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

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Presentation on theme: "Market segmentation Module 3 Dr. Mohamed Zamil AL-Akhtaby."— Presentation transcript:

1 Market segmentation Module 3 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 Segmentation 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 Create Value for targeted Customers divide the total market into smaller segments Differentiation Differentiate the market offering to create superior customer value

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

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

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

10 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. 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 Family lifecycle 9.2 How Are Market Segments Best Defined?

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

12 Market Segmentation Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits Segmenting Consumer Markets

13 Market Segmentation 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 Country Region City Metro size Density Climate Country Region City Metro size Density Climate Social Class Life style Personality Social Class Life style Personality Age Gender Family life cycle Family size Income Occupation Education Religion Race Nationality Age Gender Family life cycle Family size Income Occupation Education Religion Race Nationality Occasions Benefits User status User rates Loyalty status Readiness stage Attitude toward The product Occasions Benefits User status User rates Loyalty status Readiness stage Attitude toward The product GeographicDemographicPsychographicBehavioral

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

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

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

18 Market Segmentation Segmentation 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 Create Value for targeted Customers divide the total market into smaller segments Differentiation Differentiate the market offering to create superior customer value

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

21 Segment Marketing Different products to one or more segments (some segmentation, i.e. Marriott) 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 Target Marketing Strategies Market Targeting

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

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

24 Choosing a Target Market Company Resources Product Variability Products Stage in the Life Cycle Market Variability Competitors Marketing Strategies

25 Market Segmentation Segmentation 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 Create Value for targeted Customers divide the total market into smaller segments Differentiation Differentiate the market offering to create superior customer value

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 Products Position - the way the product is defined by consumers on important attributes - The place the product occupies in consumers minds relative to competing products. Perceptions Impressions Feelings

28 Differentiation and Positioning Identifying Possible Value Differences and Competitive Advantages Competitive advantage is 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 Positioning Strategy Identifying a set of possible competitive advantages to build a position by providing superior value from: Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation

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

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 promotionthat 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 4Ps& 4Cs Product (Customer Solutions) Price (Cost) Place (Convenience) Promotion IMC (Communication) Promotion IMC (Communication)7 Ps Extended in case of Services) People Process Physical Facilities

36 Thank You


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