Market Segmentation- Targetting - Positioning

 

Market Segmentation 

Market segmentation : Buyers have unique needs and wants & each is potentially a separate market but designing a separate marketing program for each buyer is not worth while. Marketers look for broad classes of buyers who differ in their product needs or buying responses.

What is Market Segmentation?

Market Segmentation is dividing market into smaller groups of buyers based on their unique needs, behaviours or personality.

Advantages of Market Segmentation.

Distinguish one customer group from another.

Understand Potential Customers.

Pay Proper attention to them.

Formulate Maketing Programmes & Marketing Mix.

Select channels of distribution.

Understand Competition

Efficient use of marketing resources

Accurate measurement of goals & performance.

Facilitate proper choice of target market.

Helps achieve specialization.

Helps spot the less satisfied segments and succeed in satisfying them.

Market Segments require separate products, have unique needs and wants, have unique responses and behaviour, 

Requirements for Effective Segmentation.

To be useful, market segments must have the following characteristics.

1. Measurability - The degree to which the size and purchasing power of the segment can be measured.

2. Accessibility - The degree to which the segments can be reached and served.

3. Substantiality - The degree to which segments are large and profitable enough.

4. Actionability The degree to which affective. programs can be designed for attracting and serving the segments.

5. Growing

6. Compatible with present policies.

7. Profitable.

Bases of Segmenting Consumer Markets.

Geographic: North, s, e, w, region, city, density of population, climate .

Demographic: age, family size, family life cycle, gender, income, occupation, religion, social class.

Psychographic: life-style, personallity, Activities, Interests, Opinions. 

Behavioral

Occasions: regular, special

Benefits: quality, economy, features

User status: non-user, ex- user, potential user, first time user, regular user.

User Rate: light, medium, heavy

Loyalty Status: none, medium, strong, absolute, 

Readiness Stage: unaware, aware, informed, interested, desirous, intending to buy

Attitude : enthusiastic, positive, indifferent, negetive, hostile.

Market Targeting

Markel targeting requires to evaluate the market segments and selecting one or more of them.

* Evaluating Market segments

In evaluating different market segments, a firm must look at three factors: segment size and growth segment structural attractiveness and company objectives and resources.

-Segment Size and Growth

Company must collect data on current sales, projected sales, growth rates cand expected profit margins for various segments.

It must select the segment appropriate in size and growth for the company.

Large and fast growing segments are not always the most atractive for every company.

Smaller companies with lack of skill and resources may find smaller segment more profitable.

-Segment Structural Attractiveness

The company must examine several major structural factors

1. The impact of potential competitors.

2. The threat of substitute products.

3. The relative power of buyers. If the buyers possess strong bargaining power they will force the price down or demand more service at the expense of profitability. 

4. The relative power of suppliers. Suppliers may raise prices or reduce Quality or quantity of goods or services.

-Company Objectives & Resources

Some attractive segments can be dismissed if they are not in line with company's long run objectives.

Even if the company has required strength it must have superior resources if it wants to win.

*Selecting Market Segments

After evaluating different segments, a company hopes to find One on more market segments worth entering.

A Target Market consists of a set of buyers sharing common needs or characteristics that the company decides to serve.

• The firm can adopt three market coverage strategies. 

1. undifferentiated marketing

2. differentiated marketing.

3. concentrated marketing.

-Undifferentiated Marketing

• Undifferentiated Marketing is market -coverage strategy in which a a firm decides to ignore market segment differences and go after the whole market with one market offer.

It focuses on what is common in the needs. of consumers rather than what is different.

It provides cost economies, low inventory, low transportation cost, low marketing research cost, low advertising cost, low marketing. cost and product management cost.

Differentiated Marketing

• Differentiated marketing is a market coverage strategy in which a firm decides to target several market segments and design separate offers for each. 

Concentrated Marketing

Concentrated Marketing is a market-coverage strategy in which a firm goes after a large share of one or a few sub-markets.

Another way of describing market coverage strategy is 

Single segment concentration

Selective specialisation

Product specification 

Market specialization 

Full market coverage strategy.

Choosing A Market-Coverage Strategy

Many factors that must be considered when choosing a market-coverage strategy are -

• Company resources - if limited concentrated marketing makes sense.

•Product variability-

•Products stage in the life cycle - For a new product, undifferentiated marketing or concentrated marketing makes most sense.

Market variability - If most buyers have same taste differentiated marketing is appropriate.

Competitor's Marketing Strategies - when competitors use segmentation undifferentiated marketing can not be used.