Module 3 Market segmentation Dr. Mohamed Zamil AL-Akhtaby

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

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

Market Segmentation Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation

Segmenting Consumer Markets Market Segmentation Segmenting Consumer Markets Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

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

Segmenting Consumer Markets 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

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

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

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

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

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

Segmenting Consumer Markets 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

Geographic Demographic Psychographic Behavioral Occasions Benefits Country Region City Metro size Density Climate Social Class Life style Personality 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 Geographic Demographic Psychographic Behavioral

Segmenting Business Markets 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

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

Market Segmentation Measurable Accessible Substantial Differential Requirements for Effective Segmentation market segments must be: 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.

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

Selecting Target Market Segments 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

Market Targeting Mass Marketing Target Marketing Strategies 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

Market Targeting Target Marketing Strategies 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

Market Targeting 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

Market Targeting Micromarketing Products to suit the tastes of individuals and locations (complete segmentation) Market Targeting Target Marketing Strategies Local Marketing Tailoring brands/ promotions to local customer groups. 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

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

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

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

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

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

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

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

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

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

Marketing Strategy and the Marketing Mix Developing an Integrated Marketing Mix

Marketing Strategy and the Marketing Mix

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

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