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Market segmentation

Module 3. Market segmentation. Dr. Mohamed Zamil AL-Akhtaby. Market segmentation.

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Market segmentation

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  1. Module 3 Market segmentation Dr. Mohamed Zamil AL-Akhtaby

  2. Market segmentation Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more effectively and efficiently with products and services that match their unique needs

  3. Market Segmentation Differentiation Differentiate the market offering to create superior customer value Segmentation Divide the total market into smaller segments Create Value for targeted Customers divide the total market into smaller segments Positioning Position the market offering in the minds of target customers Targeting Select the segment or segments to enter

  4. Market Segmentation • Segmenting consumer markets • Segmenting business markets • Segmenting international markets • Requirements for effective segmentation

  5. Market Segmentation Segmenting Consumer Markets • Geographic segmentation • Demographic segmentation • Psychographic segmentation • Behavioral segmentation

  6. Market Segmentation Segmenting Consumer Markets Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities

  7. Market Segmentation Segmenting Consumer Markets • Demographic segmentation:Dividing the market into groups based on variables such as: • Age • Gender • Income • Occupation • Education • Religion • Race • Generation • Nationality

  8. 9.2 How Are Market Segments Best Defined? Age Demographic Descriptors Gender Education

  9. 9.2 How Are Market Segments Best Defined? Demographic Descriptors Family size Occupation Income

  10. 9.2 How Are Market Segments Best Defined? Few financial commitment. Recreation and fashion oriented. Buys cars, entertainment items, and holidays. Better off financially. High purchase rate of consumer desirables. Buy cars, white goods and furniture. House buying is at peak. Liquid assets are low. Dissatisfied with level of savings and financial position. Buy medicine, toys, school tuition, and white goods. Family lifecycle Home ownership is at peak. Financial situation, and savings have improved. Interest in travel, recreation, and self-education. Not interested in new products. Buy holidays, luxuries, and home improvements

  11. 9.2 How Are Market Segments Best Defined? Demographic Descriptors Race Religion Nationality

  12. Social Class Lifestyle Personality Market Segmentation Segmenting Consumer Markets • Psychographic segmentationdivides buyers into different groups based on social class, lifestyle, or personality traits

  13. Market Segmentation Segmenting Consumer Markets Behavioral segmentation: Dividing the market into groups based on variables such as: • Occasions • Benefits • User status • Usage rate • Loyalty status • Readiness stage • Attitude toward product

  14. Geographic Demographic Psychographic Behavioral Country Region City Metro size Density Climate Age Gender Family life cycle Family size Income Occupation Education Religion Race Nationality Social Class Life style Personality Occasions Benefits User status User rates Loyalty status Readiness stage Attitude toward The product

  15. Market Segmentation Segmenting Business Markets • Intermarket segmentationdivides consumers into groups with similar needs and buying behaviors even though they are located in different countries

  16. Geographic Location Factors Used to Segment International Markets Economic Factors Cultural Factors Political and Legal Factors Market Segmentation Segmenting International markets

  17. Measurable Accessible Substantial • Size, purchasing power, profiles • of segments can be measured. Differential • Segments can be effectively • reached and served. Actionable • Segments are large or profitable enough to serve. • Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments. Market Segmentation Requirements for Effective Segmentation market segments must be:

  18. Market Segmentation Differentiation Differentiate the market offering to create superior customer value Segmentation Divide the total market into smaller segments Create Value for targeted Customers divide the total market into smaller segments Positioning Position the market offering in the minds of target customers Targeting Select the segment or segments to enter

  19. Market Targeting Selecting Target Market Segments • Target market consists of a set of buyers who share common needs or characteristics that the company decides serve

  20. Mass Marketing Same product to all consumers (no segmentation, i.e Coca-Cola) Market Targeting Target Marketing Strategies • Undifferentiated marketing targets the whole market with one offer • Mass marketing • Focuses on common needs rather than what’s different

  21. Market Targeting Segment Marketing Different products to one or more segments (some segmentation, i.e. Marriott) Target Marketing Strategies • Differentiated marketing targets several different market segments and designs separate offers for each • Goal is to achieve higher sales and stronger position • More expensive than undifferentiated marketing

  22. Niche Marketing Different products to subgroups within segments (more segmentation, i.e. Standard or Luxury SUV’s) Market Targeting Target Marketing Strategies • Concentrated marketing targets a small share of a large market • Limited company resources • Knowledge of the market • More effective and efficient

  23. Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Local Marketing Tailoring brands/ promotions to local customer groups. Market Targeting Target Marketing Strategies Individual Marketing Tailoring products and programs to the needs of individual customers, i.e. Dell Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations

  24. Market Targeting Choosing a Target Market Company Resources Product Variability Product’s Stage in the Life Cycle Market Variability Competitor’s Marketing Strategies

  25. Market Segmentation Differentiation Differentiate the market offering to create superior customer value Segmentation Divide the total market into smaller segments Create Value for targeted Customers divide the total market into smaller segments Positioning Position the market offering in the minds of target customers Targeting Select the segment or segments to enter

  26. Differentiation and Positioning Choosing a Differentiation and Positioning Strategy • Identifying a set of possible competitive advantages to build a position • Choosing the right competitive advantages • Selecting an overall positioning strategy

  27. Differentiation and Positioning • Product’s Position - the way the product is defined by consumers on important attributes - The place the product occupies in consumers’ minds relative to competing products. Impressions Perceptions Feelings

  28. Differentiation and Positioning Identifying Possible Value Differences and Competitive Advantages • Competitive advantageis an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

  29. Differentiation and Positioning Choosing a Differentiation and PositioningStrategy • Identifying a set of possible competitive advantagesto build a position by providing superior value from: • Product differentiation • Service differentiation • Channel differentiation • People differentiation • Image differentiation

  30. Identifying Possible Competitive Advantages Product Differentiation i.e. Features, Performance, Style & Design, or Attributes Services Differentiation i.e. Delivery, Installation, Repair Services, Customer Training Services Image Differentiation i.e. Symbols, Atmospheres, Events Personnel Differentiation i.e. Hiring, Training Better People Than Competitors Do

  31. Differentiation and Positioning Selecting an Overall Positioning Strategy • Value proposition is the full mix of benefits upon which a brand is positioned

  32. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix Marketing mix is the set of controllable tactical marketing tools — product, price, place, and promotion—that the firm blends to produce the response it wants in the target market

  33. Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix

  34. Marketing Strategy and the Marketing Mix

  35. Marketing Mix 4P’s& 4C’s • Product (Customer Solutions) • Price (Cost) • Place (Convenience) • Promotion IMC (Communication) Promotion IMC (Communication)7 P’s Extended in case of Services) • People • Process • Physical Facilities

  36. Thank You

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