Levels and Patterns of Market Segmentation, Marketing Management | Marketing Management - B Com PDF Download

Levels and patterns of market segmentation

Level of market segmentation

• The starting point for discussing segmentation is mass marketing in mass marketing, the seller engages in the mass production, mass distribution, and mass promotion of one product for all buyers. Henry Ford epitomized this marketing strategy when he offered the Model-T Ford "art any color, as long as it is black." Coca-Cola also practiced mass marketing when it sold orgy one kind of Coke in a 6.5-ounce bottle.
• The proliferation of advertising media and distribution channels is making it difficult and increasingly expensive to reach a mass audience. Some claim that mass marketing is dying. 

Not surprisingly, many companies are turning to micromarketing at one of four levels:

• Segments
• Niches
• Local Areas
• Individuals

1. Segments Marketing

• A market segment consists of a group of customers who share a similar set of wants. Thus we would distinguish between car buyers who are primarily seeking tow-cost basic transportation and those seeking a luxurious driving experience. We must be careful not to confuse a segment and a sector. A car company might say that it will target young, middle-income car buyers The problem is that young, middle-income car buyers will differ about what they want in a car Some will want a low-cost car and others will want an expensive can Young, middle-income car buyers is a sector, not a segment.
• However, even a segment is partly friction, in that not everyone wants exactly the same thing. Anderson and Narus have urged marketers to present flexible market offerings instead of a standard offering to all members of a segment. A flexible market offering consists of two parts: a naked Solution contouring the product and service elements that all segment members value and discretionary that some segment member’s value. Each option might carry an additional charge. 
• For example, Delta Airlines offers all economy passengers a seat, food, and soft &inks. It charges economy passengers extra for alcoholic beverages mid-earphones. Siemens sees metal-cist boxes whose price includes free delivery and a warranty, but also offers installation, tests, and communication peripherals as extra-cost potholes.

2. Niche Marketing

• A niche is a more narrowly defined group seeking a distinctive mix of benefits. Marketers usually identify niche by dividing a segment into subset meets. For example, the tile segment of heavy smokers includes two niches: those who are trying to stop smoking and those who do not care.
• An attractive itched is characterized as follows: The customers in the niche have a distinct set of needs; they will pay a premium to the firm that best satisfies filer needs; the niche is not likely to attract other competitors; the Etcher gains certain economies through specialization; the niche has size, puffin and growth potential.
• Whereas segments are fairly large and normally attract several competitors, niches are fairly small and normally attract only one or two. Larger companies, such as IBM, lose pieces of their market to Etchers: Dialogic and Lieu labeled this confrontation “guerrillas against coffles? Even some large companies have turned to niche marked son & Johnson, for example, consists of 170 affiliates (business units), mix), of which dominate niche markets. Here are some examples of large companies that have moved into niche marketing.

3. Local Marketing

• Target marketing is leading to marketing programs tailored to the needs and wants of local customer groups (trading areas, neighborhoods, even individual stores), Citibank provides different mixes of banking services in its branches, depending on neighborhood demographics. Kraft helps supermarket chains identify the cheese assortment and shelf positioning that will optimize cheese sales in low-, middle-, and high-income stores, and indifferent ethnic neighborhoods.
• Those favoring localizing a company's marketing see national advertising as waste full because it fails to address local needs. Those against local marketing argue that it drives up manufacturing and marketing costs by reducing economies of scale. Logistical problems become magnified when companies try to meet local requirements. A brand's overall image night be diluted if the product and message defter in different localities.

4. Individual Customer Marketing

• Individual Customer Marketing the ultimate level of segmentation leads to “segments of one," "customized marketing," or "one-to-one marketing" Ultimately, every individual has a unique set of wants and preferences, In past centuries, producers customized their offerings to each customer: The tailor fitted a suit and a cobbler made shoes for each individual. The Industrial Revolution ushered in an era of mass-production: Now companies made standard goods in advance of orders and left it to individuals to fit into whatever was available. Producers moved from built-to-order marketing to build-to-stock marketing. 
• Today the information Revolution is enabling a growing number of companies to mass-customize their offerings. Mass-customization is the ability of a company to prepare on a mass basis individually designed products, services, programs, and communications, to meet each customer's requirements.

Patterns of market segmentation

Here we will consider segment-centered marketing. Market segments can be built up in many ways. One way is to identify preference segments. Suppose ice cream buyers are they value sweetness and creaminess as two product attributes.
Three different patterns can emerge:

• Homogeneous preferences
• Diffused preferences
• Clustered preferences

Market-segmentation procedure

• Market segmentation must be done periodically because segments change. At one time the personal computer industry segmented its products purely on speed and power. 
• Later, PC marketers recorded an emerging "Soho" market, named for "small Office and home office." 
• Mail-order compares such as Dell and Gateway appealed to this market’s requirement for high performance coupled with low price and User Friendliness. 
• Shortly thereafter, PC makers began to see Soho as comprised of smaller Segments.

Effective segmentation

Effective segmentation market segments must be:

• Measurable: The size, purchasing power, and characteristics of the segments can be measured.
• Substantial: The segments are large and profitable enough to serve A segment should be the largest possible homogeneous group worth going after with a tailored marketing program. It would not pay, for example, iron an automobile manufacturer to develop cars for people who are under four feet tall.
• Assessable: The segments can be effectively reached and served.
• Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.
• Actionable: Effective programs can be formulated for attracting and serving the segments.