marketing5-091228110653-phpapp01

8/7/2019 marketing5-091228110653-phpapp01

http://slidepdf.com/reader/full/marketing5-091228110653-phpapp01 1/39



Discussion Questions

� What are the different levels of market

segmentation?

� How can a company divide a market into

segments?� How should a company choose the most

attractive target markets?

� What are the requirements for effective

segmentation?

� How a consumer market is different from

organizational market?



NEED FOR SEGMENTING MARKETS

� Market segmentation looks at markets consisting of

customers who differ in their wants and needs.

Some firms adopt market segmentation becausethey lack the ability and competitiveness to cater to

the mass market.

� But of late, market segmentation is being suggested

as the best strategy for targeting the markets.



What is a Market Segment?

A market segment consists of a group of

customers who share a similar set of

needs ad wants.



Ford¶s Model T Followed a Mass

Market Approach



Pepsi in India



The Revolutionbrand of ready-

made women·sapparel

successfully focuseson the niche

segment of plus-size

clothes.



Four levels of Micromarketing

Segments

Local areas Individuals

Niches



MARKET SEGMENTATION LEVELS

� Segment Marketing: Marketers divide the target market into

different segments on the basis of homogeneous needs.

Although it is evident that no two customers are alike, these

customers are segmented on the basis of a broad similarity with regard to some attributes such as tastes, preferences,

etc.

� Individual marketing is the extreme level of segmentation in

which marketers focus on individual customers. In fact,

almost all the business-to-business marketing is individual

marketing.



MARKET SEGMENTATION LEVELS

� Niche Marketing Niche marketing can be defined as themarketers¶ effort to position their product or service insmaller markets that have similar attributes and have beenneglected by other marketers. These smaller market

segments should also be profitable.� Local Marketing Most marketers who have a global

presence tend to offer customized products to suit the local markets. µThink global act local¶ has long been a buzzword.

The prominence of local marketing has become sodominant that even if a product proves to be successful at the national or global level, it may fail utterly at the local level because of unmatched local tastes and preferences.



Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral



Criteria for Segmenting Consumer Market

� In geographic segmentation, the market is divided according to

geographical areas such as localities, regions, cities, states,countries, etc.

� In Demographic segmentation, the market is divided into groupsbased on demographic attributes such as age, gender, income,occupation, religion, race, nationality, social class, family size,

family life cycle, etc.� Though the markets segmented on the basis of demographic

variables have common characteristics such as sex, age, income,etc., their psychographics such as motivation, values, belief,lifestyle, personality, etc., can differ significantly.

� Organizations can divide markets on the basis of behavior that customers show towards the usage of the products. Variousvariables for segmenting market on the basis of the purchasebehavior of customers are occasions, benefits, user status, usagerate, loyalty, etc.



Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable



Dove Targets Women



TARGET MARKET SELECTION PROCESS

� Evaluating the Market Segments While evaluating the

market segments, a firm must first evaluate the potential of

the segment and also its own ability to tap it. Marketers

need to ensure that the organization objectives are fulfilled while serving a particular segment of the market.

� Selecting the Market Segments After evaluating different

market segments, the company or the marketer should

decide which segments to target. Targeting the customers

in a highly competitive environment is a complex process.



Selecting the Market Segments

� Single segmentconcentration

�Selectivespecialization

� Product specialization

� Market specialization

� Full market coverage



Patterns of Target Market Selection



� Positioning is the battle for a place in the consumer¶s mind.(Al Ries & Jack Trout)

� Positioning starts with a product. A piece of merchandise, aservice, an institution, or even a person. But positioning isnot what you do to a product. Positioning is what you do tothe mind of the prospect.

� Positioning means owning a credible and profitable³position´ in the consumer¶s mind, either by getting therefirst, or by adopting a position relative to the competition, or by repositioning the competition.

Positioning



Types of Positioning

� By Pr oduct Benef it± Maggi Noodles : µFast to cook. Good to eat¶

± Colgate Dental Cream : µStops bad breath. Fights tooth

decay¶

� By Price - Quality

± Zenith Computers : MNC quality. Indian prices

± Tata Nano : Poorman¶s Car

� By Use/Application / Occasion

± Cadbury¶s Dairy Milk : Aaj Pehli tarikh hai

± Raymond Wedding : For special occasion

Collection



Types of Positioning

� By User Gr oup± Reid & Taylor : Bond with the Best

± Bajaj Pulsar : Macho dudes

� By Pr oduct Categor y/Type

± Fair & Handsome : Fairness cream for men

± Coca Cola : µThanda Matlab Coca Cola¶ (generic)

� By Cultural Symbol

± Air India : Maharaja

± Harley Davidson : µLive to Ride, Ride to Live¶

� By Competitor

± Nestlé MUNCH : No specific date to eat chocolate(VsCadbury's Dairy Milk)

± Sansui : Better than the Best



Reaction to the Competition

� The competitors¶ reaction patterns to a firm¶s competitive strategies should beobserved continuously, because it is necessary to attack the competitors intheir vulnerable areas. Normally, there are four types of competitors based ontheir reaction patterns.

� The first type is the Slow Reactor. This type of competitor reacts very slowly tothe competition. For example, Iodex launched its green colored pain reliever to

fight the competition from Moov. This was actually a very late move.� The second type of competitor is the Selective Competitor, who reacts only to

certain types of strategies, perhaps to added product features or lineextensions. E.g. ± Tata Motors Vs. Mahindra & Mahindra

� The Tough Competitor, the third type, strongly retaliates to the slightest moveof his competitors. This type of competition is clearly evident in the cola wars

between Pepsi and Coca-Cola.� The fourth type is the Unpredictable Competitor who may or may not respond

to the strategies of his competitors. This is usually the case with small firms,which attack the competitors if they are strong enough to persist in the attack or else refrain from attacking



DESIGNING COMPETITIVE STRATEGIES

� Market Leader Strategies

� Market Challenger Strategies

� Market Follower Strategies

� Market Nicher Strategies



Market Leader Strategies

� A market leader has a considerable market share, asignificant presence in the industry and is acknowledged as

the leader by other firms in the industry. E.g ± Hero Honda

� A market leader has to constantly guard itself from other

competing firms as they will always try to attack the leader at its weak spot or challenge it in its strong area.

� The market leader can adopt certain strategies to remain in

that position by expanding the market area with new

products or by extending the current products in the new markets. It can also show its customers the benefits of

increasing the usage the product.



Market Challenger Strategies

� Market challengers are those firms which occupy the second, third or fourth positions in the market. E.g. ± Bajaj Bikes

� The firm which is in the second position can best adopt the strategy of offensive attack against the market leader to grab a market share.

� The challenger can attack firms of its own capacity; it can also attack

vulnerable areas of the leader, but it should have sufficient resourcesto sustain the attack, or it can attack the leader in its weak spots and try to leverage the maximum market share by such an attack.

� There is another strategy whereby the challenger can attack itscompetitors by offering the market all the benefits and features and all other facilities provided by its competitors. This strategy workswhen the firm has superior resources to sustain such an attack.

� The challenger can indirectly attack its competitors by entering intothose markets where the competitors do not have a presence.



Market Follower Strategies

� Market followers prefer to follow the leader rather than attack it. Most follower firms manufacture

products leveraging on the product innovations of

the market leaders. E.g. - TVS � If the follower attacks a market leader with the same

quality offerings and at the same price, it might

have to face severe attacks from the market leader.� So, unless the follower firm has some strong point

in its armor, it will not dare attack the market leader.



Market Nicher Strategies

� Companies following niche strategies do not like to attack the market leader and therefore, operate in a small

segment of the market in which the leader is not interested.

E.g. ± Suzuki Hayabusa ( 1,349 CC, Rs 11 lakh);

Yahama 'VMaxµ (1,679 cc, Rs 20 lakh)

� A niche marketer usually focuses all his resources to

efficiently serve a small market segment and thus gains the

loyalty of customers in this segment.� The niche marketer then tries to ensure that customers in

the segment remain loyal to it. It increases its efforts with

increased focus and attention.



Differences between Organizational

Markets and Consumer Markets

� Generally, the time spent in the purchase process by anindividual customer is much less compared to the time takenfor the purchase process in organizations.

� Organizational buyers are fewer compared to individualbuyers.

� The quantity of products or services needed by industrialbuyers is significantly more than that required by individualcustomers.

� Consumer markets are mostly segmented on the basis of geographic, demographic and psychographic factors.

Industrial or organizational markets are usually segmented onthe basis of factors such as operating variables, purchasingapproaches, situational factors and personal characteristics.

� The decision-making process for the purchase of industrialproducts also varies significantly from the decision-makingprocess for purchase of consumer products.



DEFINING STRATEGIC MARKET PLANNING

� Strategic market planning is the process of communicating and sharing data between different departments of an organization to collectively

formulate future strategies and implement them withmaximum efficiency.

� Strategy formulation helps the decision-makers of the organization to proactively respond to the needsof the market and thus stay ahead of thecompetition.



� The corporate vision and mission paves the way for

the creation of long-term and short-term objectives;the planned strategies are adopted to realize these

objectives.

� The strategies adopted differ from company tocompany. However, there are five basic activities,

which companies undertake. They are, setting the

corporate mission, forming strategic business units

(SBUs), allocating resources to each SBU, planning

new business activities, and downsizing existing

businesses.



Establishment of SBUs

� A strategic business unit is a separate and self-sufficient business unit operating in the market.

� Companies are operating in an ever changingand challenging environment. The spectrum of activities is widening and every company istrying to leverage as many opportunities aspossible. The consequence is strategic businessunits (SBUs).

� Each SBU should be an individual business

entity with an individual planning process. EachSBU should operate in a market where it has itsown customers and competitors. And each SBUshould be headed by a person who isresponsible for its performance.



Resource Allocation to SBUs

� Resource allocation to strategic business units is

done by differentiating the company¶s businesses

according to their potential and identifying whether

they are profitable.

� Two very popular models used for such estimations

are the Boston Consulting Group Model and the

General Electric Model.



BCG competitive advantage matrix

� In business level strategy, market share and product life

cycle are important constructs.

� This model helps multi-business or single business

organizations allocate organizational resources efficiently and effectively.

� The BCG growth-share matrix displays the positions of

business units on a graph of the market growth rate against

their market share relative to competitors. It contains four

cells ± question marks, stars, cash cows and dogs



General Electric model

� In the General Electric model, the strategic business units are plotted in the matrix with ninecells.

� Each SBU is measured using criteria such asindustry attractiveness and business unit strength.

� Each business unit in the model is represented by a

circle. The circle size represents the size of theindustry and in each circle the shaded portiondepicts the market share of the business unit in that industry.



General Electric model

Industry Attractiveness

� Market growth rate

� Market size� Demand variability

� Industry profitability

� Industry rivalry

� Global opportunities� Macroenvironmental factors ( PEST )

Business Unit Strength

� Market share

� Growth in market share� Brand equity

� Distribution channel access

� Production capacity

� Profit margins relative tocompetitors



Thank You.

marketing5-091228110653-phpapp01

Documents