market segmentation

market segmentation

1. objectives

   • retain customers by better matching of their needs
   • increase efficiency of marketing mix to tailoring it to each segment

2. steps

   • segment market
     • determine basis of segmentation
     • describe the profile of each segmentation
   • choose target market
     • determine which segment to target
   • tailor marketing mix to each segment

3. bases

   • demographic
     • age, gender, income, occupation, education, fam size
   • geographic
     • regions, population density, city size, climate
   • psychographic
     • interests, opinions, activities, values, attitudes
   • behavioural
     • usage rate, product benefits, brand loyalty, price consciousness, occasions, user status, purchase intent, preferences
   • descriptive
     • demographic, geographic, psychographic
   • behavioural

4. research process

   • 1. market segmentation objectives
   • 2. sec data
   • 3. qualitative data to understand market
     • focus group discussions
     • one-to-one interview
   • 4. quantitative research to validate findings and further insights
     • telephone interviews
     • online surveys
   • 5. target market
     • market size, expected growth, compatibility with firm's objective, competitive position, cost of reaching segment

5. market positioning

   • point of differences (PODs)
     • strong, favourable, unique associations of a brand/ product
     • competitive advantage
     • Attributes or benefits consumers strongly associate with a brand, positively evaluate and believe they could not find to the same extent with a competing brand i.e. points where you are claiming superiority or exclusiveness over other products in the category.
   • point of parties (POPs)
     • category point of parity
       • basic associations of a product category/ product class
       • necessary conditions for the brand choice
     • competitive points of parity
       • designed to negate the PODs of competitors
       • emphasize its own PODs
     • Associations that are not necessarily unique to the brand but may be shared by other brands i.e. where you can at least match the competitors claimed bets. While POPs may usually not be the reason to choose a brand, their absence can certainly be a reason to drop a brand. While it is important to establish a POD, it is equally important to nullify the competition by matching them on the POP. As a late entrant into the market, many brands look at making the competitor's POD into a POP for the category and thereby create a leadership position by introducing a new POD.