Marketing Project Reports on Market Segmentation
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PROJECT REPORT ON MARKET SEGMENTATION
LIST OF CONTENTS SL NO I. INTRODUCTION PAGE TITLE NO 5-8
Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customers. The marketing concept calls for understanding customers and satisfying their needs better than the competition. But different customers have different needs, and it rarely is possible to satisfy all customers by treating them alike. Mass marketing refers to treatment of the market as a homogenous group and offering the same marketing mix to all customers. Mass marketing allows economies of scale to be realized through mass production, mass distribution, and mass communication. The drawback of mass marketing is that customer needs and preferences differ and the same offering is unlikely to be viewed as optimal by all customers. If firms ignored the differing customer needs, another firm likely would enter the market with a product that serves a specific group, and the incumbent firms would lose those customers. Target marketing on the other hand recognizes the diversity of customers and does not try to please all of them with the same offering. The first step in target marketing is to identify different market segments and their needs.
Amul was formally registered on December 14, 1946. The brand name Amul, sourced from the sanskrit word Amoolya, means priceless. It was suggested by a quality control expert in Anand. Some cite the origin as an acronym to (Anand Milk Union Limited). The Amul revolution was started as awareness among the farmers. It grew and matured into a protest movement that was channeled towards economic prosperity. It is a dairy cooperative movement in India. It is a brand name managed by an apex cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.41 million milk producers in Gujarat, India. It is based in Anand town of Gujarat and has been a sterling example of a co-operative organization's success in the long term. The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India one of the largest milk producers in the world. It is also the world's biggest vegetarian cheese brand. Amul's product range includes milk powders, milk, butter, ghee, cheese, chocolate, ice cream, cream, shrikhand, paneer, gulabjamuns, basundi, Nutramul brand and others. In January 2006, Amul plans to launch India's first sports drinkStamina, which will be competing with Coca Cola's Powerade and PepsiCo's Gatorade. Amul is the largest food brand in India with an annual turnover of US $868 million (2009-2010). Currently Amul has 2.41 million producer members with milk collection average of 5.08 million litres/day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of flooding the Japanese markets. Other potential markets being considered include Sri Lanka.
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money.
13 district cooperative milk producers' Union
No. of Producer Members: No. of Village Societies: Total Milk handling capacity: Milk collection (Total - 2006-07): Milk collection (Daily Average 2006-07): Milk Drying Capacity: Cattle feed manufacturing Capacity:
2.6 million 12,792 10.16 million litres per day 2.38 billion litres 6.5 million litres
594 Mts. per day 2640 Mts per day
Sales Turnover 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Rs (million) 11140 13790 15540 18840 22192 22185 22588 23365 27457 28941 29225 37736 42778
US $ (in million) 355 400 450 455 493 493 500 500 575 616 672 850 1050
REQUIREMENTS OF MARKET SEGMENTS In addition to having different needs, for segments to be practical they should be evaluated against the following criteria: ? ? ? ? ? Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified. 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.
Bases for Segmentation in Consumer Markets Consumer markets can be segmented on the following customer characteristics. ? ? ? ? Geographic Demographic Psychographic Behavioralistic
1. Geographic Segmentation The following are some examples of geographic variables often used in segmentation. Region: by continent, country, state, or even neighborhood Size of metropolitan area: segmented according to size of population Population density: often classified as urban, suburban, or rural Climate: according to weather patterns common to certain geographic regions 2. Demographic Segmentation Some demographic segmentation variables include:
Age Gender Family size
Family lifecycle Generation: baby-boomers, Generation X, etc. Income Occupation Education Ethnicity Nationality Religion Social class Many of these variables have standard categories for their values. For example, family lifecycle often is expressed as bachelor, married with no children (DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories have several stages, for example, full-nest I, II, or III depending on the age of the children.
3. Psychographic Segmentation Psychographic segmentation groups customers according to their lifestyle. Activities, interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic variables include: Activities Interests Opinions Attitudes
4. Behavioralistic Segmentation Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include: Benefits sought Usage rate Brand loyalty User status: potential, first-time, regular, etc. Readiness to buy Occasions: holidays and events that stimulate purchases
Behavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation. Market segmentation is the process in marketing of grouping a market (i.e. customers) into smaller subgroups. These markets are often termed niche markets or specialty markets. These segments are fairly homogeneous in their attitudes about certain variables. Because of this intragroup similarity, they are likely to respond somewhat similarly to a given marketing strategy. That is, they are likely to have similar feeling and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way. The purpose of segmentation is to identify and target prime customer groups (eg the 20% that account for 80% of your sales) so that you get the maximum return from a limited marketing budget (the most bang for your buck).
Market Segmentation Of Amul CHOCO CRUNCH
Homogeneity within the segment Heterogeneity between segments Segments are measurable and identifiable Segments are accessible and actionable Segment is large enough to be profitable..... These criteria can be summarized by the word SADAM: S Substantial: the segment has to be large and profitable enough A Accessible: it must be possible to reach it efficiently D Differential: it must respond differently to a different marketing mix A Actionable: you must have a product for this segment M Measurable: size and purchasing power can be measured .
The Process-Data Model Of Marketing Segmentation A given diagram is a generic process-data model is given for the whole process of segmenting and positioning as a basis of deciding on the most effective marketing strategy and marketing mix. This model consists of the three main activities: segmenting, targeting and positioning. It shows the chronological dependency of the different activities. On the right side of the model the concepts resulting from the activities are showed. The arrows show that one concept results from one or more previous concepts; the concept cannot be made when the previous activities have not taken place. Below the three main activities are shortly described as well as their role as a basis for the next step or their dependency on the previous step.
Research, particularly in social science contains endless word spinning and too many quotations; end result though may be far from expectations. In context of planning and development it is to be noted that it significant lies in quality than quantity. Therefore, eventually proper attention has to be paid to designing and adhering to appropriate methodology throughout so as to improve the quality of the research. Research type: This type of result is Descriptive research .Descriptive Research includes surveys and fact finding enquiries of different kinds. The major purpose of Descriptive Research is description of the state of affairs, as it exists at present. Research Design: The survey was conducted for the Amul products where a questionnaire was filled from the retailers, wholesaler and consumers. The population and the samples were evenly divided in such a manner so as to extract the best possible results within the given limitation. Sampling Design: The survey was conducted within a selected part of Pune region by dividing the sample evenly. The whole of Pune region was divided based on the number of wholesalers and retailers. Sampling Unit: Retail outlets. Sample Size: 950 retail outlets. Areas Covered: NDA, Uttamnagar, Manikbaug, Suncity, Wadgoan, PimpriNighidi, Vallabhnagar, Ajemera, Pradhikiran, Paudroad, Warje 1 & 2, Karvenagar, Kothrud.
Method of Data collection: There are several method of data collection available but,one of the most common method is-questionnaire method,same was found appropriate for this research , for the reason that
Questionnaire are one of the most commonly used methods. ? ? It is cost-effective. It is time-effective.
The questionnaire was designed by us and also with the help of panel members of Amul. Determination of sources of Data collection: A list of retailers were generated area wise and later on contacted individually. Sampling procedures: ? The procedure employed for conducting the survey is on random basis. ? The database was referred for carrying out the survey. First the areas to be covered were decided and then the respondents were contacted directly. ? As the respondents filled the sheets, his/her view relating to his expectation was also noted. This was done with the aim to gather the information, which would provide related and relevant insights as to what did the customer expect. Tools for the Data Collection: For the collection of primary data one to one interview method with the help of well structured questionnaire with both open and closed ended questions were used.The survey of all retailers was conducted and their responses were taken down carefully with the help questionnaire.
Tools for Data Analysis: For the purpose of analyzing the data statistical tools such as weighted average method and percentage analysis were used.For better understanding the raw data tools like bar graphs and pie charts were used. Limitations: The sample size: The biggest limitation of the research is the wide area of Pune region. Only 30% of the entire area was considered for the research. 1. The sample size was too small when we take the universe into the consideration, which is very big. 2. The survey was done in a part of Pune city hence if generalizations are to be made for whole city, some deviations might occur.
3. Though the data is collected in a best possible way but still the above figures depict the performance of the company. 4. The sample selected wasdone on random basis and taken from few selected areas that are supposed to represent the whole population. Hence some deviations might be there when the same is applied to the whole universe. 5. Retailers did not provide the real data for the study. 6. Retailers are scattered all over Pune city and its very difficult to locate and contact each of them. 7. The big retailer are not ready to fill up the questionnaire. 8. Feedback may not be very reliable owing to difference in opinion. Research Design
Identify the Problem “To study the market segmentation of Amul chocolate &Shrikhand in pune market” Designing of Research Procedure Procedure employed for survey is on random basis. Areas to be covered were decided and the respondents were contacted directly. Expectations and views were noted as respondent’s Defining Methods ofthe Data Collection filled in their response sheets. Primary Data Secondary Data
Collection of Data from websites, manuals and company records
Surveyed 950 retail outlets in Pune city
Analyzing and tabulating the Data 1. For analyzing of Data, statistical tools such as weighted average method and percentage analysis were used 2. Also, Data was tabulated with the help of Bar charts and Pie diagrams. Interpretation of Data
1.Amul India has a market share of around 5% in
Chocolate industry for which the competitors includes leaders like Cadburys & Nestle. 2.For Shrikhand market, Amul has a market share of 30% which includes tough competition with chitle, warna&Gagangiri. 3.The distribution Network of Amul India has to be more efficient as compared top others. 4.The Trade margin for Amul products is quite high. Suggestions
1.Should increase the awareness of Amul products
through advertising in various media. 2.The Retail margin for their products should be increased so that that more number of retailers will have Amul products.
ANALYSIS AND INTERPRETATION
GRAPHICAL REPRESENTATION OF DATA The data is obtained by administering the questionnaire to the selected samples and the results are calculated on the basis of the data thus collected. The data is supported by graphs and charts for easy understanding.
PIE DIAGRAM SHOWING THE MARKET SHARE OF CHOCOLATES IN PUNE REGION Fig.1
MARKET SHARE OF CHOCOLATES IN PUNE REGION
CADBURY 48% OTHERS 18% ` AMUL 16%
Competitors Cadbury Nestle Amul Others
Market Share(%) 48 18 16 18
Explanation: From the fig.1, we can see that, Amul faces a tough competitoneith the leaders from chocolate industry like Cadbury & Nestle. Cadbury leads the market of Chocolates with a market share of 48% and Amul with a share of mere 16%.
PIE DIAGRAM SHOWING THE MARKET SHARE OF SHRIKHAND IN PUNE REGION Fig.2
Market Share of Shrikhand in Pune Region
Gagangiri 10% Amul 30%
Competitors Amul Chitale Warna Gagangiri
Market Share(%) 30 40 20 10
Explanation: From the fig.2, it shows the market share of shrikhnad in Pune region. The fig. clearly reflects that the share of Amul Shrikhand holds a good position after Chitale. The market share is about 30% of Amul, 40% of Chitale , 20% of Warna& 10% of Gagangiri.
BAR CHART SHOWING THE DEALER MARGIN FOR CHOCOLATES IN PUNE REGION
DEALER'S MARGIN FOR CHOCOLATES IN PUNE REGION
Others, 10.00% 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Cadbury Nestle Amul Others z Amul, 4% Nestle, 5.86%
Cadbury Nestle Amul Others
Competitors Amul Nestle Cadbury Others
Dealers’s Margin 4 6 9 10
EXPLANATION: From the fig.3, it reflects that the dealer margin is quite low for Amul Chocolates as compared to Nestle & Cadbury with a dealer margin of 6 and 9 points respectively.
BAR CHART SHOWING THE DEALER MARGIN FOR SHRIKHAND IN PUNE REGION
DEALER MARGIN OF SHRIKHAND IN PUNE REGION
12 10 8 6 4 2 0 Amul Chitale Gagangiri
0thers, 11 Amul, 9.4 Gagangiri, 10.02 Chitale, 8.77
Amul Chitale Gagangiri 0thers
EXPLANATION: From the Fig.4, it shows the dealer margin for Shrikhand market in Pune region.
BAR CHART SHOWING THE DEALER MARGIN FOR CHOCOLATES IN PUNE REGION
Retailers Margin for Chocolates in Pune region
z Nestle Nestle, 11.2
Nestle Amul Others
EXPLANATION: From the Fig.5, it shows the dealer margin for Chocolates market in Pune region.
After the most attractive segments are selected, a company should not directly start targeting all these segments. The attractiveness of the segments is also depending on other important factors. In the main activity of defining a target market, four sub activities are given which are the bases for deciding on which segments will actually be targeted.
AGE GROUP TARGETED
60 50 40 30 20 10 0 7 - 20 yrs 21 - 40 yrs 40 - 50 yrs
The four sub activities performed by Amul while targeting are:-
Defining the abilities of the product and resources needed to enter a market Analyzing competitors on their resources and skills Considering the company’s abilities compared to the competitors’
Deciding on the actual target markets.
The first three sub activities are described at the topic competitor analysis. The last sub activity of deciding on the actual target market is an analysis of the information made available when comparing the companies abilities to the competitors’. This analysis leads to a list of segments which are most attractive to target and have a good chance of leading to a profitable market share. Obviously, targeting can only be done when segments are predefined; there have to be segments to analyze the competitors which are in this market. When the process of targeting is ended, the markets to target are selected, but the way to use marketing in these markets is not yet defined. To decide on the actual marketing strategy, knowledge of the differential advantages of each segment is needed. When positioning a product, the segments are first analyzed, this process is described next.
In order to ensure a continuous & efficient distribution, an approximate figure has to be arrived at for getting the initial orders & to ensure adequate supply so that any delays or resultant losses are avoided. For this purpose, the company adopted the consumer response hierarchy model so that, it is ensured that all the company enters the market with a bang avoiding any problems of late or inadequate supplies. This is highly essential to support the huge promotional budget, since if the supplies aren’t at the right time, all other effort can be in vain. As Per The Consumer Response Hierarchy Model; The Calculations Are Like Below:
5% of Trial 10% ofPreferencePrefer ence 20% of Liking 40% of Knowledge 60% of Awareness 80% of Targeted Population
TRIAL PREFERENCE LIKING KNOWLEDGE AWARENESS
Studying The Demographic Conditions Of INDIA
It is expected that 80% of this targeted population will get aware about the products with the help of the sales promotion, advertising and other marketing tactics. Out of the People being aware of the products & the company, 60% will have somewhat exact knowledge of the product. It is expected that out of the people having the knowledge of the product, with the product features and the requirement of milk in the country, 40% will develop a liking for the products. 20% of the target audience who have developed a liking, will opt for the company’s product as against the products they are using for daily consumption. 10% of the people who might prefer the product, will actually try it for the first time. 5% of the people who have tried it for the first time, might be convinced to purchase the product again Thus, adding up the people trying the product and the re-purchaser of the products, it comes up to 624960 people.
OBSERVATIONS AND FINDINGS
On the analysis of data following were the findings ? In the survey of each outlet I found that availability of Amul Shrikhand is more than other brand. ? The service provided by Amul to retailer is very good comparing with other brand. ? The quality of Amul Chocolate and Shrikhand is very good comparing with other brands. ? Amul Shrikhand sales is more than any other brand. ? At most of the outlets, employees are not satisfied even dealers also. ? According to them, Amul only takes action for customer satisfaction but for the outlets employee’s satisfaction, Amul tries to avoid it. ? In retail outlets customers focus on quality of products and not on service given by them. ? Customer trust on brand of product and name of company while purchasing the product.
The survey we carried out among 950 retailers for Amul Chocolates and Shrikhand was a great success in finding some important feedback. The survey we carried out was a face to face interview with retailers and customer.
Pricing ? ? ? Many retailers want more margins on Amul’s Chocolate and Shrikhand. Some said that the price should be in round figures. Some said the price should be less.
Product Quality ? Majority of the people said that the quality of Amul Chocolate and Shrikhand is very good. They don’t have any problem regarding this. Many said that Amul should maintain its quality in coming years.
It is said that the ‘line to perfection never exists’, in a way it suggests that continuous improvement and development is essential to atleast near to the ‘Perfection’. To help a plant grow it must be suitably watered, sunlight and soil, which best suit its kind, similarly the organization too, to see that its efforts get results, must provide with proper attention for the development of the company. After analyzing the data collected during the survey, following improvements can be made in future. 1. Replacement facility should be made available for all the products. 2. Promotional activities like, Wall paintings, Flex boards should make available for more product awareness. 3. Efficient distribution must be followed. 4. Promotional activities should be undertaken. 5. To create awareness for the products, different modes of publicities should be used such as Neon sign, Hoardings, Danglers. 6. Dealers should offer some attractive commissions for generating regular supply of Amul Chocolates and Shrikhand.
? Amul India sells quality products like Amul milk, Amulshrikhand, Amul Chocolates, Amul Ice-cream and Amul butter which are a brand in itself. So, its widely favoured with the consumers. ? Consumers get good quality, good product, good brand & good service at their door-step at an affordable price. ? From the survey, it shows that the Shrikand market is favourable for Amul rather than Chocolate market as it faces stiff competition with the leaders in chocolate industry like Cadbury & Nestle. ? The dealer margin is quite low as compared to other competitors. Also, the distribution network of Amul India is quite efficient
Competition will never end so let's not avoid it but face it confidently, "For a chief executive, unless he knows where he is going no one can take him there". What's the use of Market Segmentation if it does not reach desired results? Therefore it is necessary for every individual who has something to sell but no one to buy, to detect the problem areas and try to solve them. But for this, knowing the right problem is extremely essential otherwise hitting the target in dark means nothing.
Therefore, it is rightly said that a "well defined problem is half done". Once you know your drawbacks only then you can correct it. Therefore, to know your drawbacks you need to conduct a survey and get information right from the ultimate users of your product. They should be asked to bring out your drawbacks. This will help you to not only know your pitfalls but also what your customers want and their likes and dislikes and while doing so build a good rapport with your customers. While conducting such surveys you can also advertise your products among those customers who are not much aware of it. "There are three ways of doing a thing—- the wrong way, the right way and our way"
whichever may be your way the ultimate aim is to achieve the results and implement them to maximize customer satisfaction we all know competition is intense then why not take it positively so that it helps us to improve our product quality, makes customers loyal to us, helps us know our shortcomings and rectify them. The best way to overcome your competitors is to give your customers what they expect or probably more than that.
To know the customers expectations towards Amul, I had conducted a market Research of the existing customers, which helped me to know the satisfaction, awareness and liking among customers for the products of Amul and analyze the situation and provide them suggestion to improve the situation. These suggestions if implemented would definitely yield results and
"Ultimately the results matter, how and who does it is immaterial".
Books referred : 1.Marketing management --------- Philip Kotler, Millennium Edition(1998) Prentice Hall Publication, INDF, New Delhi – 110001
2.Reserch Methodology ----------- C. R Kothari, Second Edition, Twenty First Re-print, 1998 WishwaPrakashan, New Delhi.
3.Marketing research -------------- David Lucky and Ronald Rubin Prentice Hall of India Private Ltd; 1997(Ninth Edition)
4. Information supplied by the company.(Company manuals & files) 5. Websites -------------------------- www.amul.com www.google.com
QUESTIONNAIRE FOR WHOLESALERS
WHOLESALER(WD) WD Name Location
Which Chocolate sell More? 1. Milk Chocolate 2.Fruit n Nut 3.Fundoo 4.Bindass 5.Almond bar 6.Chocozoo 7.Sugar free 8.Rejoice
At what time is the Demand of
Chocolates more? 1.Festival 2.Holiday 3.School open
What kind of trade Support would increase The sale? 1.Chocolate 2.Shrikhand
What else can we Do to increase the sales?
QUESTIONNAIRE FOR CONSUMERS
CONSUMER Name Location
Which is your chocolate? Have you eaten Amul Chocolate? If yes did you like the Taste? Which flavour do you Like the most? 1.Milk Chocolate 2.Fruit n Nut 3.Fundoo 4.Bindass 5.Almond 6.Chocozoo 7.Sugar free 8.Rejoice
Do you gift chocolates?
When would you like To eat chocolates? Is chocolate easily Available in your Locality? Would you like to buy Amul chocolates?
Which Shrikhand do you Eat? Have you eaten Amul Shrikhand? Which flavour do you Like the most? 1.Kesar 2.Badam 3.Pista 3.Elaichi 4.Mango
Is Shrikhand available In your locality?
QUESTIONNAIRE FOR RETAILERS
RETAILERS Retailer Name Location
Do you keep Amul Chocolates? If yes the, which chocolate sell more? 1. Milk Chocolate 2.Fruit n Nut 3.Fundoo 4.Bindass 5.Almond bar 6. Chocozoo 7.Sugar free 8.Rejoice
At what time is demand of chocolates more? 1.Festival 2.Holiday 3.School open
Which age group people buy the chocolates more? 1. 4-10 yrs 2. 11-20 yrs 3. 20-35yrs 4. Above 35yrs
Do you keep Amul Shrikhand? What are the retailer margin for? 1. Chocolate A)Cadbury 2. Shrikhand B)Nestle C)Others
Trade schemes on A) Chocolates B) Shrikhand What kind of trade would Increase the sell? 1. Chocolates 2.Shrikhand