SEGMENTATION
MBA / BBA MARKETING MANAGEMENT QUESTION PAPER 2020 PUNE UNIVERSITY
*******************************************************************************
Economists frequently, draw no distinctions among different types of buyers, as long as they have a willingness and an abilty to buy.
Young and old buyers, men and women, people who drink 12 beers a day and those who drink one beer on New Year's Eve are all lumped together.
Experience tells marketers, however, that in many cases buyers differ from one another even though they may be buying the same products. Marketers try to identify groups and subgroups within total markets— that is, they try to segment markets.
Recall that market segmentation consists of dividing a heterogeneous market into a number of smaller, more homogeneous submarkets. Almost any variable age, sex, product usage, life style, expected benefit— may be used as a segmenting variable, but the logic behind the strategy is always the same.
Not all buyers are alike.
*******************************************************************************
Sub groups of people with similar behaviour, values, and/or backgrounds may be identified.
*******************************************************************************
IT SHOULD BE EASIER TO SATISFY SMALLER GROUPS OF SIMILAR CUSTOMERS THAN A LARGE GROUP OF DISSIMILAR CUSTOMERS.
*******************************************************************************
For example, the computer software market can be divided into two segments: the domestic market and the foreign market.
The domestic market can be segmented further into business users and home users.
And the home user segment can be further divided into sophisticated personal computer user, people who hate personal computers but have to buy so their children use it for school work, people who use computers only for e-mail, and so on.
The number of market segments within the total market depends largely on the strategist's ingenuity and creativity in identifying those segments.
a single company is unlikely to pursue all possible market segments.
In fact, the idea behind market segmentation is for an organization to choose one or a few meaningful segments and concentrate its efforts on satisfying those selected parts of the market. Focusing its efforts on these targeted market segments —that is, targeting-enables the organization to allocate its marketing resources effectively.
Concentrating efforts on a given market segment should result in a more precise marketing program satisfying specific market needs.
*******************************************************************************
Target market:-
*******************************************************************************
The market segment, or group of buyers, toward which an organization decides to direct its marketing plan is called the target market.
For example,
there are “left-hander”shops specializing in products for lefthanded people,
Tobacco shops catering to wealthy pipe smokers,
and dress shops that target women who wear certain clothing sizes
In fact, the idea behind market segmentation is for an organization to choose one or a few meaningful segments and concentrate its efforts on satisfying those selected parts of the market. Focusing its efforts on these targeted market segments —that is, targeting-enables the organization to allocate its marketing resources effectively.
Concentrating efforts on a given market segment should result in a more precise marketing program satisfying specific market needs. Target market:-
The market segment, or group of buyers, toward which an organization decides to
direct its marketing plan is called the target market.
For example,
there are “left-hander”shops specializing in products for lefthanded people,
Tobacco shops catering to wealthy pipe smokers,
and dress shops that target women who wear certain clothing sizes
As you can see, the process of segmentation provides hints on how to market to the targeted segments identified.
First, the total market, consisting of many different customers, is studied and broken down (or disaggregated)
into its component parts— that is, individual customers, families, organizations, or other units.
The customers are then regrouped by the marketing strategist into market segments on the basis of one or several characteristics that segment members have in common. Then the strategist must target segments to which the organization will appeal.
When that is done, the strategist has answered the question “What are our target markets
It is thus natural that many differing segments occur within a market.
Marketers usually divide the heterogeneous market for any product into segments, with
relatively more homogeneous characteristics, since this helps in tapping it. And, this
process of disaggregating a market into a number of sub-markets segments is known as market segmentation.
It is thus natural that many differing segments occur within a market.
To put it in a nutshell, market segmentation rests on the recognition that:
(a) any market is made up of several sub-markets, or sub-groups of consumers,
distinguished from one another by their varying needs and buying behaviour, and
(b) it is feasible to disaggregate the consumers into segments in such a manner that
in needs, characteristics and buying behaviour, the members would vary
significantly among/across segments, but would be homogeneous within each
segment.
*******************************************************************************
Why Segment the Market?
*******************************************************************************
Let us see how segmentation benefits the marketer.
1. Facilitates Proper Choice of Target Market
*******************************************************************************
2. Facilitates Tapping of the Market, Adapting the Offer to the Target
Segmentation also enables the marketer to crystallise the needs of the target
buyers
Adapting Offer to Suit Target Segment
*******************************************************************************
Ford modifies its models for India
*******************************************************************************
Ford modified its models for the Indian target segment as shown below:
l Higher ground clearance to make the car more compatible to the rougher road surface in India.
l Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads.
l Changes in cooling requirement, with greater airflow to the rear.
l Higher resistance to dust.
l Compatibility of engine with the quality of fuel available in India.
l Location of horn buttons on the steering wheel.
As the Indian motorist uses the horn far more frquently, for cars sold in India, the horn buttons are
kept on the steering wheel and not on a lever on the side as in the models sold in Europe.
For example,
*******************************************************************************
Daewoo offers eight variants of its Cielo, and Ford Mahindra four versions of the Ford Escort.
*******************************************************************************
segmentation as a strategy of dividing the markets for conquering them.
3. Helps ‘Divide the Markets and Conquer Them’
Through segmentation, the marketer can look at the differences among the
customer groups and decide on appropriate strategic offers for each group. This
is precisely why some marketing experts have described segmentation as a strategy of dividing the markets for conquering them.
It ensures that the marketing effort is concentrated on well defined and carefully chosen segments. After all, the resources of any firm are limited and no firm can normally afford to attack and tap the entire market without any delimitation whatsoever.
The marketer can thus identify the relatively less satisfied segments and succeed by satisfying such segments. *******************************************************************************
Advantages of Market Segmentation:-
*******************************************************************************
l Helps distinguish one customer group from another within a given market.
l Facilitates proper choice of target market.
l Facilitates effective tapping of the market.
l Helps ‘divide the markets and conquer them’.
l Helps crystallise the needs of the target buyers and elicit more predictable responses from
them; helps develop marketing programmes on a more predictable base; helps develop
marketing offers that are most suited to each group.
l Helps achieve the specialisation required in product, distribution, promotion and pricing for
matching the customer group and develop marketing offers and appeals that match the needs
of such group.
l Makes the marketing effort more efficient and economic.
l Helps concentrate efforts on the most productive and profitable segments, instead of frittering
them over irrelevant, or unproductive, or unprofitable segments.
l Helps spot the less satisfied segments and succeed by satisfying such segment.
l Brings benefits not only to the marketer but to the customer as well.
l When segmentation attains high sophistication, customers and companies can choose each
other and stay together.
Levels and Patterns of Market Segmentation
We begin by examining the various levels and pattern of market segmentation.
*******************************************************************************
Segment Marketing
*******************************************************************************
A market segment consists of a large identifiable group within a market with similar
wants, purchasing power, geographical location, buying attitudes, or buying habits. For
*******************************************************************************
example, an auto company may identify four broad segments: car buyers who are
primarily seeking basic transportation or high performance or luxury or safety.
Segmentation is an approach midway between mass marketing and individual
marketing. Each segment’s buyers are assumed to be quite similar in wants and needs,
yet no two buyers are really alike. Anderson and Narus urge marketers to present
flexible market offerings instead of a standard offering to all members within a
segment.
*******************************************************************************
Niche Marketing
*******************************************************************************
A niche is a more narrowly defined group, typically a small market whose needs are
not well served. Marketers usually identify niches by dividing a segment into sub
segments or by defining a group seeking a distinctive mix of benefits. For example, the
segment of heavy smokers includes those who are trying to stop smoking and those
who don’t care.
*******************************************************************************
For example,
*******************************************************************************
Delta Airlines offers all economy passengers a seat, food, and soft drinks. It charges
extra for alcoholic beverages and earphones to those ecomomy passengers wanting
them.
Whereas segments are fairly large and normally attract several competitors, niches
are fairly small and normally attract only one or two. Larger companies, such as IBM,
lose pieces of their market to nichers: Dalgic labeled this confrontation “guerrillas
against gorillas.” Some larger companies have therefore turned to niche marketing,
which has required more decentralization and some changes in the way they do business.
Johnson & Johnson, for example, consists of 170 affiliates (business units), many of
which pursue niche markets.
*******************************************************************************
For e.g., there is Outlook Traveller for
*******************************************************************************
those who love travelling; there is Inside Outside which focus on design and interior;
there is Osho Times for those who believe in Osho etc.
*******************************************************************************
Niche marketers presumably understand their customers’ needs so well that the
customers willingly pay a premium. Ferrari gets a high price for its cars because loyal
buyers feel no other automobile comes close to offering the product-service-membership
benefit bundle that Ferrari does.
An attractive niche is characterized as follows: The customers in the niche have a
distinct set of needs; they will pay a premium to the firm that best satisfies their needs;
the niche is not likely to attract other competitors; the nicher gains certain economies
through specialization; and the niche has size, profit, and growth potential.
Both small and large companies can practice niche marketing.
Fifteen per cent of the
commercial Web sites with fewer than 10 employees take in more than $100,000, and
2 per cent even ring up more than $1 million. The recipe for Internet niching success:
Choose a hard-to-find product that customers don’t need to see and touch.
Economists frequently, draw no distinctions among different types of buyers, as long as they have a willingness and an abilty to buy.
Young and old buyers, men and women, people who drink 12 beers a day and those who drink one beer on New Year's Eve are all lumped together.
Experience tells marketers, however, that in many cases buyers differ from one another even though they may be buying the same products. Marketers try to identify groups and subgroups within total markets— that is, they try to segment markets.
Recall that market segmentation consists of dividing a heterogeneous market into a number of smaller, more homogeneous submarkets. Almost any variable age, sex, product usage, life style, expected benefit— may be used as a segmenting variable, but the logic behind the strategy is always the same.
Not all buyers are alike.
*******************************************************************************
Sub groups of people with similar behaviour, values, and/or backgrounds may be identified.
*******************************************************************************
IT SHOULD BE EASIER TO SATISFY SMALLER GROUPS OF SIMILAR CUSTOMERS THAN A LARGE GROUP OF DISSIMILAR CUSTOMERS.
*******************************************************************************
For example, the computer software market can be divided into two segments: the domestic market and the foreign market.
The domestic market can be segmented further into business users and home users.
And the home user segment can be further divided into sophisticated personal computer user, people who hate personal computers but have to buy so their children use it for school work, people who use computers only for e-mail, and so on.
The number of market segments within the total market depends largely on the strategist's ingenuity and creativity in identifying those segments.
a single company is unlikely to pursue all possible market segments.
In fact, the idea behind market segmentation is for an organization to choose one or a few meaningful segments and concentrate its efforts on satisfying those selected parts of the market. Focusing its efforts on these targeted market segments —that is, targeting-enables the organization to allocate its marketing resources effectively.
Concentrating efforts on a given market segment should result in a more precise marketing program satisfying specific market needs.
*******************************************************************************
Target market:-
*******************************************************************************
The market segment, or group of buyers, toward which an organization decides to direct its marketing plan is called the target market.
For example,
there are “left-hander”shops specializing in products for lefthanded people,
Tobacco shops catering to wealthy pipe smokers,
and dress shops that target women who wear certain clothing sizes
In fact, the idea behind market segmentation is for an organization to choose one or a few meaningful segments and concentrate its efforts on satisfying those selected parts of the market. Focusing its efforts on these targeted market segments —that is, targeting-enables the organization to allocate its marketing resources effectively.
Concentrating efforts on a given market segment should result in a more precise marketing program satisfying specific market needs. Target market:-
The market segment, or group of buyers, toward which an organization decides to
direct its marketing plan is called the target market.
For example,
there are “left-hander”shops specializing in products for lefthanded people,
Tobacco shops catering to wealthy pipe smokers,
and dress shops that target women who wear certain clothing sizes
As you can see, the process of segmentation provides hints on how to market to the targeted segments identified.
First, the total market, consisting of many different customers, is studied and broken down (or disaggregated)
into its component parts— that is, individual customers, families, organizations, or other units.
The customers are then regrouped by the marketing strategist into market segments on the basis of one or several characteristics that segment members have in common. Then the strategist must target segments to which the organization will appeal.
When that is done, the strategist has answered the question “What are our target markets
It is thus natural that many differing segments occur within a market.
Marketers usually divide the heterogeneous market for any product into segments, with
relatively more homogeneous characteristics, since this helps in tapping it. And, this
process of disaggregating a market into a number of sub-markets segments is known as market segmentation.
It is thus natural that many differing segments occur within a market.
To put it in a nutshell, market segmentation rests on the recognition that:
(a) any market is made up of several sub-markets, or sub-groups of consumers,
distinguished from one another by their varying needs and buying behaviour, and
(b) it is feasible to disaggregate the consumers into segments in such a manner that
in needs, characteristics and buying behaviour, the members would vary
significantly among/across segments, but would be homogeneous within each
segment.
*******************************************************************************
Why Segment the Market?
*******************************************************************************
Let us see how segmentation benefits the marketer.
1. Facilitates Proper Choice of Target Market
*******************************************************************************
2. Facilitates Tapping of the Market, Adapting the Offer to the Target
Segmentation also enables the marketer to crystallise the needs of the target
buyers
Adapting Offer to Suit Target Segment
*******************************************************************************
Ford modifies its models for India
*******************************************************************************
Ford modified its models for the Indian target segment as shown below:
l Higher ground clearance to make the car more compatible to the rougher road surface in India.
l Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads.
l Changes in cooling requirement, with greater airflow to the rear.
l Higher resistance to dust.
l Compatibility of engine with the quality of fuel available in India.
l Location of horn buttons on the steering wheel.
As the Indian motorist uses the horn far more frquently, for cars sold in India, the horn buttons are
kept on the steering wheel and not on a lever on the side as in the models sold in Europe.
For example,
*******************************************************************************
Daewoo offers eight variants of its Cielo, and Ford Mahindra four versions of the Ford Escort.
*******************************************************************************
segmentation as a strategy of dividing the markets for conquering them.
3. Helps ‘Divide the Markets and Conquer Them’
Through segmentation, the marketer can look at the differences among the
customer groups and decide on appropriate strategic offers for each group. This
is precisely why some marketing experts have described segmentation as a strategy of dividing the markets for conquering them.
It ensures that the marketing effort is concentrated on well defined and carefully chosen segments. After all, the resources of any firm are limited and no firm can normally afford to attack and tap the entire market without any delimitation whatsoever.
The marketer can thus identify the relatively less satisfied segments and succeed by satisfying such segments. *******************************************************************************
Advantages of Market Segmentation:-
*******************************************************************************
l Helps distinguish one customer group from another within a given market.
l Facilitates proper choice of target market.
l Facilitates effective tapping of the market.
l Helps ‘divide the markets and conquer them’.
l Helps crystallise the needs of the target buyers and elicit more predictable responses from
them; helps develop marketing programmes on a more predictable base; helps develop
marketing offers that are most suited to each group.
l Helps achieve the specialisation required in product, distribution, promotion and pricing for
matching the customer group and develop marketing offers and appeals that match the needs
of such group.
l Makes the marketing effort more efficient and economic.
l Helps concentrate efforts on the most productive and profitable segments, instead of frittering
them over irrelevant, or unproductive, or unprofitable segments.
l Helps spot the less satisfied segments and succeed by satisfying such segment.
l Brings benefits not only to the marketer but to the customer as well.
l When segmentation attains high sophistication, customers and companies can choose each
other and stay together.
Levels and Patterns of Market Segmentation
We begin by examining the various levels and pattern of market segmentation.
*******************************************************************************
Segment Marketing
*******************************************************************************
A market segment consists of a large identifiable group within a market with similar
wants, purchasing power, geographical location, buying attitudes, or buying habits. For
*******************************************************************************
example, an auto company may identify four broad segments: car buyers who are
primarily seeking basic transportation or high performance or luxury or safety.
Segmentation is an approach midway between mass marketing and individual
marketing. Each segment’s buyers are assumed to be quite similar in wants and needs,
yet no two buyers are really alike. Anderson and Narus urge marketers to present
flexible market offerings instead of a standard offering to all members within a
segment.
*******************************************************************************
Niche Marketing
*******************************************************************************
A niche is a more narrowly defined group, typically a small market whose needs are
not well served. Marketers usually identify niches by dividing a segment into sub
segments or by defining a group seeking a distinctive mix of benefits. For example, the
segment of heavy smokers includes those who are trying to stop smoking and those
who don’t care.
*******************************************************************************
For example,
*******************************************************************************
Delta Airlines offers all economy passengers a seat, food, and soft drinks. It charges
extra for alcoholic beverages and earphones to those ecomomy passengers wanting
them.
Whereas segments are fairly large and normally attract several competitors, niches
are fairly small and normally attract only one or two. Larger companies, such as IBM,
lose pieces of their market to nichers: Dalgic labeled this confrontation “guerrillas
against gorillas.” Some larger companies have therefore turned to niche marketing,
which has required more decentralization and some changes in the way they do business.
Johnson & Johnson, for example, consists of 170 affiliates (business units), many of
which pursue niche markets.
*******************************************************************************
For e.g., there is Outlook Traveller for
*******************************************************************************
those who love travelling; there is Inside Outside which focus on design and interior;
there is Osho Times for those who believe in Osho etc.
*******************************************************************************
Niche marketers presumably understand their customers’ needs so well that the
customers willingly pay a premium. Ferrari gets a high price for its cars because loyal
buyers feel no other automobile comes close to offering the product-service-membership
benefit bundle that Ferrari does.
An attractive niche is characterized as follows: The customers in the niche have a
distinct set of needs; they will pay a premium to the firm that best satisfies their needs;
the niche is not likely to attract other competitors; the nicher gains certain economies
through specialization; and the niche has size, profit, and growth potential.
Both small and large companies can practice niche marketing.
Fifteen per cent of the
commercial Web sites with fewer than 10 employees take in more than $100,000, and
2 per cent even ring up more than $1 million. The recipe for Internet niching success:
Choose a hard-to-find product that customers don’t need to see and touch.
