Effective Segmentation Criteria

MARKETING MANAGEMENT13th edition

sudiptaa saha, Spring 2015

8 Identifying Market

Segments, Market Targeting & Market Positioning

Effective Segmentation CriteriaEffective Segmentation Criteria

There are many ways to segment the market, but not all segmentations are effective.

- To be useful, market segments must be:

• Measurable• Substantial• Accessible• Differentiable• Actionable

8-2


Measurable

Measurable refers to the fact that the market size, purchasing power and profiles of the segments needs to be measured. Certain segmentation variables are sometimes difficult to measure.

- If you are taking Demographical factors like age, education, income, etc. as variables of segmentation then it needs to be measurable.

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Substantial

Substantial refers to the fact that the market segments are large or profitable enough to serve.

- Some segments have one or few customers but the marketers can sell huge volume of their products to these customers.

- For example: Tomato Ketchup goes to different fast food shops such as Pizza Hut, KFC, Helvetia, etc. in huge volume rather than individual customers.

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Accessible

Accessible refers to the fact that the market segments needs to be effectively reached and served.

- For example: Like in Cantonment areas, the businessmen needs to take special permission

from the defense authority to do business, therefore in order to segment such markets, the marketers must make special arrangement so that the segments can be reached and served.

8-5


Differentiable

Differentiable refers to the fact that the segments are conceptually distinguishable (separable from each other) and respond differently to different marketing mix elements and programs.

- For example: Married and Unmarried women can respond differently to different products such as dress materials, cosmetics, household products, etc. Again Consumption of Students and Executives is quiet different.

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Actionable

Actionable refer to the fact that effective programs can be designed and implemented for attracting and serving the segments.

- For example: Cigarette manufacturers cannot promote their product directly through the different medias (Television Commercials, Newspaper Advertisements etc), therefore they have to take different action to promote their product.

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Market Targeting (Market Coverage Alternatives)Market Coverage Alternatives)

Target marketing is the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter.

- Characteristics for targeting effective segment:

Segment size and growth

Segment structural attractiveness

Company objectives and resources

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Target Marketing Strategies

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Undifferentiated marketing targets the whole market with one standard offer.

- And it’s characteristics are;

• Mass marketing• Focuses on common needs (basic buyer

need) rather than what’s different• Relying on mass production, distribution

and communication 8-10


Differentiated marketing targets several different market segments and designs separate offers for each segment.

- And it’s characteristics are;

• Goal is to achieve higher sales and stronger position in the market within the segments

• Developing separate marketing mix (product, price, place & promotion) strategies for each segment

• More expensive than undifferentiated marketing8-11


Concentrated marketing targets a small share (niche: narrowly defined market) of a large market those who deals with specific needs and problems.

• Expertise about the product or services• Have proper knowledge of the market• Use more effective and efficient marketing

tools to attract the customers8-12


Micromarketing is the practice of tailoring (customizing) products and marketing programs to suit the tastes of specific individuals and locations.

- And the types are:

• Local marketing (HSBC, Amanah bank account) for Bangladesh market

• Individual marketing (Tailor’s shop)8-13


A UNDIFFERENTIATED

MARKETING

Company Marketing Mix 1

Market

B DIFFERENTIATED

MARKETING

Company Marketing Mix 1Company Marketing Mix 2Company Marketing Mix 3

Segment 1Segment 2Segment 3

C CONCENTRATED

MARKETING

Company Marketing Mix1

Segment 1Segment 2Segment 3

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END of CHAPTER - 8

Sales

Effective Segmentation Criteria