MARKET SEGMENTATION STRATEGIES AND CASES

MARKET SEGMENTATION STRATEGIES AND CASES

BY

SMART LEARNING WAY

CONTENTS 

•       Introduction

•       Definitions of Marketing segmentation

•       Basis of Market Segmentation

•       Objectives of Marketing segmentation

•       Characteristics of market segmentation

•       Flow Chart of Segmentation process

•       Indian examples of various market segments

•       Market Segmentation Strategies

•       Strategic marketing planning

•       Limitations of Segmentation

•       Methods of Seg-men-ta-tion

•        Requirements for segmentation

•       Case Example

•       Grand on Nirma ,Hul ,and Godrej.

•       Conclusion

•       Bibliography

INTRODUCTION

   Marketing segmentation is a process of grouping the customers into number of different divisions on the bases of similar characteristics. It is a customer oriented philosophy. A market segment consists of a identifiable group within a market. Every product is not required by everybody. Therefore marketer must group the customers on the basis of similar characteristics or uniform  response to a concentrate either on one or more groups depending upon his capability instead of launching his product in the open market. 

   Market segmentation strategy involves dividing the market into groups, where individuals have similar needs and wants for services and products. It could also be a segmentation of people on the basis of behavior, culture and economic status. To get a clearer picture of what is market segmentation, one can always look into the definition provided by business dictionary. COM, market segmentation is defined as, "Process of defining and sub-dividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics".

DEFINITIONS OF MARKETING SEGMENTATION 

            According to Philip Kotler, ” Market segmentation is the sub-dividing of market into homogeneous sub-sections of customers . where any sub-section may conceivable be selected as a market target to be reached with a distinct marketing mix.”

           According to W. J .Stanton, “Market segmentation consists of taking the total heterogeneous market for a product and dividing information technology into several sub-markets or segments, each of which tends to be homogeneous in all significant aspects. 

           Market segmentation allows a marketer to take a heterogeneous market, a market consisting of customers with diverse characteristics, needs , wants and behavior , and carve information technology up into one or more homogeneous markets which are made up of individuals or organizations  with similar needs, wants and behavioral tendencies.

           marketing segmentation means “Group according to their similarity related to a particular product category.

            McDonald’s and other marketers have found market segmentation to be a valuable technique for the following reasons:

•       Efficient use of marketing resources

•       Better understanding of customer need

•       Better understanding of the competitive situation

•       Accurate measurement of goals and performance

         

     Market segments are groupings of two or more consumers for a product or service so that their needs are better served.

       

Basis of Market Segmentation

Geographic

Village

Local market

Zonal Region

City or Metro

Size of density

Country

Climatic conditions

Demographic

Age

Gender

Race

Marital status

Education

Income Occupation Religion

Family size

Family life cycle

Nationality

Psychographic

Compulsiveness

Gregariousness

Autonomy

Conservation

Leadership

Authoritarianism

Ambitiousness

Personality 

Behavioural 

Usage rate

Readness  stage

Benefits sought

Enduse

Brand loyality

Brand belief

Market factors

Occasions

Attitude towards

products

Objectives of Marketing segmentation

•       To understand market segmentation and targeting.

•       To be able to evaluate the success of market segmentation for businesses.

Market Segmentation

•       This is where the market is broken down into smaller sub groups that share similar characteristics

•       Age

•       Gender

•       Income

•       Religion

•       Ethnic group

•       Level of education

•       Geographical

•       Social class

Characteristics of market segmentation 

•       Age

•       Gender

•       Geographic location

•       Income

•       Spending patterns

•       Cultural Background

•       Demographics

•       Marital status

•       Education

•       Language

•       mobility

Flow Chart of Segmentation process 

Analyze the needs of customers

Analyze the characteristics of consumers

Dis aggregate the consumers into suitable segments

Formulate different market mix for different segments

 Feedback of various segments

 Select the higher potential segments

INDIAN EXAMPLES OF VARIOUS MARKET SEGMENTS

1. Single Segment Concentration

Woodland shoes

Cellular phones

2. Selective Specialization

DENTA Cream Tooth Powder (Dabur)

3. Market  Specialization

Sultan Chand & Sons ( Books covering all types of student need , schools , colleges & institutes)

4. Product  Specialization

Mahindra & Mahindra jeeps

 Bajaj Auto

5. Full Coverage

Pepsi, Titan , Bata

Practical Requirements of Market Segmentation 

1.       Relevant

2.       Sizeable

3.       Accessible

4.       Measurable

5.       Profitable 

•      Market Segmentation Strategies

How a market is segmented is based on variables used for segmentation; behavioral, demographic, psychographic and geographical differences.

1.Behavioral Segmentation: 

          Behavioral segmentation is based on the customer's needs and subsequent reaction to those needs or toward the purchase of intended products and/or services. This study is conducted on all variables that are closely related to the product itself, like loyalty to a particular brand, cost effectiveness in terms of benefits and usage, circumstances responsible for the purchase, whether the customer is a regular, a first timer or and has the potential to become a customer, and whether the readiness to buy is linked to status.

2.Demographic Segmentation: 

              Demographic segmentation refers to a wide study of the potential customers. While marketing a product many variables like age, gender, education, income, size of the family, occupation, socioeconomic status, culture and religion, language and nationality are taken into account. There are many instances where such a segmentation has worked very profitably, toys and clothes for every age group, certain food products that do well in certain counties and don't in some, either due to cultural or religious reasons. Demographic segmentation plays a vital role in determining whether a product can be mass marketed or designed for specific clientele. Dividing the market into groups based on variables such as age, gender family size, income, occupation, education, religion, race and nationality.

•       3.Psychographic Segmentation: 

             Segmenting people according to their lifestyles and values, and how they translate into consumption or purchases of products of services is what psychographic segmentation is all about. How one's interest, opinions, values, attitude and the activities they perform, all affects how and why a group of people would lean towards one product more than others. A high status would translate into an expensive flying habit, while a thrift value will translate into an economy flight.

•       4.Geographical Segmentation: 

             Geographical segmentation is done by dividing people (markets) into different geographical locations. The country, state, or neighborhood, the king of gentry, climate, size of a place segmented into size of its age wise population, etc. all play a role in devising market strategies. This helps the producer and the marketers to understand what will sell and what won't, for example, a market for winter wear would definitely not work in warm regions. Geographic segmentation tries to divide markets into different geographical units.

•       Strategic marketing planning

•       Strategic marketing planning involves four steps.

1)Situation Analysis

             Situation analysis is the starting point in all planning activities ,I.e. .,where are we now? Information technology analyses existing marketing programmed and where the programmed should go in the future. Information technology gives information on market demand, market environment and performance. it enlightens us on our capabilities and limitations. Information technology also reviews the existing marketing mix  thoroughly.

2)Marketing Objectives and Strategies

               these at the marketing level are closely allied with corporate objectives and strategies. The marketing objectives translate corporate strategy is 20 per cent cost reduction in order to enhance profitability. This company strategy will now be the marketing objective and the marketing strategy may be payment  of sales remuneration in the form of commission instead of salary.

3) Segmentation and target market

              in a new company, segmentation enables the company to identify potential target markets. In a running concern, management reassesses  the choice of target  markets and modifies them, if necessary. The firm may also reconsider segmentation strategy. Information technology has to ascertain sales forecast in its target markets.

4) Marketing –mix

           A distinctive marketing –mix is now prepared to satisfy target market demand and attain marketing objective for each target market.

           marketing-mix and its implementation constitute the bulk of  company’s marketing  efforts. We have the best integration of product, price, promotion and distribution strategies.

        

Advantages of Segmentation

•              The main advantage of market segmentation lies in a better understanding of the consumer needs and behaviour so that a marketer can plan accordingly. In brief, market segmentation helps:

•       Understand potential customers;

•       Pay proper attention to particular areas;

•       Formulate marketing programmes;

•       Select channels of distribution;

•       Understand competition;

•       Use marketing resources efficiently;

•       Advertise the products and launch sales promotion programmes;and

•       Design marketing mix- product , price, place and promotion.

Limitations of Segmentation

•       Lack of information and data: some markets are poorly researched with little information about what customers want

•       Difficulty in measuring and predicting consumer behaviour: humans don’t all behave in the same way all of the time.

•       Hard to reach customer segments once identified: it is one thing spotting a segment; it is another reaching target customers with an effective marketing message

Methods of Seg-men-ta-tion 

  Demographic/Geographic refers to age, sex, income, education, race, martial status, size of household, geographic location, size of city, and profession. 

   Life stage refers to chronological benchmarking of people's lives at different ages (e.g., pre-teens, teenagers, empty-nesters, etc.).

   Lifestyle refers to the collective choice of hobbies, recreational pursuits, entertainment, vacations, and other non-work time pursuits

   Psychographics refers to personality and emotionally based behavior linked to purchase choices; for example, whether customers are risk-takers or risk-avoiders, impulsive buyers, etc. 

  Belief and value systems  includes religious, political, nationalistic, and cultural beliefs and values. 

   Behavior analysis includes what behaviors consumers actually engage in (after all is said and done)

  Requirements for segmentation

   Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified.

Relevant/Accessible: the segments must be reachable through communication and distribution channels.

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

Unique needs: to justify separate offerings, the segments must respond differently to the different marketing mixes.

Durable: the segments should be relatively stable to minimize the cost of frequent changes.

CASE EXAMPLE

Fashion Channel: Market Segmentation (Brief Case)

  The new Senior Vice President of Marketing for The Fashion Channel (TFC), a cable television network dedicated to round-the-clock, fashion-oriented programming, is preparing to recommend a change in the company's traditional marketing approach by introducing a market segmentation program. This program is, in part, a response to the intensifying competitive environment for TFC, and it needs to strengthen the company's brand and positioning with viewers and advertisers. At the same time, the program must maintain consumer and distributor satisfaction with the network. Several segmentation options are being considered, each with pros and cons. 

   Consumer research provides insights but does not give a simple answer regarding the best path to take. The reader must evaluate the research results, calculate financial scenarios, and make a recommendation. Also looks at change management issues. TFC has never done a program like this before, and the Senior Vice President of Marketing is new to the job. In addition to making a recommendation, she must manage the change process to insure that the organization and her leadership team peers are fully aligned.

NIRMA

   Shri Karsanbhai Patel is typical example of success of Indian entrepreneurship face of stiff competition . Starting as one man operation in 1969 , the brand is today industries third best brand as per ORG MARG survey . Norma's strategy has always been to provide the consumer with  “VALUE FOR MONEY” option.

MARKET PROMOTION & ADVERTISING ACTIVITIES

•          Executive

       Advertising

Nirma

        Ltd.

      ·         Advertising

       Agency

      Poornima ads

•          Media

        Air

               Tv etc.

HINDUSTAN UNILEVER LIMITED,

                 Hindustan Unilever Limited, 51.6 Subsidiary of Unilever Plc , is the largest FMCG co. in the country. The co. business sprawl from Personal & household care Products to foods , beverage , specialty , chemicals &animal Feeds .HUL is the market leader in he detergent & soap industry .  

HUL’S DISTRIBUTION NETWORK

•       HUL  Factory

•       Carrying  & Forwarding  Agents

•       Stockiest

•       Retailers &  wholesalers

GODREJ

          Godrej’s Major product line are toilets soaps & Detergent , industrial Chemicals , cosmetics & Men’s toiletries . It has interest in several other business such as real estate, agro produce etc. through its subsidiaries 

POPULAR SEGMENT : shoodh ganga, Doodh ganga , cinthol, Cinthol Fresh, Godrej NO-1 , Fair Grow

MID PRICE SEGMENT : Cinthol lime , cinthol Cologne

PREMIUM SOAPS : Cinthl ultimate , Vita

Conclusion

   Market segmentation: is separating a market into distinct groups of potential consumers who share common characteristics and interests and who are likely to be attracted to particular products or services. Segmentation allows you to develop products and plans which fit the needs of customers more efficiently. Market segmentation is also separating the customers into different groups, and sometimes can split up into different age groups because different age customers are interested in different things from the business. Market segmentation is a marketing approach that encompasses the identification of different groups of customers with different needs or responses to marketing activity. The market segmentation process also considers which of these segments to target.

BIBLIOGRAPHY

1) The essence of international marketing

  - Stanly J. Paliwoda

•                 Prentice –Hall of India, New Delhi

2)Principles of marketing

  - Philip Kotler

  - Gary Armstrong

•                Prentice –Hall of India Private Limited

3. Marketing management

         -S.A. sherlekar

•               Himalaya publishing house

4. Management-2

        -Anand K. Bewoor

        -S. KULKARNI

•       Tech-max publications, pune