Transcript Market Segmentation

Market Segmentation
By Kaustubh Pal
Segmentation
• Segmentation involves subdividing markets, channels or customers
into groups with different needs, to deliver tailored propositions
which meet these needs as precisely as possible.
• The purpose for segmenting a market is to allow your
marketing/sales program to focus on the subset of prospects that
are "most likely" to purchase your offering. If done properly this will
help to insure the highest return for your marketing/sales
expenditures.
Segmentation-Why Segment Markets???
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Better matching of customer needs
Enhanced profits for business
Better opportunities for growth
Retain more customers
Target marketing communications
Gain share of the market segment
Category of need!!!
• For businesses:
– Strategic
– Operations
– Functional
• For the individual consumer
– Social Esteem or Pleasure
– Functional
Criteria for effective segmentation
• It should be substantial in size and potential to justify the
expenditure made on it.
• It must be easily accessible i.e. easy to reach.
• Distinct variation in responsiveness to marketing
programmes in comparison with other segments.
Approaches to Segmentation
• Divide the market into homogeneous sub-groups called
segments.
• Start with individual consumer and then form segments
with consumers of similar characteristics.
Segmentation Variables
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Geographic
Socio-economic
Psychographic
Product Usage
Benefits
Geographic Segmentation
– Simplest and less expensive
– Geography decides the product consumption pattern
– Small companies can do focussed approach to customers
Demographic Segmentation
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Age
Sex
Family Size
Occupation
Education
Religion
Nationality
Family Life Cycle
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Young and single bachelor stage
Newly married couples
Young married with children
Older married with children
Older marries with no children
Old, single and retired people
Psychographic Segmentation
• Social Class
• Life-style
• Personality traits
• Benefit Segmentation
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Price
Durability
Occasions on which it is to be used
User status
• Other segmentation basis
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User status
Usage rate
Loyalty status
Buyer readiness stage
Attitude
Values and Life Style Classification (VALS)
• Adults classified into distinctive life-style groups.
• Each group has psychological needs (values) and behavioral
response patterns (life-styles)
• VALS blends together demographics, attitudes, activities,
consumption patterns, brand preferences and media graphics
• Major groups in VALS are
– Need driven poor and un-educated
– Outer directed upper and middle class
– Inner –directed due to inner motivations
– Integrated – a combination of both outer and inner directed
values
SUSTAINER
BELONGER
I-AM-ME
EMULATOR
EXPERENTIAL
ACHIEVER
SOCIALLY
CONSCIOUS
INTEGRATED
VALS Segments
INNER
DIRECTED
NEED DRIVEN
OUTER
DIRECTED
SURVIVOR
Case Study
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MAC India a 100% subsidiary of USA based parent company, wants to
launch health drink for sports people and iced tea.
Preliminary research indicated that Indian public is becoming increasingly
health conscious and cola market has become saturated.
India’s beverage market size is 720 million liters, which includes soft drinks,
tea, coffee, and mineral water but does not include health drinks.
MAC is thinking to target the tetra pack market and wants to achieve
success similar to Parle Agro’s FROOTI,
MAC INDIA intends processing 250 tons fruits in the first year to make
health drink, which will be expanded up to 2000 tones by 5th year.
After the initial success of health drink is ensured, it wants to launch iced
tea.
Questions :
(1) State and explain the problem area of the case?
(2) Advice on the marketing mix and market segmentation strategy?