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WHAT IS MARKET SEGMENTATION?
“Market segmentation is a strategy for selecting customers according to differences in the way they respond to marketing effort, for choosing among alternative market opportunities and for tailoring marketing strategies to those distinctive opportunities”.
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SEGMENTATION,TARGETING & POSITIONING OF INDUSTRIAL MARKET
Presentation On SEGMENTATION,TARGETING & POSITIONING OF INDUSTRIAL MARKET
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Benefits of Market Segmentation
First, the mere attempt to segment the business market forces the marketer to become more attuned to the needs of customer segments. Second, market segmentation provides the foundation for efficient and effective business marketing strategies. Third, market segmentation provides a basic unit of analysis for marketing planning and control
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Requirements for a Effective Segmentation
Measurable Substantial Accessible Differentiable Actionable
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Bases For Segmenting Business Markets
Demographic 1. Industry: Which industry should we serve? 2. Company Size: What size companies should we serve ? 3. Location: What geographical areas should we serve?
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Operating Variables 1. Technology: What customer technologies should we focus on? 2. User or nonuser status: Should we serve heavy users, medium users or light users or nonusers ? 3. Customer Capability : Should we serve customers needing many or few services
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Situational Factors 1. Urgency: Should we companies that need quick and sudden delivery or service? 2. Specific application: Should we focus on certain applications of our product rather than all applications? 3. Size of order: Should we focus large or small orders
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Personal Characteristics
1. Buyer-seller similarity: Should we serve whose people and values are similar to ours? 2. Attitude towards risk: Should we serve risk taking or risk avoiding customers? 3. Loyalty: Should we serve companies that show high loyalty to their suppliers?
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Two Important Set of Characteristics of Business Buyers
The characteristics of the buyer as a consumer organisation. The behavioral characteristics of the buyer
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Classification of Market Segmentations
Macro Segmentation: It involves the subdividing of the market into subgroups based on certain overall characteristics of the buyer such as the industry group, type of organisation, size, product requirements, end use of the product bought, geographical locations.
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2. Micro Segmentation: It specifically pertains to characteristics of the decision making process and the buying structure within customer organisations. This includes such factors as the position of buying centers in authority, demographics and personality characteristics of key members of the buying center, attitude towards the vendor and specific attributes in the organisation’s buying decisions.
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POSITIONING In marketeting, positioning is the technique by which marketers try to create an image or identity in the minds of their target market for its product, brand, or organization. It is the 'relative competitive comparison' their product occupies in a given market as perceived by the target market.
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POSITIONING Re-positioning involves changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. De-positioning involves attempting to change the identity of competing products, relative to the identity of your own product, in the collective minds of the target market..
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POSITIONING PROCESS Defining the market in which the product or brand will compete (who the relevant buyers are). Identifying the attributes (also called dimensions) that define the product 'space.' Collecting information from a sample of customers about their perceptions of each product on the relevant attributes. Determine each products' current location in the product space
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POSITIONING PROCESS The position of your product
Determine the target market's preferred combination of attributes (referred to as an ideal vector) Examine the fit between: The position of your product The position of the ideal vector Position.
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POSITIONING CONCEPTS Functional positions Solve problems
Provide benefits to customers Get favorable perception by investors and lenders Symbolic positions Self-image enhancement Ego identification Belongingness and social meaningfulness Affective fulfillment
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POSITIONING CONCEPTS Experiential positions
Provide sensory stimulation Provide cognitive stimulation
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POSITIONING STRATEGIES
Benefit Positioning: Any distinctive benefit of use of the product becomes the core of positioning like energy saving by a machine, low operating cost, pollution free product etc. Cost Positioning: The low cost, like the low of product or the low cost per unit if output by a machine.
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POSITIONING STRATEGIES
Segment Positioning: Products may be positioned with reference to specific segments. Eg: A courier service firm has separate brands for low weight & high weight articles. Application/Use positioning: A product may be positioned with respect to the use/application or the customer group it is meant for.
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POSITIONING STRATEGIES
Competitor Positioning: Positioning is done directly against the competitor. This strategy is suitable for a firm that has solid differential advantage. Quality positioning Product category positioning some time positioning strategy entails associating with a product class or category.
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TYPES OF POSITIONING Variety Based Positioning : It is based on producing a subset of an industry’s products or services. The focus is on product or service varieties. Need Based Positioning: The focus is on satisfying most of the needs of the target customers. This strategy is appropriate when customers have different needs and when a tailored set of activities can serve those needs.
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TYPES OF POSITIONING Access Based Positioning: Its is applicable on the needs of different sets of customers are similar, but the best ways of accessibility are due to factors like geography or customer scale.
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TARGETING OF INDUSTRIAL GOODS
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WHAT IS TARGET MARKETING ?
Market segmentation would reveal the nature of clustering of buyers, the distinctive characteristics of the different segments and the marketing opportunities and requirements.
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EVALUATION OF MARKET SEGMENTS
Potential Structural attractiveness Company objectives and competence
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STRATEGIES OF TARGET MARKETING
Single Segment Concentration Selective Specialization Product Specialization Market Specialization Full market coverage
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Differentiation The means of differentiation are peculiar to each industry. Differentiation can be based on the product itself, the delivery system by which it is sold, the marketing approach , and a board range of other factors
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Bases Of Differentiation
Product Attributes: It is based on certain differentiation characteristics of the physical product. According to kotler, the main product differentiation are features. Performance )reliability Conformation )repairability Durability )style and design
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Service Differentiation: Services can be a factor of
differentiation in number of cases. services as a differentiator assumes more significance where the scope of differentiation in respect of the physical product is limited. Delivery Installation Customer training Consulting service Repairs
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Personnel Differentiation : Sometimes people who matter
can also make a difference. Hiring and training better people than competitors are the most important personnel differentiation a company can have. The six important characteristics of a well trained personnel are 1) Competency ) Reliability 2) Courtesy ) Responsiveness 3) Credibility ) Communication Capability
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Image Differentiation: Many consumers are
influenced by the brand or company image, even when the competitive offerings are similar. For Example: Some firms tries to project a high image by publicizing the name of high profile customers they serve or the business they won by competing with other heavy weights.
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ESSENTIALS OF DIFFERENTIATION
Differentiation, to be successful in business marketing, must have the essential characteristics. Distinctive: The differentiation should be meaningful from customers’ point of view, i.e.. It should offer some tangible benefit to the customers. Superior: it is not enough that the differentiation has customer benefits but the customers should also perceive a better benefit than the offerings of other companies
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3) Communicable: The difference should be clearly communicable so that it becomes tangible to the customers. Sustainable: The differentiation should ideally be sustainable ----it should not be easy for the competitors to initiate it. Profitable: The differentiation will be meaningful for the company only if it is profitable.
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THANK U
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Managing the Business Marketing Channels
Presentation on Managing the Business Marketing Channels
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In this session… Basic Structural Elements
Ashwin & Raghavendra Formulating Channel Strategy Sandeep Channel Logistics Sandeep
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Basic Structural Elements
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Marketing Channel defined
It is primary means through which the industrial firms finds new prospects for its products communicates with existing customers physically delivers the products to the industrial user
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It’s a challenging task, because…
The alternatives are numerous. Marketing goals differ. A variety of customer market segments often require that a number of separate channels be employed concurrently
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Essential Tasks Making contact with potential buyers Negotiating
Establishing contractual arrangements. Transferring Title Communications
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Essential Tasks contd…
Providing required financial arrangements Servicing the product Providing local inventory. Transportation. Storage
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Types of Distribution Channels
Direct Distribution It is a channel strategy that does not utilize middlemen but instead the manufactures own sales force deals directly with the customer. Indirect Distribution It involves utilization of one or more types of middlemen in the channel.
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Participants in the Industrial Channel
Distributors General line distributors Specialists Combination House Manufactures Agents/Representatives. Jobbers Brokers Commission Merchants
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Channel Alternatives Producer Industrial Buyer Wholesaler B Agent C D
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Channel Alternatives contd…
Manufacturer’s Sales Branches Manufacturer Manufacturer’s Representatives Industrial Distributors Customer
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Formulating Channel Strategy
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Channel Design Process
Selection of Channel Evaluation of Alternatives Quantitative Analysis of Channel Objectives Qualitative Analysis of Company, Competitive & Environmental Conditions Specification of Feasible Channel Alternatives Analysis of tasks to be performed by the channel
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Channel Design Process contd…
Channel Objectives Profit Considerations Reflect marketing goals Channel Design Constraints Availability of good alternatives Traditional channel process Product characteristics Financial resources Competitive Strategies Geographic dispersion
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Channel Design Process contd…
Pervasive Channel Tasks Channel Alternatives Degree of directness Assessing product/Market Factors Type of intermediary Number of channels Legal issues
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Channel Design Process contd…
Channel Selection Evaluating alternative channels Qualitative dimensions
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Channel Administration
Selection of Channel Members Securing Good Intermediaries Motivating Channel Members A Partnership Dealer Advisory Councils Margins & Commissions
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Factors influencing Channel Structure
Is the market Vertical or Horizontal? Market potential Geographical concentration of purchasers Gross Profit Margin Price Volatility Need for Product Installation Repair & Maintenance Service requirements Firm’s Financial position Seller’s Marketing Objectives
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Channel Logistics
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Channel Logistics It’s a function of facilities, their location and transportation network. A operation in which such activities as production scheduling storage inventory control order handling packaging selection of plant & warehouse sites transportation with their resulting costs, are balanced against the value of customer satisfaction.
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Channel Logistics contd…
Classified as Stationary Facilities Transportation Network Location
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Markets change faster than Marketing
Thank You
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Vendor Analysis & Vendor Rating
Criteria (Factors) for Vendor Appraisal Technical Capability Manufacturing Capability Service Capability Financial Capability Management Capability Methods of evaluating Vendor Performance (Vendor Rating) Categorical Method Weighted Point Method Cost-Ratio Method
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Categorical Method Categorical Method
Is based on the experience and opinion of the user departments Significant performance criteria are drawn up by the purchasing department Users assign a grade of plus, minus or neutral against each criterion Regular meetings are held and suppliers rated overall as high, medium or low Inexpensive but subjective rating system
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Weighted Point Method Weighted Point Method
Significant performance criteria are listed weights are assigned to each criteria based on their importance The scores of all the criteria are totaled to get the composite performance score of each vendor Acceptable and unacceptable ranges can be applied for the composite scores This enables to compare the ratings of all the suppliers
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Weighted Point Method Example
Factor Weight Actual Performance Performance Score Quality Delivery Price Cost Redn. Suggestions 40 30 10 20 90% Acceptable 125% of lowest price 100/125=0.8 % of total received=60 40X .9 =36 30X .9 =27 10X .8 = 8 20 X .6 =12 Total Score =83
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Based on the use of cost analysis in rating suppliers
Cost-Ratio Method Cost-Ratio Method Based on the use of cost analysis in rating suppliers Significant performance criteria are identified Costs associated with each criteria are identified Costs associated with quality Defective products, inspections, visits to vendor plants, sample evaluation etc., Costs associated with delivery Telephone follow-ups, additional paper work to expedite orders, factory down-time due to delays, emergency transport costs etc., Costs associated with service Intangible costs of training, spare availability, repair capability, prompt responses etc.,
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Cost Ratio Method Contd.
All such costs for different criteria are related to the value of the products received A higher cost to value ratio gives a lower rating and a lower value of the ratio will give a higher rating The costs so computed are adjusted with the supplier’s quoted price to determine the “net adjusted price” This method is gaining in importance
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Cost Ratio Method Example
Supplier Q/C Ratio D/C Ratio S/C Ratio Total Cost Penalty Quoted Price/Unit Net Adj. Price/Unit A B C D 2% 1% 3% -4% -1% 7 % 4 % 1 % 95.5 95 94.75 95.25 94.55 101.65 98.54 96.20
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