Market Segmentation&

Buyer BehaviourGroup 5

MMM- I, Batch - I

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Market A set-up where two or more parties (also called buyers and sellers) are engaged in transaction of goods and services in exchange of money is called a market.

What is Market Segmentation

A marketing concept which divides the complete market set-up

into smaller subsets comprising of consumers with a similar taste,

demand and preference Where, one market segment is totally distinct

from the other segment.

Need for Market Segmentation

Helps the marketers to understand the needs of the

target audience

Helps the marketers to devise appropriate marketing strategies and

promotional schemes

Gives the customers a clear view of what to buy and what

not to buy

Helps the organizations to target the right product to the right customers at

the right time

Reach a wider audience and promote their products

more effectively

Criteria for Effective Market Segmentation

Steps in Market Segmentation

Types of Market Segmentation

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Psyc

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nPersonality traits, lifestyle, or values

Loyalties of customers

Geographical areas

Age, family size, gender, income, occupation, education,

Buyer Behavior

Consumer Buying Behaviour

How individuals, groups and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants.

Factors affecting Consumer Buying Behaviour Cultural factors -- The fundamental determinants of a person’s wants and behaviour

- Marketers should decide how to best market their existing & new products

e.g. Cultures & Sub Cultures in India

Social factors –(Reference Groups, Primary/Secondary)- Have a direct/indirect influence on attitude & behaviour

-Marketers must determine how to reach and influence

e.g. Primary – Dell & Ford Car, Sec - Religious Associations, Political Parties

Personal Factors- Consumers often select and use those brands which are personality consistent

- Marketers should carefully organize brand experiences to express such

brand personalities

e.g. Newlyweds-US (Wedding Industry), Joie de Vivre(hospitality)

Psychological Factors- Motivation

- Perception

- Learning

- Beliefs and attitudes

Factors affecting Consumer Buying Behavior

Consumer Behavior Applications

Marketing strategy For making better marketing campaigns

E.g. Food advertising

Social marketing Involves getting ideas across to consumers rather than selling

E.g. Campaign by Dr. Marty Fishbein

Make us better consumers Studying consumer behaviour

E.g. Buying a 64 liquid ounce bottle of laundry detergent

1. Traditional

Economical-With limited purchasing power and a set of needs/tastes, a consumer allocates his/her

expenditure over different products at a given prices so as to maximize utility.

Learning- Helps marketers to promote brands with strong drivers, which lead to positive

reinforcement from the consumers.

- Helps to understand how consumer learn to respond in new marketing situations or

how they have learned and responded in the past in similar situations.

Eg. Same brand offering different variants - HP

Models expressing Consumer Behavior

Psychological - How Marketers identify & utilize Human needs and motives that determine

buying process

- Human behaviour is the outcome of Id, Super Ego, Ego

Eg. Buying a luxury car

Sociological- Buyer’s interactions with society play a major role in influencing his buying

behaviour.

- Marketers learn the common behavioural patterns of society & try to influence

the buying pattern of consumer.

Models expressing Consumer Behavior

2. Contemporary Models-

Howard Sheth Model –- Explains rational brand behaviour shown by buyers

- Helps understand consumer behaviour by identifying the variables

which influence consumers viz. Input stimuli, Output, Hypothetic constructs

Nicosia Model – - Explains buying behaviour by establishing a link between the organisation and

its prospective customer.

- It tells us how the activities of the firm influence the consumer and result in his

direction to buy.

Models expressing Consumer Behavior

EBM Model( Engle, Blackwell and Miniard ) –- Assumes consumer behaviour as a decision making process in the form of five

steps and other variables which occur over a period of time.

The five steps are –

1. Problem Recognition,

2. Information Search,

3. Alternative Evaluation,

4. Choice,

5. Outcome

Models expressing Consumer Behavior

2. Contemporary Models-

Organizational Buying Behavior

Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers.

Characteristics of an Organizational Buying Behavior

Bulk Purchasing

Close relationships and service are needed.

Demand is derived from the production and sales of buyers.

Demand fluctuations are high as purchases from business buyers magnify

fluctuation in demand for their products.

The organizational buyers are trained professionals in purchasing.

Several persons in organization influence purchase.

Lot of buying occurs in direct dealing with manufacturers.

Factors affecting an Organisational Buying Behaviour Environmental factors

Environmental factors leads to technological shift, focus shift of product to demand product the firm is selling, sudden drop in availability of product due to rise in demand.

Organizational factorsChanges in purchasing department organization like centralized purchasing, decentralized

purchasing , changes in purchasing practices like  long-term contracts, relationship purchasing are the organization factors.

Interpersonal factorsThese factors are the relationship between buyers and sales representatives of

various competitor companies.

Individual factorsThese factors related to the buyer. What sort of ways of interacting and service are

appreciated by the buyers and what ways are considered as irritants ? Marketers have to understand the reactions of buyers

Decision Making Process

ExamplesHallmark’s personal expression products are sold in more than 41,500 retail outlets nationwide and account for almost one of every two greeting cards purchased in the United States. Each year Hallmark produces 19,000 new and redesigned greeting cards. Hallmark has also embraced technology. Musical greeting cards incorporate sound clips from popular movies, TV shows, and songs. Online, Hallmark offers e-cards as well as personalized printed greeting cards that it mails for consumers. For business needs.

TVS Motors comes out with product ‘ Jupiter ’ in two-wheeler segment to beat ‘ Honda Activa ’ and ‘ Hero Maestro ’ to acquire the rest market by designing and launching the product as similar to Honda ’ s Activa. So study of the market segmentation and buyers behavior made them to order, purchase and manufacture such range of products.

Distinguishing Factors Organizational market Consumer market

Few buyers and high volume Large buyers and less volume

Customized offerings Commoditized offerings

Close supplier-customer relationship Brand association

Professional & Multiple buying influences Single or family influence on buying

Multiple sales call Few sales call

Distinguishing Factors

Organizational market Consumer market

Derived Demand Direct demand

Less influence on market Direct influence on market

Inelastic demand Elastic demand

Direct purchase from manufacturer Purchase through showrooms, distributors etc

Conclusion

Market segmentation is required to connect to target audience with focused energy.

Products should be designed taking in view the problems of target market segment.

Advertisement is a key in consumer market whereas relationship with customer is

important in organizational customer.

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