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9.1
Segmenting and Targeting
the Market
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9.2
Number of Product Categories with
Relative Penetration of Top Three Brands
Ratio of
Penetration
Income Category Urban Rural
High Ratio Low
Low Middle
Middle High
5
5
8
4
3
7
Medium Ratio Low
Low Middle
Middle High
1
3
-
2
4
-
Low Ratio LowLow Middle
Middle High
43
-
42
3
Note : The top three brands are concentrated in the high ratio. It shows that in relation to the
other brands in the category the tope three are dominant. This is more so among the middle
and high levels of incomeSource: NCAER: Consumer Market Demographics in India (Revised Ed), Ed: S.L. Rao, Jan 1994, p.18
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9.3
Below
SSC
66%
SSC
Grad
26%
Grad
8%
SSC
Grad
33%
Below
SSC
58%
Grad
9%
TV
Viewers
46%
Non-
Viewers
54%
TV
Viewers
62%
Non-
Viewers
38%
Ilterate
42%Literate
58%
Ilterate
42%Literate
58%Non
Work
80%
Work
13%
Student
7%
Non
Work
76%
Work
15%
Student
9%
1983 1990
A: Literacy Profile
1983 1990
C: Education Profile
1983 1990
B: Occupational Profile
1983 1990
D: TV Viewership
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9.4
Rural Customers
Brand
Price
Size
Feature
Rural Customers
Brand
Price
Size
Feature
Rural Customers
Brand
Price
Size
Feature
Rural Customers
Brand
Price
Size
Feature
Lower Income H.H.Middle Income H.H.
Upper Middle Income H.H. Rich H.H.
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9.5
Very
Rich: 1.2
Consuming
Class: 32.5
Climbers: 32.5
Aspirants: 44.0
Destitute: 33.0
Segmenting the Indian Market: The Income Route
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9.6
C(19.5%) Skilled Workers,clerks, salespersons etc
D(22.4%) Same as above, occupation profile with SSC
E1&E2 (13.2%) Primarily unskilled labour
Socio-Economic Pyramid of Indian Population
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9.7
Segmentation
Market segmentation is the process of dividing a heterogeneous
market into homogenous sub units.
Need for segmentation
To be able to compete in a highly competitive market.
To position itself as segment leader.
To gain competitive edge.
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9.8
BASES FOR SEGMENTING THE MARKET
(a) Customer based segmentation(b) Product related segmentation
(c) Competition related segmentation
Customer Based Segmentation
Geographic location of customers:
RURAL vs. URBAN METRO vs. NON METRO
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9.9
Demographic Characteristic
Age
Sex Child Pester Power
Youth Market
Income
Occupation Gender
Education
Marital Status
Family Size & Structure Psychographic Variables
Life Style
Personality
Buyer Readiness
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9.10
Where Kids Reign Supreme Role in FMCG purchase
71
5952 49 47
4237 36
32 31
0
10
20
30
40
50
6070
80
1
FMCG
%o
fkidswhoaffluence
what
FMCGbrandtheirfamilybuys
Biscuits
Burgers & PizzasFruit Juice
Shoes
Hot milk additives
Cheese
Tomato ketchup
Tooth pas te
Soap
Shoepolish
Where kids reign supreme in FMCG purchase-Case of
food products
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9.11
Product Related Segmentation
Product Use situations Different customers may use the
same product in different situations.
Benefits Segmentation Marketers identifies benefits that a
customer looks for when buying a product.
Quantity consumed- one of the basis of segmentationbeverages tea ,coffee,soft drinks,liquor and cigarette
markets.Following segments are visible
a) Heavy users
b) Moderate users
c) Light users
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9.12
Product Related Segmentation
Decision Criteria Used by customer to evaluate and buy a brand
or the product. Following four parameters are considered inconsumer decision making today
Price
Perceived quality of the product/ service
Service offered by the firm Technology
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9.13
ReligiousPrefers to work hard themselves
Anxious and worriedabout change
Seeking equality
Quality conscious
Disturbed by vulgarity and Western
influences
Seeking luxury
Outgoing
Fashion conscious
Bolder and liberatedSeeking economy
Self- sacrificing
Social conservatism
Self Denial Pleasure
Sec D
Sec C
Sec B
Sec A
Sec A1+
Contemporary Indian womenBy Sec Group
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9.14
Bolder
Outgoing
Consumerist
Anxious , worried about
change
Nostalgic
Self- indulgent
Discontented
Fashion conscious
Seeking freedom Seeking pleasure away from home
Impulsive
Disturbed by vulgarity and Western
influences
Discomfort with luxury Discomfort with vulgarity
Guilt about spending on self
Self sacrificing
20-29years30-39 years
40-49 years
15-19 years
50+years
Modern/Individualistic Traditional/conservative
By Age
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9.15
Competition Based Segmentation
Hard Core Loyal
Soft Core Loyals
Switchers
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9.16
Segmenting Industrial Markets
Based on Size & purchase of the customer,there are
a) Category customers large buyers
b) Category customers medium sized buyers
c) Small buyers
Geographical Location Firms located in a particular region
form a part of segmentation
End Use
by differentiating end users of firms products Within end use segment further market can be segmented on
basis of purchase criteria.
Combining purchase criteria, size and geography Matrix
form of market segmentation .
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9.17
Segment 1 Segment 2 Segment 3 Segment 4
Buyer characteristics
and buying motives
Marketing mix
(a)Large
(b)Average order
size Rs.2,00,000
(c)Standard
product
(d)Quality
conscious
(e)Competitive
price-price
important(f)Delivery
crucial
(g) Western India
(a)Large
(b)Average
order size Rs.2,00,000
(c)Standard
product
(d)Not much
'concerned
about
quality
(e)Extendedcredit
If)Highly
price sensitive
(g) North
India
(a)Medium sized
(b)Average order size
Rs. 2,00,000(c)Tailor-made product
(d)Moderate on price
sensivity
(e)Value for money
(f)Vendor reliability
(g) Extended credit
(h) Returns Policy
(i) South based
(a)Small
(b)Avemge order
size Rs. 2,00,000(c)Tailor-made
product
(d)After sales
service
(e)Price sensitivity low
Spread all over India
Product quality
product features
Warranties
After sales service
Financmg plans
Price
Credit terms
Delivery
Prompt availability
Personal selling
Direct mail
Yes
No
No
No
No
Yes
No
Yes.
Yes
Maybe
May be
No
No
No
No
No
Yes
'Yes
May be
May be
May be
May be
Yes
Yes
Yes
Yes
Maybe
Yes
Yes
Yes
Yes
Yes
Mav he
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Buying Behaviour/Motivation or Purchase Criteria
Market Segmentation in Industrial products --The matrix Approach
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9.18
Three Stages of Market Segmentation
Survey Stage- Divided into two parts-
1) Focus group discussions & in depth interviews with a view to getting an
insight into consumer motivation,attitudes and behavior.
2) Based on this insight, developing a questionnaire for a sample group of
customers.
Analysis Stageusing factor analysis. Identifying factors that differentiate
customer groups. Profiling Stage- Each cluster is profiled in terms of demographics,
psychographics, media habits,attitudes,behavior and consumption habits.
Requirements for Effective Segmentation-
a) Accessibility
b) Measurable
c) Viable
d) Intensity in Competition.
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9.19
Targeting Strategies
StandardizationFirm offers the same product to different market segments.
It uses the same communication,pricing and distribution strategies.
Differentiation
Focus - Focus is a combination of standardization & differentiation, where
the core strategy remains the same,but differentiation is made to take into
account specific customer group requirements.
Positioning- the differentiation could be along following lines-a) Product
b) Service
c) Channel
d) Price
e) People
f) image
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