Market Segmentation

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Factors which contribute to Market Segmentation : 

Factors which contribute to Market Segmentation Measurable :It should be possible to measure the size, purchasing power and characteristics of the segment. Substantial : The segments should be large and profitable enough to serve. Accessible :The segments can be effectively reached and served.

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Differentiable :The segments are distinguishable and respond differently to different marketing mix elements and programmes. Actionable : Effective programmes can be formulated for attracting and serving the segments.

Market Targeting : 

Market Targeting Once the firm has identified the market segment opportunities, it has to decide how many and which one to target. While evaluating different market segments , the firm must look at two factors.

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. The firm must see whether a potential segment has the characteristics that generally make it attractive such as size, growth, profitability, scale economies and low risk. 2. The firm must consider whether investing in the segment makes sense given the firm’s objectives and resources.

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Marketing targeting is the process of fixing one’s target market. Market penetration : It relates to strength in a given market segment. Every firm must decide on its optimal level of concentration in a given segment.

Product Life Cycle (PLC) : 

Product Life Cycle (PLC) A product passes through certain distinct stages during its life. This cycle of stages is called the product life cycle. The PLC is normally presented as a sales curve spanning the product’s course from introduction to exit as shown in the figure.



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The PLC reflects sales and profits of a product over a period of time. The utility of PLC concept lies in the fact that each stage in the PLC is characterised by a typical market behaviour and consequently each stage lends itself to the application of a specific marketing strategy.

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Understanding PLC concept and managing it effectively can help prolong the profitable phases of life span of a product. A typical PLC consists of 4 stages

Introduction Stage : 

Introduction Stage At this stage, there may not be a ready market for the product. Sales are low, profits are remote possibility, demand has to be created and developed and customers are to be prompted to try out the product.

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One of the crucial decisions to be made in this stage is the pricing of the product. In short, introduction stage is characterised by slow sales growth as product is introduced in the market. Profits are non existent as heavy expenses are incurred on product introduction.

Growth Stage : 

Growth Stage During this stage , the demand for the product increases and the size of market grows. Competitors enter scene with similar or slightly improved versions of the product.

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A firm has to alter its marketing strategies at this stage. It has to stay ahead of its competitors and persuade the customers to prefer its brand. The firm can not dictate the price, and is forced to follow competition oriented pricing as the total market is shared by many firms.

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Sales and profits keep increasing during this stage .

Maturity Stage : 

Maturity Stage Demand tends to reach a saturation point. There is enough supply of the product from several competing firms. Price competition becomes intense and a firm tries to distinguish its brand by slightly differentiated product and exploits brand loyalty it has built up.

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Long term and short term marketing plans are implemented to profitably prolong the maturity stage. This stage is characterised by relatively low prices, increased marketing costs, keener competition and lesser profits .

Deckling Stage : 

Deckling Stage Sales begin to fall. The demand for the product shrinks due to new and advanced products available in the market. Total sales fall and profits diminish.

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