chapter 5 retail market segmentation-retail management

7/31/2019 chapter 5 Retail Market Segmentation-Retail Management

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RETAIL MARKET SEGMENTATIONRETAIL MARKET SEGMENTATION


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What is a market?What is a market?A market is a group of potential customers with similarA market is a group of potential customers with similar

needs who are willing to exchange something of valueneeds who are willing to exchange something of valuewith sellers offering various goods and services that canwith sellers offering various goods and services that cansatisfy these needssatisfy these needs

Mass marketing approach:Mass marketing approach:-- approaching the entire set of customers with aapproaching the entire set of customers with a

uniform marketing approach thereby creating theuniform marketing approach thereby creating the

largest potential market (sale of staple food items likelargest potential market (sale of staple food items like

rice and bread)rice and bread) Differentiated ApproachDifferentiated Approach

- strategy of market segmentation- strategy of market segmentation

- marketer selects one or more of the segments as the- marketer selects one or more of the segments as thetarget market and positions his outlet as per thetarget market and positions his outlet as per theprofile of the targeted segment (Diet Coke sold toprofile of the targeted segment (Diet Coke sold to

market segment of health conscious adults)market segment of health conscious adults)


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What is market segmentationWhat is market segmentationThe process of dividing the heterogeneous total marketThe process of dividing the heterogeneous total market

into small groups of customers who share a similar set ofinto small groups of customers who share a similar set ofwantswants

Major characteristicsMajor characteristics- is an aggregating process: clustering people with similar- is an aggregating process: clustering people with similar

or homogenous needs and respond to the marketing mixor homogenous needs and respond to the marketing mixin the same wayin the same way- different kind of promotional activities are developed for- different kind of promotional activities are developed for

serving different market segmentsserving different market segments- identifying niche segments- identifying niche segments

- customized products and services are provided to- customized products and services are provided tocustomer groups (Whirlpool automatic washing machinescustomer groups (Whirlpool automatic washing machinesin urban Mumbai with large groups of working womenin urban Mumbai with large groups of working womencan be segmented)can be segmented)


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Benefits of segmentationBenefits of segmentation


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Benefits of segmentationBenefits of segmentation Development of marketing mixDevelopment of marketing mix

- helps to identify target audience- helps to identify target audience

- customize marketing strategies in terms of product,- customize marketing strategies in terms of product,price and promotion for customersprice and promotion for customers

Store location decisionStore location decision

- to concentrate stores where target population are found- to concentrate stores where target population are found

Understanding customer behaviorUnderstanding customer behavior

- how and why the target group behaves and acts- how and why the target group behaves and acts- determining the buying behavior after segmenting the- determining the buying behavior after segmenting the

marketmarket


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Benefits of segmentationBenefits of segmentationcontdcontd

Merchandising decisionsMerchandising decisions- deciding on which items will occupy the store shelves- deciding on which items will occupy the store shelves

for displayfor display

- understanding the preference of target groups- understanding the preference of target groups Promotional campaignsPromotional campaigns

- effective and accurate promotional campaigns- effective and accurate promotional campaigns

PositioningPositioning- major feature of segmentation . Sarvanna stores are- major feature of segmentation . Sarvanna stores are

positioned for lower middle class consumers where aspositioned for lower middle class consumers where asthe clientele of Lifestyle and Shoppers Stop are for thethe clientele of Lifestyle and Shoppers Stop are for theupper income class and the eliteupper income class and the elite


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Segmenting, targeting andSegmenting, targeting and

positioningpositioning

C i i f ff i k


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Criteria for effective marketCriteria for effective market

segmentationsegmentation


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Criteria for effective marketCriteria for effective marketsegmentationsegmentation contdcontd

Homogeneous within:Homogeneous within:- similar needs, wants and buying behavior- similar needs, wants and buying behavior

- an effective marketing programme can be developed- an effective marketing programme can be developed

(Gillette Mach 3 for young male adults)(Gillette Mach 3 for young male adults) Heterogeneous withinHeterogeneous within

- customers between segments stay different for better- customers between segments stay different for better

focus from retailersfocus from retailers

SubstantialSubstantial- should have sufficient discretionary incomeshould have sufficient discretionary income

(Ebony must ensure high income groups exist in their(Ebony must ensure high income groups exist in their

trade area)trade area)


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Criteria for effective marketCriteria for effective marketsegmentationsegmentation contdcontd

ActionableActionable-- useful for identifying target groups and deciding onuseful for identifying target groups and deciding on

marketing mix variables (Caf Coffee Day attractsmarketing mix variables (Caf Coffee Day attractscollege goers and young working executives to enjoycollege goers and young working executives to enjoycoffee in a fashionable outlet)coffee in a fashionable outlet)

AccessibleAccessible

-- reachable target market and accessible to targetreachable target market and accessible to target

consumer groups (Crossroads is readily accessible withconsumer groups (Crossroads is readily accessible with

parking facilities)parking facilities) MeasurableMeasurable

- size, purchasing power and characteristics of market- size, purchasing power and characteristics of market

segment should be measurablesegment should be measurable


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Kinds of marketsKinds of markets

Consumer marketsConsumer markets- individuals and households purchasing goods- individuals and households purchasing goods

for self consumption (groceries like milkfor self consumption (groceries like milk

,poultry etc .),poultry etc .)

Industrial marketsIndustrial markets

- individuals, groups and organizations- individuals, groups and organizationspurchasing goods for reproductions of otherpurchasing goods for reproductions of other

productsproducts


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Bases of segmentationBases of segmentation Geographic segmentationGeographic segmentation

divided on the basis of geographic units like regionsdivided on the basis of geographic units like regionsand districts (Subhiksha Stores in Chennai)and districts (Subhiksha Stores in Chennai)

Demographic segmentationDemographic segmentation- division on the basis of variables like age, gender,- division on the basis of variables like age, gender,

income level, family size, occupation, education, andincome level, family size, occupation, education, andmarital status (Life Style may segment the market bymarital status (Life Style may segment the market by

income class)income class)

Psychographic segmentationPsychographic segmentation

-based on lifestyle, personality, values, and-based on lifestyle, personality, values, andinterestsinterests- value and lifestyle segmentation (VALS)- value and lifestyle segmentation (VALS)- e- each consumer is targeted with a unique style ofach consumer is targeted with a unique style of

living based on the VALS conceptliving based on the VALS concept


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Profiling of customersProfiling of customers Customer DemographicsCustomer Demographics- age, sex, income levels, educational background, andage, sex, income levels, educational background, and

professional backgroundprofessional background- Family decision-makingFamily decision-making

(a CTV or a 2-wheeler purchase)(a CTV or a 2-wheeler purchase) Customer PsychographicsCustomer Psychographics

purchasing behaviour of the target populationpurchasing behaviour of the target population

purchase motivationpurchase motivationpurchasing processpurchasing process

source of purchasesource of purchase

time and place utilitytime and place utility


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Buyers intentions surveyBuyers intentions survey Frequency of customer visits to storeFrequency of customer visits to store Weekday/weekend shopping patternsWeekday/weekend shopping patterns

Store selection criteria: how buyers goStore selection criteria: how buyers go

about selecting the storeabout selecting the store

Spending per visit:. how much the customerSpending per visit:. how much the customerspends on an average during each visitspends on an average during each visit

Planned vs unplanned shopping: itemsPlanned vs unplanned shopping: items

purchased in a planned way and impulsepurchased in a planned way and impulsepurchasespurchases

Store loyalty: do they patronize a few storesStore loyalty: do they patronize a few stores

or shop around for bargainsor shop around for bargains


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Market segmentation in IndiaMarket segmentation in India Marketer uses segmentation models basedMarketer uses segmentation models based

on demographics, geo-demographics, SECon demographics, geo-demographics, SEC

data, and benefits and usagedata, and benefits and usage

Prominent examples are McDonalds,Prominent examples are McDonalds,

Nescafe, Caf Coffee Day, BenettonNescafe, Caf Coffee Day, Benetton

chapter 5 retail market segmentation-retail management

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