating platform.

8-23

HSBC in New York

HSBC held a “New York City’s most knowledgeable Cabbie” contest. The winning cabbie gets paid to drive full time for HSBC for the year and HSBC’s customers win too. And they get a free ride in the HSBC branded Bankcab.

8-24

HSBC in Hong Kong

During the Severe Acute Respiratory Syndrome(SARS) outbreak, HSBC launched a program to revitalise the local economy.

8-25

HSBC’s niche marketing venture

Proides Pet Insurance which in 2003 was growing at the rate of 125% per year.

Dealing with Competition

8-27

Five Forces Determining Segment Structural Attractiveness

Potential entrants Suppliers Buyers Industry competitors Substitutes

8-28

Industry Concept of Competition

Number of sellers and degree of differentiation

Entry, mobility, and exit barriers Cost structure Degree of vertical integration Degree of globalization

8-29

Industry Concept of Competition

Pure monopoly Oligopoly Monopolistic competition Pure competition

8-30

Analyzing Competitors

Share of market Share of mind Share of heart

8-31

Expanding the Total Market

New customers More usage

8-32

Six Types of Defense Strategies Defender Flank Preemptive Counteroffensive Mobile Contraction

8-33

Other Competitive Strategies

Market challengers Market followers Market nichers

8-34

Market Challenger Strategies

Define the strategic objective and opponents

Choose a general attack strategy Choose a specific attack strategy

8-35

General Attack Strategies

Frontal attack Flank attack Encirclement attack Bypass attack Guerrilla warfare

8-36

Specific Attack Strategies

Price discounts Lower-priced goods Value-priced goods Prestige goods Product proliferation

Product innovation Improved services Distribution innovation Manufacturing-cost

reduction Intensive advertising

promotion

8-37

Market Follower Strategies

Counterfeiter Cloner Imitator Adaptor

8-38

EXERCISE

Pick an industry. Classify firms according to the four different roles they might play: leader, challenger, follower and nicher. How would you characterize the nature of competition? Do the firms follow the principles described above?

8-39

ACCENTURE

Stareted as the consulting arm of the accounting firm Arthur Andersen.

They were called “Administrative Accouting Group” and then became Management Information Consulting Division.

8-40

ACCENTURE

In 1989, Andersen Consulting separated from Arthur Andersen in order to position itself against its IT services competitors. At the time Andersen Consulting already doing a $1 billion a year in business, but it was mistakenly associated with accounting.

8-41

ACCENTURE

The IT consulting marketplace was crowded with competitors ranging from nuts-and-bolts hardware/software providers like IBM to leading strategy firms like Mckinsey and Boston Consulting Group.

Came out with an advertising campaign.

8-42

ACCENTURE

In 2000, following arbitration against its former parent, Andersen Consulting was granted full independence. It had three months to find, implement, and introduce the world to a new corporate name. This effort went on to become one of the largest and most successful re-branding campaigns in corporate history.

8-43

ACCENTURE

A consultant from the Oslo office coined the Accenture name because it rhymed with adventure and connoted an “accent on the future”. The name emerged as the winner because it was catchy and distinctive and embodied bold growth and innovation.

8-44

ACCENTURE

In 2002, Accenture launched the “Innovation Delivered” campaign to distinguish itself from the commpetition. Competitors in the IT arena, such as IBM lacked broader business consulting expertise and weren’t seen as knowledgeable in business strategies and processes. They tended the firms from the IT level. Competitors like McKinsey had brand strength associated with strategic thinking.

8-45

ACCENTURE

Accenture saw its differentiator as the ability to provide both innovative ideas and execute them too.

“Unless you can provide both transformational consulting and outsourcing capability, you are not going to win”

8-46

ACCENTURE

“Innovation Delivered” campaign. “from innovation to execution, Accenture helps accelerate your vision”.

8-47

ACCENTURE

In 2002, the climate changed, after the dot-com crash and the economic downturn, innovation was no longer enough. “High performance Delivered” campaign with Tiger Woods as the spokesperson.