1. MARKET SEGMENTATION Chapter 7
MBAADM5
roger bancilo

2. Chapter Overview: What is Market Segmentation
Levels of Market Segmentation
Bases for Segmenting Markets

3. 3 Steps in Target Marketing (S T P)
Segmentation Marketing
Identify bases for segmenting the market
Develop segment profiles
Target Marketing
Develop measure of segment attractiveness
Select target segments
Market Positioning
Develop positioning for target segments
Develop a marketing mix for each segment

4. Market Segmentation CONCEPT AND DEFINITION
The concept of market segment is based on the fact that the market of commodities are not homogeneous but they are heterogeneous.
Market represent a group of customer having common characteristics but two customer are never common in their nature, habits, hobbies, income and purchasing techniques.

5. Defining Market Segmentation
According to Philip Kotler ,
“Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.”

6. Market Segmentation
Market Segmentation is a method of “dividing a market (Large) into smaller groupings of consumers or organizations in which each segment has a common characteristic such as needs or behavior.”

7. LEVELS OF MARKET SEGMENTATION

8. Evolving Marketing Strategies
Mass Marketing:
The term mass market refers to a large, undifferentiated market of consumers with widely varied backgrounds.
Products and services needed by almost every member of society are suited for the mass market. Such items as electric and gas, utilities, soap, paper towels and gasoline, for example, can be advertised and sold to almost anyone, making them mass market goods.

9. 1. Mass Marketing
An attempt to appeal to an entire market with one basic marketing strategy utilizing mass production, mass distribution and mass promotion of one product for all buyers. Also called undifferentiated marketing.
The appeal of mass marketing is in the potential for higher total profits. Companies that employ the system expect the larger profit to result from:
(1) expanded volume through lower prices, and
(2) reduced costs through economies of scale made possible by the increased volume.
Henry Ford applied the concept in the automobile industry. His Model-T was conceived and marketed as a "universal" car — one that would meet the needs of all buyers.

10. Mass Marketing
Henry Ford epitomized this strategy when he offered the Model- T Ford in one color , black.
Ford Model-T was the first to mass market automobiles. Ford mass produced by assembly line, mass distributed through dealers, and mass promoted one product for all buyers.

11. 2. SEGMENT MARKETING Identifiable Group with in a Market with Similar
A market segment consists of a large identifiable group of customers within a market who share a similar set of needs and wants, purchasing power, geographical location, buying attitudes, or buying habits.
Identifiable Group with in a Market with Similar
Similar Needs & Wants
Purchasing Power
Geographical Location
Buying Attitudes

12. 1. Low-cost Basic Transportation
Example:
Automakers may identify four broad segments in the car market.
Buyers who are primarily seeking:
1. Low-cost Basic Transportation
Toyota Wigo, Mitsubishi Mirage, Honda Brio, Kia Picanto, Hyundai Eon & i10, Tata Indigo

13. 2.Driving Thrills & High Performance
Toyota 86, Subaru BRZ, Subaru WRX STI,
Ford Mustang, Chevrolet Camaro, Nissan GTR

14. 3. Luxurious Driving Experience
Lexus LFA, Mercedes, BMW, Audi, Bently, Meserati

15. McLaren, Ferrari, Bugatti, Lamborghini, Pagani, Renault
4. Supercar / Hypercar
McLaren, Ferrari, Bugatti, Lamborghini, Pagani, Renault

16. 5. Car Safety Features Volvo Top Safety Features
Volvo 360 Degrees Surround Camera; Blind Spot Information System, Lane Keeping Warning, Volvo Adaptive Cruising, Park Assist Pilot,
Active High beam Headlights

17. Safety Features Subaru Forester
Strong Utilitarian Body Structure, Eye Sight Camera
Off-road Safety with X Mode , Best crash-test ratings in its class

18. Safety Features Ford Focus & Ford Explorer
Ford Focus: Active City Stop, Blind Spot Warning, Self-parking
Ford Explorer: Inflatable seatbelt

19. Safety?

20. FLEXIBLE MARKET OFFERING
Consists of the product and service elements that all segment members value, plus options (additional charge) that some segment members value.
Even in segments, 100 % of their needs are not the same.

21. FLEXIBLE MARKET OFFERING
Consists of two parts.
Naked Solution : - products and services that all members of the segment values.
Discretionary options : - that some segment members value. Each option might carry an additional charge.

22. FLEXIBLE MARKET OFFERING
Need: Low Cost Basic Transportation
Naked Solution: Mitsubishi Mirage
Discretionary options: 2 Trims in 4 variants to choose from
Mirage GLX (MT) – P503,000
Mirage GLX (CVT) – P553,000 ^P50K (CVT)
Mirage GLS (MT) – P598,000 ^P95K (Trim)
Mirage GLS (CVT) – P648,000
(MT) – Manual Transmission
(CVT) – Continuous Variable Transmission (Automatic)

23. FLEXIBLE MARKET OFFERING
Manual or CVT?

24. FLEXIBLE MARKET OFFERING
Mirage GLX (MT) - P503K
Mirage GLS (MT) – P598K
Ignition key starter
Key entry
Option: SAT-NAV system
Option: Touch screen multimedia entertainment
2 Speakers
Non leather wrapped steering wheel
Manual control air con
Driver side airbag only
14” steel rim w/ hubcaps
No fog lamps
No rear spoiler
2 front doors power windows
Option: ABS w/EBD
Start/stop push button starter system
Keyless entry system
SAT-NAV equipped touch screen multimedia entertainment
6 Speakers
Leather wrapped steering wheel
Automatic climate control air con
Twin airbags
15” alloy wheel
Fog Lamps
Rear spoiler
Central locking 4 door power windows
ABS w/ electronic brace-force distribution

25. FLEXIBLE MARKET OFFERING
Delta Airlines offers all economy passengers a seat and soft drinks. It charges economy passengers extra for alcoholic beverages.

26. 2. NICHE MARKETING
Group of customers seeking a distinctive mix of benefits who are ready to pay extra premium.
A niche is a more narrowly defined customer group typically a small market whose needs are not being well served. Marketers usually identify niches by dividing a segment into sub segments or by defining a group seeking a distinctive mix of benefits.
Niche = segment sub – segments

27. NICHE MARKETING
Ex. Car buyers who are primarily seeking for thrills and high performance. [MT] Manual Transmission [CVT] Continuous Variable Transmission with Paddle shifter

28. NICHE MARKETING

29. 3. LOCAL MARKETING
Marketing programs tailored to the needs & wants of local customer groups in trading areas, neighborhoods , etc.
This trend is called grass roots marketing.

30. LOCAL MARKETING

31. 4. INDIVIDUAL MARKETING
Ultimate segmentation – segments of 1 or customized marketing or one-to-one marketing.
Customerization – empower the consumers to design the product or service offering of their choice.

32. Bases for Segmenting Consumer Markets

33. GEOGRAPHIC SEGMENTATION
Divides the market into different geographical units such as nations, regions, states, counties, or cities.
Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on. Tereyaki burger in Japan.
Toyota Motor Corporation

34. DEMOGRAPHIC SEGMENTATION
Demographic segmentation is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables.

35. Demographic Segmentation
Income Level
Age
Family
Ethnicity
Education
Dr. Rosenbloom

36. Age and life-cycle stage segmentation is the process of offering different products or using different marketing approaches for different age and life-cycle groups.
As people age their needs and wants change, some organizations develop specific products aimed at particular age groups for example  nappies for babies, toys for children, clothes for teenagers and so on.   
Gender segmentation is commonly used within the cosmetics, clothing and magazine industry.
Income segmentation is another strategy used by many organizations.
Products and services are also aimed at different lifecycle segments. Holidays are developed for families, the 18-30's singles,  and for those in their 50's.     

39. Gender

40. Geographic Segmentation

41. Psychographic Segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits.

42. Swatch targets those with an active lifestyle

43. Behavioral Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product
Occasion
Benefits sought
User status
Usage rate
Loyalty status

44. Behavioral Segmentation
Occasion segmentation divides buyers into groups according to occasions when they get the idea to buy, actually make purchases, or respond to a product.
Benefit segmentation requires finding the major benefits people look for in the product class, the kinds of people who look for each benefit, and the major brands that deliver each benefit.

45. Behavioral Segmentation
User status divides buyers into ex-users, potential users, first-time users, and regular users of a product.
Usage rate divides buyers into light, medium, and heavy product users.
Loyalty status divides buyers into groups according to their degree of loyalty

46. Segmentation Criteria [MASDA]
To be useful, a market segment must be:
Measurable
Accessible
Substantial
Differentiable
Actionable
Requirements for Effective Segmentation

47. Segmentation Criteria
Measurable examples include the size, purchasing power, and profiles of the segments.
Accessible refers to the fact that the market can be effectively reached and served.
Substantial refers to the fact that the markets are large and profitable enough to serve.
Differentiable refers to the fact that the markets are conceptually distinguishable and respond differently to marketing mix elements and programs.
Actionable refers to the fact that effective programs can be designed for attracting and serving the segments.