THE AIM OF MARKET SEGMENTATION HAS ALWAYS BEEN TO CREATE A UNIQUE VALUE OFFER TO AS MANY CUSTOMERS AS POSSIBLE.

ANALYZE THIS STATEMENT WITH A CONSUMER NON DURABLE EXAMPLE ACROSS DIFFERENT COUNTRIES

Submitted By Mr. Attada Ekalavya - 71

INTERNATIONAL MARKET SEGMENTATION

Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs. Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets. However, all segments fall into either consumer or industrial markets. Although it has similar objectives and it overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite different. The process of segmentation is distinct from targeting (choosing which segments to address) and positioning (designing an appropriate marketing mix for each segment). The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Improved segmentation can lead to significantly improved marketing effectiveness. With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased.

BASIS FOR SEGMENTING CONSUMER MARKETS:

Geographic
Nations, regions, states, counties, cities, neighborhoods, climate, population density etc.

Demographic
Age, gender, family size, family life cycle, income, occupation, education, religion, race, nationality etc.

Psychographic
Social class, lifestyle, personality etc.

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

 Behavioral
Purchase occasion, benefits sought, user status, user rate, loyalty status, readiness status, attitude toward product etc.

BASIS FOR SEGMENTING BUSINESS MARKETS:

Demographics
Industry, company size, location

Operating variables
Technology, user/non-user status, customer capability

Purchasing approaches
purchasing function organization power structure nature of existing relationships general purchase policies purchasing criteria

Situational factors
Urgency, specific application, size of order

Personal characteristics
Buyer-seller similarity, attitudes towards risk, loyalty

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

WHY SEGMENTATION?
According to the Peter Francese a consultant to Ogilvy & Mather an advertising megalith, & the author of the research report 2010 America There is no more Average American." Fifty years ago, the concept of John Doe, an average American in a relatively even society where vast numbers of people had similar consumer needs, was real. A societal uniformity existed that has not been equalled since. The 2010 census results will put a nail in that coffin. America, or for that matter most of the developed countries, are multicultural nations. In the US no race or ethnicity comprises a majority of the population anymore. No segment forms a majority in their 10 largest cities. Also family life has diversified. Twenty five years earlier, two-thirds of the population consisted of married couples. However same is not the case today, as more & more no. of people prefers living alone. All this has resulted in a diverse population which makes it almost impossible to sell a product by mass marketing .The right market for your product needs to be selected before making any other move. Choosing the right markets is one of the most important strategic decisions you can make for your business. Resources spent on choosing the wrong markets are resources not spent on choosing the right markets. Grouping customers into market segments is standard business practice. The more a market suffers from over supply and under demand - the new status quo in a relentlessly globalizing economy for both hi tech and low tech goods and services the more vital it becomes to identify, and perhaps help create attractive sub markets and provide tailor value propositions for them. That is what apple has done with the iPod and iTunes under Steve Jobs leadership. The iPod and iTunes have not only boosted Apples bottom line, and quite separately increased the sales of its Macintosh computers, but have also accelerated the growth of the mp3 player market as a whole. Segmentation is both a science and an art. It demands a high degree of insight into customers and competitors. You cannot do it well using only methods based on simple demographics. How, for example, would you segment the dog food market? You might start of, as some have done, on the basis of type of dog old dogs versus small dogs, big dogs versus little dogs. But think how much greater Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 4

insight you might gain from examining the relationship between owner and dog, and the emotional relationship embodied in the owners choice of dog food: dog as grandchild ( indulgence), dog as child (love), dog as best friend (health and nutrition) and dog as dog (cheap/ convenient fuel). When we accept the fact that average consumers and average people dont exist, we can use market and consumer segmentation to: increase marketing effectiveness, generate greater customer satisfaction, create savings, And to identify strategic opportunities and niches. Even when a company can afford to target an entire market, it is more successful if products and communications are adapted to individual segments.

REQUIREMENTS OF MARKET SEGMENTS

In addition to having different needs, for segments to be practical they should be evaluated against the following criteria: Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified. Accessible: the segments must be reachable through communication and distribution channels. Substantial: the segments should be sufficiently large to justify the resources required to target them. Unique needs: to justify separate offerings, the segments must respond differently to the different marketing mixes. Durable: the segments should be relatively stable to minimize the cost of frequent changes.

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

THE PROCESS OF SEGMENTATION

IDENTIFY THE TOTAL MARKET

DETERMINE THE SEGMENTING DIMENSIONS

PROFILE EACH SEGMENT

ASSESS SEGMENT ATTRACTIVENE SS

SELECT TARGET MARKET

Steps in Segmentation Process

1. Identify the target market The first and foremost step is to identify the target market. The marketers must be very clear about who all should be included in a common segment. Make sure the individuals have something in common. A male and a female cant be included in one segment as they have different needs and expectations. Burberry stocks separate merchandise for both men and women. The management is very clear on the target market and has separate strategies for product promotion amongst both the segments. A Garnier mens deodorant would obviously not sell if the company uses a female model to create awareness. Segmentation helps the organizations decide on the marketing strategies and promotional schemes.
Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 6

Maruti Suzuki has adopted a focused approach and wisely created segments within a large market to promote their cars. Lower Income Group - Maruti 800, Alto. .. Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz. .. High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara. Suzuki Grand Vitara would obviously have no takers amongst the lower income group. The target market for Rado, Omega or Tag Heuer is the premium segment as compared to Maxima or a Sonata watch. 2. Identify expectations of Target Audience Once the target market is decided, it is essential to find out the needs of the target audience. The product must meet the expectations of the individuals. The marketer must interact with the target audience to know more about their interests and demands. Kelloggs K special was launched specifically for the individuals who wanted to cut down on their calorie intake. Marketing professionals or individuals exposed to sun rays for a long duration need something which would protect their skin from the harmful effects of sun rays. Keeping this in mind, many organizations came with the concept of sunscreen lotions and creams with a sun protection factor especially for men. 3. Create Subgroups The organizations should ensure their target market is well defined. Create subgroups within groups for effective results. Cosmetics for females now come in various categories.

Creams and Lotions for girls between 20-25 years would focus more on fairness.

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

Creams and lotions for girls between 25 to 35 years promise to reduce the signs of ageing.

4. Review the needs of the target audience It is essential for the marketer to review the needs and preferences of individuals belonging to each segment and sub-segment. The consumers of a particular segment must respond to similar fluctuations in the market and similar marketing strategies. 5. Name your market Segment Give an appropriate name to each segment. It makes implementation of strategies easier. A kids section can have various segments namely new born, infants, toddlers and so on. 6. Marketing Strategies Devise relevant strategies to promote brands amongst each segment. Remember you cant afford to have same strategies for all the segments. Make sure there is a connect between the product and the target audience. Advertisements promoting female toiletries cant afford to have a male model, else the purpose gets nullified. A model promoting a sunscreen lotion has to be shown roaming or working in sun for the desired impact. 7. Review the behavior Review the behavior of the target audience frequently. It is not necessary individuals would have the same requirement (demand) all through the year. Demands vary, perceptions change and interests differ. A detailed study of the target audience is essential. 8. Size of the Target Market It is essential to know the target market size. Collect necessary data for the same. It helps in sales planning and forecasting.
Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 8

Benefits of Segmentation:
The Organisation gets to know its customers better. Provides guidelines for resource allocation. It helps focus the strategy of the organisation.

Limitations of the Segmentation:

Targeting multiple segments increases marketing costs. Segmentation can lead to proliferation of products. Narrowly segmenting a market can hamper the development of broad-brand equity.

FOCUS ON CUSTOMER NEEDS

Haagen-Dazs continuously researches its market because this is exactly what got them into the business in the first place. Effective marketing is based on three key elements, the marketing philosophy, and market segmentation and consumer behaviour. Haagen-Dazs has been noted to practise the consumer driven philosophy whereby they rely on research to discover consumer preferences, desires and needs before production actually begins. This philosophy stresses the need for marketing research to be conducted in order to better understand where or who a market is and to develop a strategy targeted toward that group. The core business they are in is production of ice-cream. This industry primarily focuses on consumer tastes and preferences and only research can help identify these. However, it is not enough that research is conducted only prior to production of a particular flavour. They need to constantly research the movement of this flavour in the market and get feedback from customers about this. Market research has given Haagen-Dazs many advantages, such as, *Unique environmental insight, which they used to spot opportunities others overlooked - Reuben Mattus found Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 9

a segment in the market he believed to be un-served, namely, the adult ice-cream lover segment. While other companies focussed on enticing kids with ice cream, Mattus decided to tap the older, mature segment that had the disposable income to 'indulge' them. *Are proactive to competitor moves by following them closely - Haagen-Dazs quite readily met all of competitors' Ben & Jerry's moves by continuously introducing new flavours focussing on their niche while others lost focus and were mass marketing heir ice creams. This helps makes them fiercely competitive constantly striving to defend their turf. *Identify customer wants thus focussing energies on giving them exactly what they want - research helped them realise that Japanese love tea and hence introduced the Green Tea flavour which was an instant success in that market . They are not the only ones undertaking market research. The UK Super Premium ice cream market had a retail value of 56 million in the UK in February 2000. Ben & Jerry's accounted for fully 83 per cent of the overall growth in the UK Super Premium market in 2000. Multiple grocers account for 70 per cent of all Super Premium ice cream sold in the UK, and in September 2000 Ben & Jerry's secured parity with Haagen-Dazs in terms of sales through this channel, with Ben & Jerry's securing a 52 per cent share of the market as against 48 per cent for Haagen-Dazs . In the U.A.E. though, despite being of reasonably higher price, the brand established itself quite comfortably as a 'must try' product among the elite and middle-class. This is exactly what Haagen-Dazs had hoped to achieve when it first came here. The management were counting on the expat population of the U.A.E. who were already familiar with the brand to spread word of mouth about its high quality, unique flavours and prestige associated. MARKET SEGMENTATION As simple as it looks; every little detail of the ice cream is meticulously planned for the final consumer to buy the product. Of the money that goes into paying for the ice cream, nearly 80% is returned into marketing costs for the company. The rest of the 20% represents the actual production costs. Consumers are an integral part of the industry and the market research helps identify the core market segments that Haagen-Dazs caters to. Market segmentation is the process of identifying a specific set of characteristics that differentiate one group of consumers from the rest. In respect to ice creams, although many people eat them, the market can quite easily be segmented on bases of taste and price. Some individuals prefer high-quality ice cream made with real sugar and cream because of its taste while others cannot tell the difference in Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 10

quality and would buy primarily based on price and availability. Lower-priced competitors are into mass marketing while premium priced ice creams makers have followed a niche strategy to target that one single segment consisting of affluent upper-middle to upper class segment. Haagen-Dazs uses a few main segmentation bases for dividing their market, namely, demographic, socio-cultural and psychographic. Under demographic segmentation, they focus on the income bracket of consumers. Their products are mainly aimed at the affluent with higher disposable income to spend on frivolous luxuries like super-premium ice cream. Although they do not segregate flavours by gender they do tend to highlight he romantic and sensuous image of ice-cream by featuring couples in all their international adverts. They tend to link their ice creams directly to sex in order to highlight that the indulgence and pleasure felt is similar in both cases and just as fulfilling for inner desires. This leverage gives it extreme importance among the adult population as they can understand this feeling and hence relate consumption of this product directly to this feeling. The socio-cultural segmentation looks at various cultures and nationalities and their preferences. Certain cultural groups tend to have similar needs especially when it comes to food, confectionery and drinks. For this, Haagen-Dazs has taken into account various national tastes and preferences in their innovative product line by introducing flavours like Cheesecake ice cream for the UK, Green Tea ice cream for Japan, Belgian chocolate for those in East Europe, and so on. Finally, probably the most important type of segmentation bases in this case is the psychographic segmentation. To be attracted to eating super-premium ice cream, people need to be part of a particular lifestyle segment. They should technically be among those that enjoy the luxury and indulgence associated with the brand. Haagen-Dazs has been portrayed to be a reflection of pleasure and for this reason, the brand creates an ambience behind its cafes too by ensuring that furniture is cosy and in deep shades of browns, burgundy and red to add a feeling of cocooning and intimacy. Using these segmentation means, Haagen-Dazs has narrowed down its business to cater to specifically two main target markets, namely, *Affluent, pleasure seeking adults who are generally brand conscious, innovators & trend followers *Health conscious, young adults who are interested in desserts but prefer natural ingredients and low fat substitutes By identifying only two target segments and focussing on a small but profitable segment of the market, Haagen-Dazs is practising a niche market strategy. They have been fairly successful in identifying and catering to this segment and this can be determined by Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE 11

their growth from gourmet stores in New York City to its global presence now in over 54 countries. Identification which segments is profitable to market to be not enough. Companies need to design a marketing mix to cater to each of these segments. The next section discusses Haagen-Dazs current marketing mix for the mentioned segments.

Segments Based on Consumer Predispositions Markets can be segmented based on differences in consumers' wants, needs, and attitudes. We've already examined in our health club study the value inherent in creating 'benefit segments' that focus on different wants and needs held by consumers in each segment. Additional predispositions also can lead to meaningful segmentation schemes. Markets can be segmented based on how knowledgeable people are of a particular product category. Different promotional programs may be required to communicate with those who know little about the product versus those who don't. Sometimes marketers may want to differentiate between customers who have experienced specific types of problems with products or brands versus those who have not. It is possible that customers who frequently encounter problems of specific types may have a common set of characteristics that can suggest how the problem should be addressed. Segmenting markets based on consumers' media viewing habits may reveal consistent differences in the types of media consumers prefer (i.e. preferences for specific television shows, radio stations, magazines, and newspapers) and how these differences vary with key customer demographic and psychographic traits. This information then can be used to more effectively target advertising and other communications to customer groups.

Steps in Segmentation Process

9. Identify the target market The first and foremost step is to identify the target market. The marketers must be very clear about who all should be included in a common segment. Make sure the individuals

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

12

have something in common. A male and a female cant be included in one segment as they have different needs and expectations. Burberry stocks separate merchandise for both men and women. The management is very clear on the target market and has separate strategies for product promotion amongst both the segments. A Garnier mens deodorant would obviously not sell if the company uses a female model to create awareness. Segmentation helps the organizations decide on the marketing strategies and promotional schemes. Maruti Suzuki has adopted a focused approach and wisely created segments within a large market to promote their cars. Lower Income Group - Maruti 800, Alto. .. Middle Income Group - Wagon R, Swift, Swift Dzire, Ritz. .. High Income Group - Maruti Suzuki Kizashi, Suzuki Grand Vitara. Suzuki Grand Vitara would obviously have no takers amongst the lower income group. The target market for Rado, Omega or Tag Heuer is the premium segment as compared to Maxima or a Sonata watch. 10. Identify expectations of Target Audience Once the target market is decided, it is essential to find out the needs of the target audience. The product must meet the expectations of the individuals. The marketer must interact with the target audience to know more about their interests and demands. Kelloggs K special was launched specifically for the individuals who wanted to cut down on their calorie intake.

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

13

Marketing professionals or individuals exposed to sun rays for a long duration need something which would protect their skin from the harmful effects of sun rays. Keeping this in mind, many organizations came with the concept of sunscreen lotions and creams with a sun protection factor especially for men. 11. Create Subgroups The organizations should ensure their target market is well defined. Create subgroups within groups for effective results. Cosmetics for females now come in various categories.

Creams and Lotions for girls between 20-25 years would focus more on fairness. Creams and lotions for girls between 25 to 35 years promise to reduce the signs of ageing.

12. Review the needs of the target audience It is essential for the marketer to review the needs and preferences of individuals belonging to each segment and sub-segment. The consumers of a particular segment must respond to similar fluctuations in the market and similar marketing strategies. 13. Name your market Segment Give an appropriate name to each segment. It makes implementation of strategies easier. A kids section can have various segments namely new born, infants, toddlers and so on. 14. Marketing Strategies Devise relevant strategies to promote brands amongst each segment. Remember you cant afford to have same strategies for all the segments. Make sure there is a connect between the product and the target audience. Advertisements promoting female toiletries cant afford to have a male model, else the purpose gets nullified.

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

14

A model promoting a sunscreen lotion has to be shown roaming or working in sun for the desired impact. 15. Review the behavior Review the behavior of the target audience frequently. It is not necessary individuals would have the same requirement (demand) all through the year. Demands vary, perceptions change and interests differ. A detailed study of the target audience is essential. 16. Size of the Target Market It is essential to know the target market size. Collect necessary data for the same. It helps in sales planning and forecasting. Benefits/Strengths of Segmentation

Organizations get to know its customers better. Provides guidelines for resource allocation. It helps focus the strategy of the organization.

Limitations/Disadvantages of Segmentation

Targeting multiple segments increases marketing costs. Segmentation can lead to proliferation of products. Narrowly segmenting a market can hamper the development of broad-brand equity.

Segmentation of consumer non-durable across different countries

Non-durable goods A good which is immediately used by a consumer or which has an expected lifespan of three years or less. Examples of non-durable goods include food and clothing. (opposite of durable goods, Also called soft good.) Segmentation of Coca Cola:

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

15

Coca Cola segments its market in a number of ways. Coca Cola's, customer segmentation is mainly by their market demographically based on age, income and family size. Coca Colas behavioral segmentation has been a key to the companys success. Age is one of the most significant parts of the segmentation of Coca Cola. Coca Cola introduces Coca Cola diet for the people who are suffering from diabetic and for those who are likely to avoid sugar and for the aged people specially 40 plus. Coca Cola mainly produces the Coca cola and the main customer of Coca cola is young people whose age is 10 to 35. The other important thing is the taste and quality. The coco content used to prepare the drink also varies from country to country. Coca cola also segment the market on the income basis by making little pack. They have an awesome price rang to all class of people. They introduce different price of containers with different size for the people whose income is different. They think about student, poor people, and middle class people economic condition for their pricing. Coca Cola mainly serves 500ml, 1L, 1.5L and 2L pack Cola in India, Bangladesh, Pakistan, etc.. Family size basis is also a base segmentation for Coca Cola. In our society, by their marketing targeting, we have families with different family size. So Coca Cola makes a variation in their served bottle size into many ways such as 500ml, 1L, 1.5L, 2L pack. People can easily choose a suitable pack based on their family size.

Bibliography
http://courses.unt.edu/kt3650_7/sld006.htm http://www.12manage.com/description_market_segmentation.html http://www.managementstudyguide.com/market-segmentation-steps.htm http://www.netmba.com/marketing/market/segmentation/ http://ankandhk.hubpages.com/hub/PEPSIvsCOCACOLAmarketing-strategy

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

16

Copyright 2011 All rights reserved | MARKET SEGMENTATION & UNIQUE CUSTOMERS VALUE

17