Target Marketing
TARGET MARKET
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
At the end of this module the learning
outcomes are.
1. Why there is a need to segment
markets?
2. What are the various levels of market
segmentation?
3. What are bases for segmenting
consumer markets?
4. How the markets are targeted?
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
SUGGESTED READINGS
1. Marketing Management by Philip Kotler,
chapter 9 &10th edition.
2. Marketing Management by Ramaswami
and Namkumari, Chapter 6.
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
MARKET SEGMENTATION
The need
Cannot serve all customers of this
universe.
No company has that kind of resources.
Customers
Too numerous
Diverse in their buying requirement
Need to identify the market segments
that it can serve more effectively
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
MARKET SEGMENTATION.
The universe is heterogeneous.
Divide the universe into market
segments, where buying or need
requirements is same i.e. homogenous.
Attack one or few market segments.
This is target marketing.
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Target Marketing
Steps in the Targeting Process:
Market Segmentation
Market Targeting
Market Positioning
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Target Marketing
Target marketing requires marketers
to take three major steps:
Identify and profile distinct groups of
buyers who differ in their needs and
preferences (market segmentation).
Select one or more market segments
to enter (market targeting).
For each target segment, establish
and communicate the key distinctive
benefit(s) of the company’s market
offering (market positioning).
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Mass Marketing
Seller engages in mass production.
Mass distribution.
Mass promotion of one product for all
buyers.
Example
Coke in 60 & 70s,
Sold in India
One size 200 ml.
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Arguments for mass market.
Creates largest potential market
Leads to lower cost
Lead to lower prices.
Higher margins
Why criticised
Market fragmentation
Splintering of the market
Mass media proliferation.
Distribution channel proliferation
Difficult to practice “one size fits all’’ marketing.
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Using Market Segmentation
Levels of Micromarketing
Segment Marketing
Niche Marketing
Local Marketing
Individual Marketing
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
MARKET SEGMENTATION LEVELS
1. Segment Marketing
Consists of a large identifiable group
within a market with similar wants,
purchasing power, attitudes or
buying habits
Each segment’s buyers are assumed
to be quite similar in needs /wants
No two buyers all alike
Flexible market offerings
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Flexible market offering consists of two parts
1. Naked solution
Consists of products and service
elements that all segment members
value
2. Options
That some segment members value
Each option carries additional prices.
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Example – Segment Marketing
Delta Airlines

Economy Class passenger
- Seat
- Food
- Soft Drink
All of them – naked solution
 Charges extra
- Alcoholic beverages
- Earphones
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Segment marketing – benefits
More fine tuned product
Price it appropriately for the target
audience
Fewer competitors
Easier choice of
•
Distribution channels
•
Communication channels
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Niche marketing
Narrowly defined group
Needs are not well serviced
Seeking a distinctive mix of benefits
Fairly small market size
Normally attract one or two players
Customers willing to pay a premium
price.
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
1. High end designer wear like Gucci,
Chanel, Tarun Tahiliani etc.
2. Automobiles like Ferrari, Maserati,
Lamborghini etc.
WHAT IS A NICHE TODAY MAY
BECOME A SEGMENT TOMORROW
AND VICE VERSA!!
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2. Ostrichesonline.com
Selling Ostrich derived products
On line
2 million $ sales in 1998
Visitors can buy







Ostrich meat
Feathers
Leather jackets
Videos
Eggshells
Skin care products derived from ostrich
Body oil
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
3. Local marketing
Needs of local customer groups
Example Kraft Cheese

Helps supermarket chains

Identify cheese assortment and shelf layout

Optimise cheese sales in
Low
Middle
High income stores
Different ethnic groups
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
4. Individual marketing
Ultimate level of segmentation
Segment of one.
One-to-one marketing.
Customised to individuals
Tailor made
Cobbler designed shoes.
Customised industrial products
Use of new technologies
Computers.
Databases
Customised offering.
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Example
1. Dilip Chhabria -Designer cars
Customised cars
Small market
About 500 a year
Each car is unique, high prices
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Turning to Mass customisation
It is the ability to prepare on a mass basis
individually designed products and
communication to meet each customer’s
requirements.
Example.
Levi’s Jeans
Customer measurements.
Jeans ready in 8 hrs.
Mattel
Barbie com
Design your own Barbie doll.
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
-
-
Choose Doll’s
•
Skin tone
•
Eye colour
•
Haircolor.
•
Clothes
•
Accessories
•
Her likes and dislikes.
When Barbie delivered.
•
Doll’s name on the package
•
Computer generated paragraph about her
personality
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Using Market Segmentation
Basic Market-Preference Patterns
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Using Market Segmentation
Needs-based Segmentation Process
Segment
profitability
Segment
positioning
Needs-based
segmentation
Segment
identification
Segment
attractiveness
Marketing-mix strategy
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Segmentation
Characteristics of Effective Segments
Measurable
Actionable
Substantial
Accessible
Differentiable
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Segmenting Consumer Markets
Bases for
Segmentation
Geographic
Demographic
Psychographic
Behavioral
Nation or country
State or region
City or metro size
Density
Climate
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
Example Geographic
Ford Ikon in India
1.
2.
World car
Changes for India
1.
2.
3.
4.
5.
Higher suspension
Larger size air conditioner, higher ambient
temperature
Lower average speeds
Handle adulterated fuel
Petrol / diesel adulterated with kerosene
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Segmenting Consumer Markets
Bases for
Segmentation
Geographic
Demographic
Psychographic
Behavioral
Age, race, gender
Income, education
Family size
Family life cycle
Occupation
Religion, nationality
Generation
Social class
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Segmenting Consumer Markets
Bases for
Segmentation
Geographic
Demographic
Psychographic
Behavioral
Lifestyle
Activities
Interests
Opinions
Personality
Core values
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
a. Lifestyle
Nestle Classic
Pleasure of making coffee
 Adding milk, sugar, coffee in hot milk
Nestle “3 in 1
Office goers
Paucity of time
Espresso feeling
Milk sugar coffee premixed
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b. Personality
-
Targeting consumer personality
-
-
Customer of Ford
Independent
Impulsive
Masculine
Alert to change
Self confident
Customers of Chevrolet
Conservative.
Thrifty
Prestige.
Conscious.
Avoid extremes
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MARKET SEGMENTATION AND
SELECTING TARGET MARKETS
C. VALUES
Tourists to Disneyland
•
Fun seekers
•
Families visit
Tourists to Udayan child welfare unit at Kolkatta
•
Stay and meet poor children
•
Share thoughts
•
Donate
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Segmenting Consumer Markets
Bases for
Segmentation
Geographic
Demographic
Psychographic
Behavioral
Occasions
Benefits
User status
Usage rate
Loyalty status
Buyer-readiness
Attitude
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Segmenting Consumer Markets
Multi-attribute segmentation via
geoclustering combines multiple variables
to identify smaller, better-defined target
groups
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Market Targeting Strategies
Evaluating and selecting market
segments requires assessing the
segment’s overall attractiveness in light
of company’s objectives and resources.
Five patterns of target market selection
can then be considered.
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Market Targeting Strategies
Five Patterns of Target Market Selection
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Market Targeting Strategies
Targeting multiple segments may result
in cost economies
Higher costs using differentiated
marketing include:
Product modification cost
Manufacturing cost
Administrative cost
Inventory cost
Promotion cost
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