MARKET SEGMENTATION

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MARKET SEGMENTATION :

MARKET SEGMENTATION

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“ Grouping people according to their similarity related to a particular product category” Market segmentation strategy involves dividing the market into groups, where individuals have similar needs and wants for services and products. It could also be a segmentation of people on the basis of behavior, culture and economic status. To get a clearer picture of what is market segmentation, one can always look into the definition provided by business dictionary.com, market segmentation is defined as, " Process of defining and sub-dividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics ".

Benefits of segmentation :

Benefits of segmentation Facilitates right choice of target market Facilitate effective tapping of the chosen market Makes the marketing effort more efficient and economic helps identify less satisfied segments and concentrate on them Minimizes aggregation of risk Helps to know company's capabilities Provide opportunities to expand the market Helps create innovation Creates gains to consumer

SEGMENTATION BASES :

SEGMENTATION BASES

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Geographical Segmentation : Geographical segmentation is done by dividing people (markets) into different geographical locations. The country, state, or neighborhood, the king of gentry, climate, size of a place segmented into size of its age wise population, etc. all play a role in devising market strategies. This helps the producer and the marketers to understand what will sell and what won't, for example, a market for winter wear would definitely not work in warm regions.

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Demographic Segmentation : Demographic segmentation refers to a wide study of the potential customers. While marketing a product many variables like age, gender, education, income, size of the family, occupation, socioeconomic status, culture and religion, language and nationality are taken into account. There are many instances where such a segmentation has worked very profitably, toys and clothes for every age group, certain food products that do well in certain counties and don't in some, either due to cultural or religious reasons. Demographic segmentation plays a vital role in determining whether a product can be mass marketed or designed for specific clientèle .

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Psychographic Segmentation : Segmenting people according to their lifestyles and values, and how they translate into consumption or purchases of products of services is what psychographic segmentation is all about. How one's interest, opinions, values, attitude and the activities they perform, all affects how and why a group of people would lean towards one product more than others. A high status would translate into an expensive flying habit, while a thrift value will translate into an economy flight.

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Behavioral Segmentation : Behavioral segmentation is based on the customer's needs and subsequent reaction to those needs or toward the purchase of intended products and/or services. This is conducted on all variables that are closely related to the product itself, like loyalty to a particular brand, cost effectiveness in terms of benefits and usage, circumstances responsible for the purchase, whether the customer is a regular, a first timer or and has the potential to become a customer, and whether the readiness to buy is linked to status

EFFECTIVE SEGMENTING CRITERIA :

EFFECTIVE SEGMENTING CRITERIA Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served. Segments must be large or profitable enough to serve. Measurable Accessible Substantial Differential Actionable Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Target Market selection :

Target Market selection Single S egment C oncentration : Firms gain a strong knowledge of segments needs and achieve strong market presence Captures segment leadership , can earn high return on investment Risk : competitor may any time invade the segment Eg: Mahindra &Mahindra ,Zodiac Brand, Specialty hospitals

Selective specialization :

Selective specialization Firms selects a number of segments Each objectively attractive and appropriate Little or no synergy among the segments but each promises to be a money maker Diversification of firms risk Eg: bata shoes - popular segments

Product specialization :

Product specialization Makes certain product that it sells to several different market segments Downside risk is that product may be supplanted by an entirely new technology

Market specialization :

Market specialization Here the company takes up a particular market segment for supplying all relevant products to the target group Concentrates on serving many needs of a particular customer group

Full Coverage:

Full Coverage It is very difficult to serve all segments of the market . Big companies go for full coverage , they go for it 2 ways : undifferentiated marketing differentiated marketing ‘

Market segmentation strategies :

Market segmentation strategies Undifferentiated Marketing : It is a market coverage strategy in which the company treats the target market as one and does not consider that there are segments Eg: coco cola company sells coke limca etc and doesnot distinguish their target audience

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Differentiated marketing strategy : it is a market coverage strategy in which the company goes for proper market segmentation as depicted by its analysis of the total market . The company goes for several products or several segment approach which calls for preparing different marketing mix for each of the market segment Eg: HLL sells different soaps lux , pears , lifebuoy etc

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Concentrated marketing : It is a market coverage strategy in which company follows one product one segment principle

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