By Monal Deshmukh

Segmentation Strategies
Mass marketing (undifferentiated marketing): offering the same product to the entire consumer population Concentrated marketing (focused or niche marketing): selecting one market segment, even though the product may also appeal to others Differentiated marketing: selecting two or more different segments

 Undifferentiated strategy,
all consumers are treated as the same, firms not making any specific efforts to satisfy particular groups. when the product is a standard one like commodities.

Concentrated strategy,
one firm chooses to focus on one of several segments and leave other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices.

Differentiated strategy:
They offer high priced tickets to those who are inflexible and cannot tell in advance when they need to fly. These travelersusually business travelerspay high fares but can only fill the planes up partially. The same airlines then sell some of the remaining seats to more price sensitive customers who can buy two weeks in advance and stay over.

(1) Determine which kinds of customers exist, (2) Select which ones we are best off trying to serve (3) Implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way. Example: Soft drink consumers are preference for taste vs. low calories, preference for Cola vs. non-cola taste, price sensitivitywillingness to pay for brand heavy vs. light consumers.

Segmentation
The division of a broad market into small segments comprising of individuals who think on the same lines and show inclination towards similar products and brands is called Market Segmentation. Process of creation of small groups (segments) within a large market Kids form one segment; males can be part of a similar segment while females form another segment. Students belong to a particular segment whereas professionals and office goers can be kept in one segment.

B2C Segmentation Criteria

Demographic: Age Income Marital Status Education Family Size Gender Geographic Location Social Status Demographic: Annual Revenue # Employees Industry # Locations Years in Business Markets Served Products/Services Psychographic: Brand Preferences Price Sensitivity Conservative/Liberal Enviro-Friendly Hobbies Lifestyle Information Sources Service Preferences Behavioral: Purchase History Where They Shop Type of Store Preferences Association Memberships Internet Usage Impulsiveness
Environmental: Country of Residence Political Climate Currency Payment Methods Shipping & Receiving Languages Spoken

B2B Segmentation Criteria

Psychographic: Resistance to Change Diversification Oriented Open Minded/Rigid Decision Making Process Early Adopter/Follower Growth Oriented/Static Technology Sophistication Behavioral: Website Visits Responses to Marketing Purchasing Methods Association Memberships Internet Usage Social Media Groups Collateral Views/Downloads Environmental: Technology Landscape Purchasing Power Management Practices Purchasing Process Business Culture

Targeting
Once the marketer creates different segments within the market, he then devises various marketing strategies and promotional schemes according to the tastes of the individuals of particular segment. This process is called targeting. Once market segments are created, organization then targets them with the help of various marketing plans and schemes Nokia offers handsets for almost all the segments. They understand their target audience well and each of their handsets fulfils the needs and expectations of the target market. Tata Motors launched Tata Nano especially for the lower income group.

Positioning

 Positioning is the last stage in the Segmentation Targeting Positioning Cycle. Once the organization decides on its target market, it strives hard to create an image of its product in the minds of the consumers. Ray Ban and Police Sunglasses cater to the premium segment while Vintage or Fastrack sunglasses target the middle income group. Ray Ban sunglasses have no takers amongst the lower income group. Garnier offers wide range of merchandise for both men and women. Men - Sunscreen lotions, Deodorant Women - Daily skin care products, hair care products Teenagers - Hair colour products, Garnier Light (Fairness cream) Older Generation - Cream to fight signs of ageing, wrinkles A female would never purchase a sunscreen lotion meant for men and vice a versa. Thats brand positioning.

Product Positioning
Product positioning is the placement of a product, service, outlet, etc. in the mind of the consumer There are five ways used to position products, services, outlets, etc.
On perceived benefits On image On attributes Against competitors Combination of two or more of the above

Repositioning: shifting position in the consumers mind through changes in important product, price, distribution, and promotional and/or personal selling benefits.

Steps in Market Segmentation and Targeting for Services

STEP 1:
Identify Bases for Segmenting the Market

STEP 2:
Develop Profiles of Resulting Segments

STEP 3:
Develop Measures of Segment Attractiveness

STEP4:
Select the Target Segments

STEP 5:
Ensure that Segments Are Compatible

Segment Viability
Four factors are used to assess segment viability. Viable segments are:
Of sufficient size Measurable Differentiated Reachable

SM

Chapter 15

INTEGRATED MARKETING COMMUNICATION

Figure 15-3

Approaches for Integrating Services Marketing Communication

Manage Customer Expectations

Manage Service Promises

Goal: Delivery greater than or equal to promises

Improve Customer Education

Manage Internal Marketing Communication

Figure 15-4

Approaches for Managing Service Promises

MANAGING SERVICE PROMISES

Create Effective Services Communications Coordinate External Communication Offer Service Guarantees Goal: Delivery greater than or equal to promises

Make Realistic Promises

Figure 15-8

Approaches for Managing Customer Expectations

Offer Choices Create Tiered-Value Offerings Communicate Criteria for Service Effectiveness
Negotiate Unrealistic Expectations
Goal: Delivery greater than or equal to promises

The End

 Customer knowledge of service prices:

3 key differences

Service variability limits knowledge Providers are unwilling to estimate prices Individual customer needs vary Collection of price information is overwhelming Prices are not visible Time costs Search costs Convenience costs Psychological costs

Role of non-monetary costs:

Price as an indicator of service quality

Three Basic Marketing Price Structures and Challenges Associated with Their Use for Services
P= DC+OC+Profit Challenges: Challenges:
1. Small firms may charge too little to be viable. 2. Heterogeneity of services limits comparability. 3. Prices may not reflect customer value. 1. Costs difficult to trace. 2. Labor is more difficult to price than materials. 3. Costs may not equal the value that customers perceive the services are worth.

Challenges:
1. Monetary price must be adjusted to reflect the value of non-monetary costs. 2. Information on service costs is less available to customers; hence, price may not be a central factor.

Four Customer Definitions of Value

Value is low price.
Value is everything I want in a service.

Value is the quality I get for the price I pay.

Value is all that I get for all that I give.

Pricing Strategies When the Customer Defines Value as Low Price

Value is low price.

Discounting

Odd pricing Synchro-pricing Penetration pricing

Pricing Strategies When the Customer Defines Value as Everything Wanted in a Service

Value is everything I want in a service.

Prestige pricing Skimming pricing

Pricing Strategies When the Customer Defines Value as Quality for the Price Paid

Value is the quality I get for the price I pay.

Value pricing Market segmentation pricing

Pricing Strategies When the Customer Defines Value as All That Is Received for All That Is Given

Value is all that I get for all that I give.

Price framing Price bundling Complementary pricing Results-based pricing

Summary of Service Pricing Strategies for Four Customer Definitions of Value

Value is low price.
Discounting Odd pricing Synchro-pricing Penetration pricing

Value is everything I want in a service.

Prestige pricing Skimming pricing

Value is the quality I get for the price I pay.

Value pricing Market segmentation pricing

Value is all that I get for all that I give.

Price framing Price bundling Complementary pricing Results-based pricing

Service Operations (front stage and backstage)

A Service Business is a System Comprising Three Overlapping Subsystems

Where inputs are processed and service elements created. Includes facilities, equipment, and personnel
Service Delivery (front stage) Where final assembly of service elements takes place and service is delivered to customers Includes customer interactions with operations

Pricing Services
The characteristics of perishability, inability to store, and fluctuating demand for services create pricing challenges.

Pricing Strategies include: Discount strategies: Cheaper by the week. A variable pricing strategy: Kids eat free, movies cheaper on Tuesdays. Price competition.

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Distribution of Services
because most services are tied directly to a specific service provider, most have been distributed directly to customers with advancing technology, many firms are now delivering services through machines channels of distribution are necessarily short; some firms use one agent intermediary, such as insurance, real estate, and travel agents some firms use franchises to distribute services

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Promotion of Services
customer contact personnel represent the main channel of customer communication service providers must ensure that each service encounter is a positive one if customers are to develop a positive image many professional service firms are now permitted to advertise other elements of the promotional mix are used, including publicity and community affairs

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Four Rs of Service Marketing

Retention Referrals Relationships Recovery

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The Changing Environment for Services

The boom in the service economy, reduced regulation has created an increase in competition. Major focus on increased productivity, efficiency Work on people aspects of business:

Education, training programs Computer-based technologies used.

Change technology:

Restructure jobs. Bottom line: People are key to success!

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Other Considerations in Marketing Services

Impact of Technology: Remember, not everyone likes impersonal technology Performance Measurement: Larger firms can use market share, etc. Customer perceptions are essential. Prospects for Growth: It is very likely that services will continue to take an increasing share of the consumer dollar. The use of marketing programs in all services is expected to increase considerably.

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