IDENTIFYING MARKET SEGMENTS AND TARGETS

faaiz

Par 100 posts (V.I.P)
Market segmentation There are very few products which can be sold to all people or organizations. Therefore, marketers must segment potential customers into subsets, or target markets that can be effectively and efficiently reached.

Levels of Market segmentation:

There are mainly four levels of Market segmentation

1. Segmenting marketing: A market segment consists of a group of customer who share a similar set of needs and wants, called segment marketing. Following are the different ways of market segment can be defined.
Homogeneous preference: The market where all the consumer roughly the same preference .The market shows no natural segment.
Diffused preference : The market where consumer preference may be scattered throughout the period, indicating that consumer very
Greatly in their preference.
Cluster preference : The market which might reveal distinct preference clusters, called natural market segment. The first firm in this market has three options. It might position in the center, hoping to appeal to all groups. It might position in the largest market segment. It might develop several brands, each positioned in a different segment.
2. Niche marketing: Niche marketing is more narrowly defined customer group seeking a distinctive mix of benefits. Marketer usually identify niches by dividing a segment in to sub- segment .with increase the efficiency of market , niches that were seemingly too small may become more profitable .
3. Local marketing: local marketing reflects a growing trend called grass-roots marketing. Here marketing activity concentrate on grass-roots level where products are promoted not only by communicating its features and benefits but by also connecting it with unique and interesting experience.
4. Customerization: The ultimate level of segmentation leads to “segment of one” “customized marketing” or “one to one marketing”. Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumer to design the product and service offering of their choice.
But customerization is not for every company. It may be very difficult to implement for complex products such as automobiles.
Customerization can raise the cost of goods by more than customer is willing to pay. In spite of this, Customerization has worked well for some products e.g. Paint companies such as jenson & nicholson, Asian paint.





SEGMENTING CONSUMER MARKETS:

There are two broad group of variables are used to segment consumer markets. One of them form segment by looking at descriptive characteristics: geography, demography, and psychographics. Another one form segment by looking at “behavioral” .following are the explanation of these segment consumer markets.

1. Geographic segmentation: Geographics segmentation calls for dividing the market in to different geographical units such as nation, states, regions, countries, cities or neighborhoods. The size of the village, cities which help to divide the marketing efforts. In addition product penetration, income levels and availability of infrastructure like roads and electricity make the task geographic segmentation important as well as complex. Geographic market also very in their product requirements. In the arid regions of western India such as Rajasthan and Gujarat, during hot and dry summer seasons, air coolers are used .However, this product is ineffective in areas like Kerala or Goa where the climate is hot and humid during the summer. In such geographic areas, air conditioners are preferred.
2. Demographic segmentation: In demographic segmentation, the market is divided in to groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education religion, race, generation, nationality and social class.
AGE AND LIFE-CYCLE STAGE: consumer want and abilities change with age. Therefore, age and life cycle stage are important variables to define segments. Hindustan Lever introduced Pears soap in pink color, especially target towards children.
LIFE STAGE: Life stages define person’s major concern such as getting married, deciding to buy house, taking care of parents etc. These life stage present opportunities for marketers who can help people cope with their major concerns. Banks offering loan to purchase the house.
GENDER: Men and women have different attitudinal and behavioral orientations, based partly on socialization and genetic makeup. Gender differention has long been applied to product categories such as clothing, hairstyle, cosmetics, and magazines.
INCOME: Income determines the ability of consumer to participate in the market exchange and hence this is a basic segmentation variable. Nirma washing powder, for example, was launched as the lowest priced detergent in India primarily targeted at the middle-income segment of the market.
GENERATION: Each generation profoundly influenced by the times in which it grows up-the music, movies, and politics and defining the events of that period.
SOCIAL CLASS: Social class has a strong influence on preference in cars, clothing, home furnishing, leisure activity, reading habits and retailers.


3. Psychographic segmentation: psychographic is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided in to different groups on the basis of psychological, life style or values .People within the same demographic group can exhibit very different psychographics profile. Values and lifestyles significantly affect the product and brand choices of consumers. Religion has significantly influence on values and lifestyles. Titan watches have a wide range of sub- brands within their brand such as Edge, Regalia, Nebula and Raga, to appeal to different lifestyles segments.
4. Behavioral segmentation: In behavioral segmentation buyers are divided in to groups on the basis of their knowledge, attitude towards, or response to a product. Many marketers believe that the behavioral variable-occasion, benefits, users status, loyalty status, buyer reading stage and attitude are the best starting points for constructing market segments.

STEPS IN SEGMENTING A MARKET

1 Select a market or product category for study
2 Choose a basis or bases for segmenting the market
3 Select the specific segmentation variables for use (descriptors)



4 Profile and evaluate segment(s)
Size
Expected growth
Purchase frequency
Current brand usage
Brand loyalty
Long-term sales and profit potential
5 Select the target market(s)
6 Design, implement and maintain appropriate marketing mixes (product, price, promotion, distribution)

BASES FOR SEGMENTING BUSINESS MARKET
PRODUCERS:
RESELLERS:
INSTITUTIONS:
GOVERNMENT:
Marketers further divide one or more of these segments into micro segmentation or macro segmentation variables.
MACROSEGMENTATION VARIABLES
Geographic location
Customer type
Customer size
Product use



MICROSEGMENTATION
Key purchasing criteria
• Technical support
• Product quality
Purchasing strategies
• Satisfiers
• Optimizers
Importance of purchase
• Routine & small
• Major expenditure
Personal characteristics
• Demographics
• Decision style
• Tolerance for risk
• Confidence level
• Job responsibilities

There are two bases for segmenting consumer markets:
• Consumer characteristics
• Consumer responses






MARKET TARGETING
Once the firm has identified its market segment opportunities, it has to decide how many and which ones to target. Basically target marketing involves three activities: market segmentation, market targeting, and market positioning.
1. Market segmentation: Basically not all types segmentation are useful. It is important to recognize that a marketer needs to use relevant variables to segment a market. For example: segmenting a market based on a person’s age is not relevant for a product like salt. To be useful, market segments must rate favorably on five key criteria: Measurable, substantial, accessible, differentiable, and actionable.
2. Market targeting: The firm must look two factor in targeting the market: the segment’s overall attractiveness and the company’s objective and resources. There are basically five patterns of target marketing: single segment concentration, selective specialization, product specialization, market specialization, full market coverage.
3. Market positioning: The creation of an image for a product or service in the minds of customers, both specifically to that item and in relation to competitive offerings. In marketing, positioning is the technique by which marketers try to create an image or identity for a product, brand, or organization. It is the 'place' a product occupies in a given market as perceived by the target market. Positioning is something that is done in the minds of the target market. A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors. Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.
De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.
 
Market segmentation There are very few products which can be sold to all people or organizations. Therefore, marketers must segment potential customers into subsets, or target markets that can be effectively and efficiently reached.

Levels of Market segmentation:

There are mainly four levels of Market segmentation

1. Segmenting marketing: A market segment consists of a group of customer who share a similar set of needs and wants, called segment marketing. Following are the different ways of market segment can be defined.
Homogeneous preference: The market where all the consumer roughly the same preference .The market shows no natural segment.
Diffused preference : The market where consumer preference may be scattered throughout the period, indicating that consumer very
Greatly in their preference.
Cluster preference : The market which might reveal distinct preference clusters, called natural market segment. The first firm in this market has three options. It might position in the center, hoping to appeal to all groups. It might position in the largest market segment. It might develop several brands, each positioned in a different segment.
2. Niche marketing: Niche marketing is more narrowly defined customer group seeking a distinctive mix of benefits. Marketer usually identify niches by dividing a segment in to sub- segment .with increase the efficiency of market , niches that were seemingly too small may become more profitable .
3. Local marketing: local marketing reflects a growing trend called grass-roots marketing. Here marketing activity concentrate on grass-roots level where products are promoted not only by communicating its features and benefits but by also connecting it with unique and interesting experience.
4. Customerization: The ultimate level of segmentation leads to “segment of one” “customized marketing” or “one to one marketing”. Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumer to design the product and service offering of their choice.
But customerization is not for every company. It may be very difficult to implement for complex products such as automobiles.
Customerization can raise the cost of goods by more than customer is willing to pay. In spite of this, Customerization has worked well for some products e.g. Paint companies such as jenson & nicholson, Asian paint.





SEGMENTING CONSUMER MARKETS:

There are two broad group of variables are used to segment consumer markets. One of them form segment by looking at descriptive characteristics: geography, demography, and psychographics. Another one form segment by looking at “behavioral” .following are the explanation of these segment consumer markets.

1. Geographic segmentation: Geographics segmentation calls for dividing the market in to different geographical units such as nation, states, regions, countries, cities or neighborhoods. The size of the village, cities which help to divide the marketing efforts. In addition product penetration, income levels and availability of infrastructure like roads and electricity make the task geographic segmentation important as well as complex. Geographic market also very in their product requirements. In the arid regions of western India such as Rajasthan and Gujarat, during hot and dry summer seasons, air coolers are used .However, this product is ineffective in areas like Kerala or Goa where the climate is hot and humid during the summer. In such geographic areas, air conditioners are preferred.
2. Demographic segmentation: In demographic segmentation, the market is divided in to groups on the basis of variables such as age, family size, family life cycle, gender, income, occupation, education religion, race, generation, nationality and social class.
AGE AND LIFE-CYCLE STAGE: consumer want and abilities change with age. Therefore, age and life cycle stage are important variables to define segments. Hindustan Lever introduced Pears soap in pink color, especially target towards children.
LIFE STAGE: Life stages define person’s major concern such as getting married, deciding to buy house, taking care of parents etc. These life stage present opportunities for marketers who can help people cope with their major concerns. Banks offering loan to purchase the house.
GENDER: Men and women have different attitudinal and behavioral orientations, based partly on socialization and genetic makeup. Gender differention has long been applied to product categories such as clothing, hairstyle, cosmetics, and magazines.
INCOME: Income determines the ability of consumer to participate in the market exchange and hence this is a basic segmentation variable. Nirma washing powder, for example, was launched as the lowest priced detergent in India primarily targeted at the middle-income segment of the market.
GENERATION: Each generation profoundly influenced by the times in which it grows up-the music, movies, and politics and defining the events of that period.
SOCIAL CLASS: Social class has a strong influence on preference in cars, clothing, home furnishing, leisure activity, reading habits and retailers.


3. Psychographic segmentation: psychographic is the science of using psychology and demographics to better understand consumers. In psychographic segmentation, buyers are divided in to different groups on the basis of psychological, life style or values .People within the same demographic group can exhibit very different psychographics profile. Values and lifestyles significantly affect the product and brand choices of consumers. Religion has significantly influence on values and lifestyles. Titan watches have a wide range of sub- brands within their brand such as Edge, Regalia, Nebula and Raga, to appeal to different lifestyles segments.
4. Behavioral segmentation: In behavioral segmentation buyers are divided in to groups on the basis of their knowledge, attitude towards, or response to a product. Many marketers believe that the behavioral variable-occasion, benefits, users status, loyalty status, buyer reading stage and attitude are the best starting points for constructing market segments.

STEPS IN SEGMENTING A MARKET

1 Select a market or product category for study
2 Choose a basis or bases for segmenting the market
3 Select the specific segmentation variables for use (descriptors)



4 Profile and evaluate segment(s)
Size
Expected growth
Purchase frequency
Current brand usage
Brand loyalty
Long-term sales and profit potential
5 Select the target market(s)
6 Design, implement and maintain appropriate marketing mixes (product, price, promotion, distribution)

BASES FOR SEGMENTING BUSINESS MARKET
PRODUCERS:
RESELLERS:
INSTITUTIONS:
GOVERNMENT:
Marketers further divide one or more of these segments into micro segmentation or macro segmentation variables.
MACROSEGMENTATION VARIABLES
Geographic location
Customer type
Customer size
Product use



MICROSEGMENTATION
Key purchasing criteria
• Technical support
• Product quality
Purchasing strategies
• Satisfiers
• Optimizers
Importance of purchase
• Routine & small
• Major expenditure
Personal characteristics
• Demographics
• Decision style
• Tolerance for risk
• Confidence level
• Job responsibilities

There are two bases for segmenting consumer markets:
• Consumer characteristics
• Consumer responses






MARKET TARGETING
Once the firm has identified its market segment opportunities, it has to decide how many and which ones to target. Basically target marketing involves three activities: market segmentation, market targeting, and market positioning.
1. Market segmentation: Basically not all types segmentation are useful. It is important to recognize that a marketer needs to use relevant variables to segment a market. For example: segmenting a market based on a person’s age is not relevant for a product like salt. To be useful, market segments must rate favorably on five key criteria: Measurable, substantial, accessible, differentiable, and actionable.
2. Market targeting: The firm must look two factor in targeting the market: the segment’s overall attractiveness and the company’s objective and resources. There are basically five patterns of target marketing: single segment concentration, selective specialization, product specialization, market specialization, full market coverage.
3. Market positioning: The creation of an image for a product or service in the minds of customers, both specifically to that item and in relation to competitive offerings. In marketing, positioning is the technique by which marketers try to create an image or identity for a product, brand, or organization. It is the 'place' a product occupies in a given market as perceived by the target market. Positioning is something that is done in the minds of the target market. A product's position is how potential buyers see the product. Positioning is expressed relative to the position of competitors. Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market.
De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market.

Hey faaiz, you really did an amazing work and thanks for sharing this information. I am sure it if going to help many students and professionals. Well, i am also uploading a document where you would find more detailed information on market segmentation and its related terms.
 

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