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RETAIL MARKET SEGMENTATION

What is a market?
Mass marketing approach: - approaching the entire set of customers with a
A market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and services that can satisfy these needs

Differentiated Approach - strategy of market segmentation - marketer selects one or more of the segments as the target market and positions his outlet as per the profile of the targeted segment (Diet Coke sold to market segment of health conscious adults)

uniform marketing approach thereby creating the largest potential market (sale of staple food items like rice and bread)

What is market segmentation


The process of dividing the heterogeneous total market into small groups of customers who share a similar set of wants

Major characteristics

- is an aggregating process: clustering people with similar or homogenous needs and respond to the marketing mix in the same way - different kind of promotional activities are developed for serving different market segments - identifying niche segments - customized products and services are provided to customer groups (Whirlpool automatic washing machines in urban Mumbai with large groups of working women can be segmented)

Benefits of segmentation

Benefits of segmentation
Development of marketing mix
- helps to identify target audience - customize marketing strategies in terms of product, price and promotion for customers

Store location decision


- to concentrate stores where target population are found

Understanding customer behavior


- how and why the target group behaves and acts - determining the buying behavior after segmenting the market

Benefits of segmentation contd


Merchandising decisions
- deciding on which items will occupy the store shelves for display - understanding the preference of target groups

Promotional campaigns
- effective and accurate promotional campaigns

Positioning
- major feature of segmentation . Sarvanna stores are positioned for lower middle class consumers where as the clientele of Lifestyle and Shoppers Stop are for the upper income class and the elite

Segmenting, targeting and positioning

Criteria for effective market segmentation

Criteria for effective market segmentation contd


Homogeneous within:
- similar needs, wants and buying behavior - an effective marketing programme can be developed (Gillette Mach 3 for young male adults)

Heterogeneous within
- customers between segments stay different for better focus from retailers

Substantial
- should have sufficient discretionary income (Ebony must ensure high income groups exist in their trade area)

Criteria for effective market segmentation contd


Actionable
- useful for identifying target groups and deciding on

Accessible

marketing mix variables (Caf Coffee Day attracts college goers and young working executives to enjoy coffee in a fashionable outlet)

- reachable target market and accessible to target

Measurable

consumer groups (Crossroads is readily accessible with parking facilities)

- size, purchasing power and characteristics of market segment should be measurable

Kinds of markets
Consumer markets
- individuals and households purchasing goods for self consumption (groceries like milk ,poultry etc .)

Industrial markets
- individuals, groups and organizations purchasing goods for reproductions of other products

Kinds of markets
Re-seller Market

contd

- market of the middlemen like wholesalers and retailers who buy goods for resale - main focus of retailing is on consumer products - convenience products: purchased frequently like packaged foods, milk ,medicines etc - shopping products: furniture, clothing apparels etc - specialty items: special effort to purchase branded jewellery of DeBeers - unsought items: potential customers have yet to know or know through promotions (ICICI PRUDENTIAL LIFE INSURANCE, HUTCHINSON etc.)

Bases of segmentation
Geographic segmentation
divided on the basis of geographic units like regions and districts (Subhiksha Stores in Chennai) - division on the basis of variables like age, gender, income level, family size, occupation, education, and marital status (Life Style may segment the market by income class)

Demographic segmentation

Psychographic segmentation -based on lifestyle, personality, values, and interests

- value and lifestyle segmentation (VALS) - each consumer is targeted with a unique style of

living based on the VALS concept

Bases of segmentation

contd

Behavioural segmentation
- based on consumer responses or use of product (i.e. use related and usage related segmentation)

Behavioural variables - reason/occasion to purchase (Diwali sees higher sale of paints) - frequency and quantity of purchase (buying vegetables or meat on a weekly basis) - product usage (heavy beer drinkers and occasional drinkers) - loyalty status (loyal customers to Subhiksha stores)

Choice of segments to target the market


measure the attractiveness and capacity of the segment estimate its size, purchasing power, growth rate, presence of competition, etc. opt for an untapped segment choose to operate in a segment where there are already existing players e.g. CROSSROADS targets clientele from upper middle-class customers devoted to each of the four shopping categorieswomen, kids, men, and home furnishings

Profiling of customers
Customer Demographics
- age, sex, income levels, educational background, and

professional background - Family decision-making (a CTV or a 2-wheeler purchase)

Customer Psychographics
purchasing behaviour of the target population purchase motivation purchasing process source of purchase time and place utility

Buyers intentions survey


Frequency of customer visits to store Weekday/weekend shopping patterns Store selection criteria: how buyers go about selecting the store Spending per visit:. how much the customer spends on an average during each visit Planned vs unplanned shopping: items purchased in a planned way and impulse purchases Store loyalty: do they patronize a few stores or shop around for bargains

Market segmentation in India


Marketer uses segmentation models based

on demographics, geo-demographics, SEC data, and benefits and usage Prominent examples are McDonalds, Nescafe, Caf Coffee Day, Benetton

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