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Presentation on theme: "Chapter-5 RETAIL MARKET SEGMENTATION"— Presentation transcript:


2 What is a market? Mass marketing approach: Differentiated Approach
‘A market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and services that can satisfy these needs’ Mass marketing approach: - approaching the entire set of customers with a uniform marketing approach thereby creating the largest potential market (sale of staple food items like rice and bread) Differentiated Approach - strategy of market segmentation - marketer selects one or more of the segments as the target market and positions his outlet as per the profile of the targeted segment (Diet Coke sold to market segment of health conscious adults)

3 What is market segmentation
‘The process of dividing the heterogeneous total market into small groups of customers who share a similar set of wants’ Major characteristics - is an aggregating process: clustering people with similar or homogenous needs and respond to the marketing mix in the same way - different kind of promotional activities are developed for serving different market segments - identifying niche segments - customized products and services are provided to customer groups (Whirlpool automatic washing machines in urban Mumbai with large groups of working women can be segmented)

4 Benefits of segmentation

5 Benefits of segmentation
Development of marketing mix - helps to identify target audience - customize marketing strategies in terms of product, price and promotion for customers Store location decision - to concentrate stores where target population are found Understanding customer behavior - how and why the target group behaves and acts - determining the buying behavior after segmenting the market

6 Benefits of segmentation contd
Merchandising decisions - deciding on which items will occupy the store shelves for display - understanding the preference of target groups Promotional campaigns - effective and accurate promotional campaigns Positioning - major feature of segmentation . Sarvanna stores are positioned for lower middle class consumers where as the clientele of Lifestyle and Shoppers Stop are for the upper income class and the elite

7 Segmenting, targeting and positioning

8 Criteria for effective market segmentation

9 Criteria for effective market segmentation contd
Homogeneous within: - similar needs, wants and buying behavior - an effective marketing programme can be developed (Gillette Mach 3 for young male adults) Heterogeneous within - customers between segments stay different for better focus from retailers Substantial should have sufficient discretionary income (Ebony must ensure high income groups exist in their trade area)

10 Criteria for effective market segmentation contd
Actionable - useful for identifying target groups and deciding on marketing mix variables (Café Coffee Day attracts college goers and young working executives to enjoy coffee in a fashionable outlet) Accessible - reachable target market and accessible to target consumer groups (Crossroads is readily accessible with parking facilities) Measurable - size, purchasing power and characteristics of market segment should be measurable

11 Kinds of markets Consumer markets Industrial markets
- individuals and households purchasing goods for self consumption (groceries like milk ,poultry etc .) Industrial markets - individuals, groups and organizations purchasing goods for reproductions of other products

12 Kinds of markets contd Re-seller Market
market of the middlemen like wholesalers and retailers who buy goods for resale main focus of retailing is on consumer products convenience products: purchased frequently like packaged foods, milk ,medicines etc shopping products: furniture, clothing apparels etc specialty items: special effort to purchase branded jewellery of DeBeers unsought items: potential customers have yet to know or know through promotions (ICICI PRUDENTIAL LIFE INSURANCE, HUTCHINSON etc.)

13 Bases of segmentation Geographic segmentation Demographic segmentation
– divided on the basis of geographic units like regions and districts (Subhiksha Stores in Chennai) Demographic segmentation - division on the basis of variables like age, gender, income level, family size, occupation, education, and marital status (Life Style may segment the market by income class) Psychographic segmentation -based on lifestyle, personality, values, and interests - value and lifestyle segmentation (VALS) - each consumer is targeted with a unique style of living based on the VALS concept

14 Bases of segmentation contd
Behavioural segmentation based on consumer responses or use of product (i.e. use related and usage related segmentation) Behavioural variables - reason/occasion to purchase (Diwali sees higher sale of paints) - frequency and quantity of purchase (buying vegetables or meat on a weekly basis) - product usage (heavy beer drinkers and occasional drinkers) - loyalty status (loyal customers to Subhiksha stores) - buyer readiness stage (stages like innovators, early adopters or laggards for cellphone handsets) - source of purchase: choice of shopping locations (local kirana stores or the neighboring mall)

15 Choice of segments to target the market
measure the attractiveness and capacity of the segment estimate its size, purchasing power, growth rate, presence of competition, etc. opt for an untapped segment choose to operate in a segment where there are already existing players e.g. CROSSROADS targets clientele from upper middle-class customers devoted to each of the four shopping categories—women, kids, men, and home furnishings

16 Profiling of customers
Customer Demographics age, sex, income levels, educational background, and professional background Family decision-making (a CTV or a 2-wheeler purchase) Customer Psychographics purchasing behaviour of the target population purchase motivation purchasing process source of purchase time and place utility

17 Buyer’s intentions survey
Frequency of customer visits to store Weekday/weekend shopping patterns Store selection criteria: how buyer’s go about selecting the store Spending per visit:. how much the customer spends on an average during each visit Planned vs unplanned shopping: items purchased in a planned way and impulse purchases Store loyalty: do they patronize a few stores or shop around for bargains

18 Market segmentation in India
Marketer uses segmentation models based on demographics, geo-demographics, SEC data, and benefits and usage Prominent examples are McDonalds, Nescafe, Café Coffee Day, Benetton


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