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Identifying Market

Segments and Targets

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Effective Targeting Requires

Identify and profile distinct groups ofbuyers who differ in their needs andpreferences.

Select one or more market segments toenter.

Establish and communicate the distinctivebenefits of the market offering.

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Four Levels of Micromarketing

Segments

Niches

Local areas

Individuals

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Segment Marketing

Targeting a group of customerswho share a similar set of

needs and wants.

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Flexible Marketing Offerings

Naked solution

Product andservice elementsthat all segmentmembers value

Discretionary options

Some segmentmembers value

Options may carry

additional charges

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The Experience Economy

Experience

Services

Goods

Commodity

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Customerization

Combines operationally driven

mass customization with customizedmarketing in a way that empowers

consumers to design the

product and service offeringof their choice.

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Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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Market Segmentation

Occupation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

Geographic Segmentation

Climate

Density of area

City Size

Region Karnataka, Punjab, Haryana, Rajasthan

Major metropolitan areas, small cities, towns

Urban, suburban, exurban, rural

Temperate, hot, humid, rainyDemographic Segmentation

Income

Marital status

Sex

Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, female

Single, married, divorced, living together, widowed

Under $25,000, $25,000-$34,999, $35,000-$49,999,

$50,000-$74,999, $75,000-$99,999, $100,000 and over

Education Some high school, high school graduate, some college,

college graduate, postgraduate

Professional, blue-collar, white-collar, agricultural,

military

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

Psychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, affection, sense of self-worth

Extroverts, novelty seeker, aggressive

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts,

status seekers

American, Italian,Indian, Chinese, Mexican, French,

PakistaniCatholic, Protestant, Jewish,Hindu, Muslim, other

African-American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Attitudes Positive attitude, negative attitude

Sociocultural Segmentation

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

Use-Related Segmentation

Brand loyalty

Awareness statusUsage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective

Time Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievement

Home, work, friends home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, long lasting, economy,

value-for-the-money

Geodemographics Based on geography and demography

Demographic/Psychographics

Combination of demographic and psychographic profilesof consumer segments profiles

SRI VALSTM Actualizer, fulfilled, believer, achiever, striver,

experiencer, maker, struggler

Hybrid Segmentation

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Psychographic Segmentation

VALS Four groups with higher resources

Innovators- Successful, sophisticated, active, takecharge people with high self esteem.

Thinkers-Mature, satisfied and reflective people whoare motivated by ideals and value order, knowledge,and responsibility.

Achievers-Successful goal-oriented people who focuson career and family.

Experiencers- Young, enthusiastic, impulsive peoplewho seek variety and excitement.

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Four groups with lower resources BelieversConservative, Conventional, and

traditional people with concrete beliefs.

Strivers -Trendy and fun loving people who areresource constrained.MakersPractical, down-to-earth, self sufficient

people who like to work with their hands. SurvivorsElderly passive people who are

concerned about change.

(www.sric-bi.com)

Psychographic Segmentation

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Behavioral Segmentation

Decision Roles

Initiator

Influencer Decider

Buyer

User

Behavioral Variables

Occasions

Benefits User Status

Usage Rate

Buyer-Readiness Loyalty Status

Attitude

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Steps in Segmentation Process

Needs-based segmentation

Segment identification

Segment attractiveness Segment profitability

Segment positioning

Segment acid test Marketing mix strategy

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Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

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DISCUSSION

Is Mass Marketing dead?

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DISCUSSION

Think of various product categories. How wouldyou classify yourself in terms of the various

segmentation schemes? How would marketingbe more or less effective for you depending onthe segment involved? How would you contrastdemographic versus behavioral segment

schemes? Which ones do you think would bemost effective for marketers trying to sell to you?

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HSBC

HSBC is known as worlds local bank.

Established in 1865 to finance the trade

between China and the United Kingdom.

Second largest bank in the world.

Serves 100 million customers through9,500 branches in 79 countries.

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HSBC

The company is organised by businessline:

Personal financial servicesConsumer finance

Commercial banking

Corporate investment banking and marketsPrivate banking

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HSBC

HSBC is organized by the geographicsegment:

Asia-PacificUK/Eurozone

North America/NAFTA

South AmericaMiddle East

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HSBC

Sir John Bond in November 2003:

Our position as the worlds local bank enables

us to approach each country uniquely,blending local knowledge with a world wideoperating platform.

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HSBC in New York

HSBC held a New York Citys most

knowledgeable Cabbie contest. The

winning cabbie gets paid to drive full timefor HSBC for the year and HSBCs

customers win too. And they get a free

ride in the HSBC branded Bankcab.

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HSBC in Hong Kong

During the Severe Acute RespiratorySyndrome(SARS) outbreak, HSBC

launched a program to revitalise the localeconomy.

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HSBCs niche marketing venture

Proides Pet Insurance which in 2003 wasgrowing at the rate of 125% per year.

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Dealing with Competition

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Five Forces Determining Segment StructuralAttractiveness

Potential entrants

Suppliers

Buyers

Industry competitors

Substitutes

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Industry Concept of Competition

Number of sellers and degree ofdifferentiation

Entry, mobility, and exit barriers Cost structure

Degree of vertical integration

Degree of globalization

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Industry Concept of Competition

Pure monopoly

Oligopoly

Monopolistic competition

Pure competition

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Analyzing Competitors

Share of market

Share of mind

Share of heart

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Other Competitive Strategies

Market challengers

Market followers

Market nichers

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Market Challenger Strategies

Define the strategic objective andopponents

Choose a general attack strategy Choose a specific attack strategy

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General Attack Strategies

Frontal attack

Flank attack

Encirclement attack

Bypass attack

Guerrilla warfare

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Specific Attack Strategies

Price discounts

Lower-priced goods

Value-priced goods

Prestige goods

Product proliferation

Product innovation

Improved services

Distribution innovation

Manufacturing-costreduction

Intensive advertisingpromotion

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Market Follower Strategies

Counterfeiter

Cloner

Imitator

Adaptor

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EXERCISE

Pick an industry. Classify firms accordingto the four different roles they might play:

leader, challenger, follower and nicher.How would you characterize the nature ofcompetition? Do the firms follow the

principles described above?

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ACCENTURE

Stareted as the consulting arm of theaccounting firm Arthur Andersen.

They were called AdministrativeAccouting Group and then became

Management Information Consulting

Division.

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ACCENTURE

In 1989, Andersen Consulting separatedfrom Arthur Andersen in order to position

itself against its IT services competitors. Atthe time Andersen Consulting alreadydoing a $1 billion a year in business, but it

was mistakenly associated withaccounting.

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ACCENTURE

A consultant from the Oslo office coinedthe Accenture name because it rhymed

with adventure and connoted an accenton the future. The name emerged as the

winner because it was catchy and

distinctive and embodied bold growth andinnovation.

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ACCENTURE

In 2002, Accenture launched the InnovationDelivered campaign to distinguish itself from thecommpetition. Competitors in the IT arena, such

as IBM lacked broader business consultingexpertise and werent seen as knowledgeable inbusiness strategies and processes. They tendedthe firms from the IT level. Competitors like

McKinsey had brand strength associated withstrategic thinking.

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ACCENTURE

Accenture saw its differentiator as theability to provide both innovative ideas and

execute them too. Unless you can provide both

transformational consulting and

outsourcing capability, you are not goingto win

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ACCENTURE

Innovation Delivered campaign. from

innovation to execution, Accenture helps

accelerate your vision.

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ACCENTURE

In 2002, the climate changed, after thedot-com crash and the economic

downturn, innovation was no longerenough. High performance Delivered

campaign with Tiger Woods as the

spokesperson.