SEGMENTATI ON AND TARGETING STRATEGIES

CONSUMER BEHAVIOUR (311)

BY: ANKITA GAUR 05 MBA 2012 MEENU GUPTA 29 MBA 2012 SAKSHI GUPTA 45 MBA 2012

Market Segmentation What is MARKET? A market is a place which allows the purchaser and the seller to invent and gather informations and lets them carry out exchange of various products and services. In other words the Meaning of Market refers to a place where the trading of goods takes place. The place can be a market place or a street market. A market is thus by definition comprises people or business with potential interest, purchasing power and willingness to spend the money to buy a product or service that satisfies need. The following diagram illustrates this concept.

Total populatio n

Felt need

Inte e!te d

Mone" to Bu"

#illin$ne !! to !pend

Ma %et

xample! Tatas have started producing a Mercedes "en# car here in India. Many individuals have a need for car but they may not need a luxury car like Mercedes. They are happy with a santro or chevy spark or Maruti. $ome might be interested in a luxury car, but may not be interested in Mercedes as it may attract the attention of tax authorities. They may prefer luxury cars like %onda city, &ord &iesta, 'ctavia and so on. $ome may be interested in Mercedes but they are not able to afford a price of (s.)*lakh. Thus, the market for Mercedes is a very small portion of luxury car markets, which is a small portion of the total car markets. What is market segmentation? +ets us first see what market segmentation means is! Markets are Heterogeneous; Segmentation divides them into Homogeneous Sub-Units The market for a product is nothing but the aggregate of the consumer of that product. ,e also know that consumer of a product vary in needs, motivates, characteristics, and buying behavior. It means that the market for a product is essentially a heterogeneous unit. Markets break up the heterogeneous market for product into several sub units, or sub markets, each relatively more homogeneous within itself, compared to market into a number of sub markets- distinct sub units of buyer , each with relatively more homogeneous characteristics, is known as market segmentation. It is the onsumer !ho are Segmented" #ot $rodu%t" nor $ri%e It would be useful to provide one important clarification right at the beginning. Markets, sometime, speaks of product segments and price segments and use these expressions as synonymous with market segments. This can leads to a wrong understanding of what market segments, or for that matter, the process of market segmentation as a whole, actually connote. ,e have to be clear that in market segmentation, it is the consumers who are segmented, not the product, nor price. Market is about people who consume the product, not about the product thats gets consumed. &or example, in segmentation of the passenger car market, it is not the passenger cars .product/ that are segmented, but it is the consumer-buyer of car that is segmented. $imilar is the position about the price segments. Taking the passenger car instance again, it is not the cars that are segmented with price as the base, but it is the buyer of cars that are segmented, with
3

their price preference for car as the base. ,e do speak about 0price slots in segmentation. "ut it does not mean that the price slots constitute the segments. ,hat it signifies is that different offers are made available matching the differing price preference of the consumer segments involved. 01rice slots and specific products offers thereof are 2ust a derivative of segments of consumers. It is the consumer, who invariably defines the segments, not product, nor price slots. xample! Titan Wat%hes Arrives in three broad Segments The (ich The Middle The +ower

Titan &rings out a Wide Range o' (''er to Serve the )i''erent *a+ue Segments &or the 3old lovers!

Titan offered to this segment an all gold watch4 the Aurum and (oyal lines.

&or the More than 'ne $egments!

&

Titan made those who wanted more than one watches into a separate segment ad tempted them by offering a wide range of models. It offered them matched ones dress and occasions. &or the youth -the outdoor lovers!

Titan viewed them as a lifestyle segment and offered them the fast track. &or 5esigner $egment!

Titan also adopted the designer segment and offered them all designer and hand assembled watches, the uro collection, designed by uropean designers. &or the 6hildren

Titan adopted children 7 those between 8 to 9: years as o separate segment . 5ash for ;ids/ &or ,omen $eeking &ashion within the Middle4income 3roup!

'

Titan offered the (aga (ange for this segment which was meant exclusively for women.

Wh, segment the market? Market segmentation benefits the market in several ways. -a%i+itates Right hoi%e o' Target Market $egmentation helps the marketer to pick up his target market properly. It does this by enabling him to distinguish one customer group from another within market and by showing him, which segments of the market match his situation and should, hence, form his target market. -a%i+itates E''e%tive Ta..ing o' the hosen Market $egmentation enables the markets to crystalli#e the needs of each of the chosen segments and make offer that match them. ,hen buyers are handled after segmentation, the response from each segment will be more homogeneous. This in turn, will help the marketer develop marketing offers-programmers that are most suited to each segments. They can adapt the offers to the target segments the, achieves the speciali#ation re<uired in product, distribution, promotion and pricing for matching the particular customer group, and can develop marketing offers and appeal, that match the group.

Makes the Marketing E''ort More E''i%ient and E%onomi%

$egmentation also makes the marketing more efficient and economic. It ensures that the marketing effort is concentrated on selected and well4defined segments. After all, for most firms, the resources would benefits if its efforts were concentrated on selected segments4 the ones that match the firms resources and are most productive and profitable. He+.s Identi', /ess Satis'ied Segments and on%entrate on Them $egmentation also helps the marketer to asses to what extent existing offers in the market matches the needs of different customer segments and which are the less satisfied segments. Market %an be segmented using severa+ bases 0 A market- consumer population for a product can be segmented using several relevant bases. The ma2or ones include! 3eographic 5emographics $ocio4cultural 1sychographic "uying "ehavior

+e*o$ ap,i!

.eo$ ap,i-

So-io/Cultu al

Ma Ma %et %et Se$*entat Se$*entat ion ion

Bu"in$ Be,a0io

1!"-,o/$ ap,i-! )

1eogra.hi% Segmentation $egmentation of consumer based on factors like climate #one, continents- country, region, state, district, and urban-rural area, constitutes geographic segmentation. Marketer, who operate globally, often segment the market segments the market by continents-country-region in the first instance, and then go for segmentation on other bases. =ational markets within a country like India, often segment the market by region, state, district and urban-rural area, in the first instance, and then go for segmentation on other bases. xample! 3eographic decides the product consumption pattern. 1eople in coastal areas of ;onkan and 3oa relish rice, a staple grain there and fish abundantly available from sea. $outhern are found of coffee and north Indians like Tea. 1eople down south use talc excessively, and apply it even on face, perhaps aspiring to fairer like their counter part in the north. ,hen we sale our product to international market. 1roducts are made according to their need. (asna international gives instant syrup when dissolves in glass of water, and does not contain a lot of sugar. 6omplexion creams like fair and lovely sells only in India.

)emogra.hi% segmentation $egmentation of consumer based on variables such as race, religion, community, language, age, stage in family cycle, gender, marital status, family si#e, occupation, economic
2

position-income-purchasing capacity level, and social status ,of the consumer demographic segmentation. Age0 It is essentially a case of age based segmentation of a market. E2am.+e0 Amu+ has segmented his .rodu%t in di''erent age grou.

-or kids0 Amul kool, chocolate milk, =utramul energy drink. -or 3outh0 Amul cool kafe. -or !omen4s and o+der .eo.+e0 Amul calci>, Amul $hakti energy drink

1ender0 3ender is another key variable-base under demographic segmentation. There is substantial evidence that men and women differ in buying behavior and it their persuasive messages. ,omen tend to be slower to make decisions and exhibit greater uncertainty about their decisions. And, they are also more persuadable. E2am.+e0 Adidas targets !omen in India

3erman shoe maker Adidas is trying to develop the women segment in India for its products.

Emami segmented its .rodu%t in gender ,omens! =aturally fair

Men! &air and handsome

$ur%hasing %a.a%it,0 In the segmentation context of several elements of demographic, purchasing capacity is perhaps the most significant one. "uyers preferred price range is often related to purchasing capacity. E2am.+e0 #okia It deals with wild variety and wild range.

=okia *8?? price (s.*@A?

=okia A9)? price (s. A)??

=okia =@) price (s.9*, A??

14

=okia =BA price (s **,@A?

&udget %ar segmentIt is the largest segment in Indian market. %ere the entry level starts from (s 9.A to ) lakh. Maruti 566 and (mni are the dominant players in these segments. ,ith the launch of Tata #ano with a price range of 9lakh the outlook of this segment has changed. This segment is sometimes referred to as the small car segment. 6ompetition in this segment is extreme in Indian market.

Maruti 566 7&udget ar Segment8 om.a%t %ar segment4 It lies between budget car and family car. 1referred price range is between (s ) to :.A lakh. Maruti 9en" -iat Uno" Tata Indi%a" Santro" Mati: is some of the dominant players in this segment.

Maruti 9en 7 om.a%t %ar segment8

11

)ae!oo Mati: 7 om.a%t %ar segment

ars o' %om.a%t segment -ami+, %ar segment4 The purchasing capacity of buyers of this segment is somewhat higher than that of the budget and compact car segment. 1rice ranges between (s :.A to 8 lakhs. Maruti Esteem" )ae!oo ie+o" and HM ontessa belongs to this segment. In India cars that are sold in India as 0"udget 6ar and 06ompact 6ar do not meet their purpose, especially in term of space, that they turn to 0the family car segment.

)ae!oo ie+o 7-ami+, ar segment8

$remium %ar segment4 This segment represents the buyer who re<uire true world class luxury car. 1rice ranges between (s 8 to C lakh. -ord Es%ort" Honda it,, Honda it," Mitsubishi /an%er" Audi ;566 , (.e+ Astra etc are some of the ma2or cars in this segment.

12

(.e+ Astra 7$remium %ar segment8 Su.er +u2ur, sa+oon segment4 "uyer in this segment looks for a real super premium segment car. Mer%edes &en: E<<=" E-<>6" Rover Montego" Audi ?" &MW is the players in this segment. 'bviously, this is a tiny segment in the Indian context.

Audi ? 7Su.er /u2ur, sa+oon8

So%io- u+tura+ -a%tors 6ulture and social class are the two main bases of segmentation here. u+ture0 6ulture influence consumer behavior, deeply. A given culture brings in its own uni<ue pattern of social conduct. A person usually ac<uires his cultural attributes right at his childhood. 6ulture includes religious, caste, traditional, language, pattern of social behavior etc. So%ia+ -a%tor! $ocial group of varying types exert influenced on the consumer. $ocial group include family, peer group, close colleges. They adopt their common life style. The influences of cultural and social factor are on consumer behavior. $o products are segmented on the basis of social and cultural factor.

13

E2am.+e0 Dee Televisions deals with variety of channels regional channel, sports channel, movie channel. Mc5onald has both veg and non veg burger. Mc5onald has veg burger for vegetarian and nonveg burger for non vegetarian. $s,%hogra.hi% segmentation 1sychographic $egmentation groups customers according to their life4style and buying psychology. Many businesses offer products based on the attitudes, beliefs and emotions of their target market. The desire for status, enhanced appearance and more money are examples of psychographic variables. They are the factors that influence your customersE purchasing decision. In psychographic segmentation, elements like life style, attitude, self4concept and value system, form the base. /i'e st,+e0 Fust as purchasing capacity forms a ma2or base under demographic segmentation, life style forms a ma2or base under psychographics segmentation. E2am.+e0

a'@ o''ee )a, They choose lifestyle oriented, urban consumers as target with youth. They make coffee an 0experience and provide a special experience to chosen segment. 665 has estimated that presently 8?G of the footfalls in its )?? outlets belong to students between the ages of 9A to *: years. The 665 are targeting students and trying to establish a space in their lives. $s,%hogra.hi% segmentation he+.s in .ositioningAre.ositioning" +aun%h o' ne! .rodu%ts and brand e2tension0 $egmentation consumer based on psychographic rest on identifying consumer state of mind and hence helps in piecing together a more inclusive
1&

profile of target consumer. It is therefore, particularly, useful in positioning-repositioning of product and in new product launch and brand extension. &u,ing &ehavior Segmentation Markets can be segmented on the basis of buyer behavior as well. $ince all $egmentation is in a way related to buyer behavior, one might be tempted to ask why buyer behavior4based segmentation should be a separate method. It is because there is some distinction between buyers characteristics that are reflected by their geographic, demographic and psychographic profiles, and their buying behavior. Marketers often find practical benefit in using buying behavior as a separate segmentation base in addition to bases like geographic, demographics, a psychographics. The primary idea in buyer behavior segmentation is that different customer groups expect different benefits from the same product and accordingly, they will be different in their motives in owing it and their behavior in buying it. Hariables of buyer behavior are!4 &ene'it sought0 - Iuality - economy - service - look etc of the product. E2am.+e0 =estle has found a separate segment atta noodles as distinct from the maida noodles. Usage rate0 - %eavy user - moderate user - light user of a product. User status0 - (egular - potential - first time user - irregular -occasional. /o,a+t, to brand0 - %ard core loyal - split loyal - shifting - switches. (%%asion0 (%%asion - %olidays and occasion stimulate customer to purchase products. Attitude to!ard o''ering0 4 hostile. E2am.+e0 $hampoos, soap and all &M63 products buying behavior segmentation is used. Mu+ti-+eve+ Segmentation0 A Market %an be segmented" using severa+ bases in su%%ession ,hile discussing about bases of segmentation we must discuss about multi4level segmentation, as it is not as through segmentation bases discussed above are mutually exclusive and a market
1'

nthusiastic - positive attitude - negative attitude - indifferent -

can be segmented only with one particular base, on either - or basis. $ince customer characteristic are spread over several variables, any market can be segmented through several bases. 5ifferent bases can be used in combination in segmenting a given market. They 2ust have to be relevant for the concerned market. Actually, the different bases can be used in succession in a suitable order, and the market can be segmented at multi4levels. &or example, a market can be segmented using the demographic base in the first instance, followed by the psychographic base and the buyer behavior-benefit base. 'r, the market can be segmented using volume as the base in the first instance, followed by the demographic-psychographic-buyer behavior-benefit base. Assuming for example, that the firm first carries out volume segmentation of its market, it can know who the heavy user of its product are, but it cannot know the purpose for which they buy the product. The firm can then pick up the heavy users and carry out a multi4level segmentation, and continue its probe more deeply. $ince each of these bases has several sub4bases, the numbers of levels in which a market can be segmented are indeed numerous. Actually, the aim should always be to go as deep as possible in segmenting the market so that segments that are most attractive and most suited can be chosen Mu+ti-+eve+ segmentation enab+es better se+e%tion o' target market and better %hoi%e o' marketing mi2 Multi4level segmentation enables the marketers to choose his target market better. It also helps him to make the winning strategy and strike the right product offer and the right marketing mix. ,ith the information generated from multi4level segmentation, he can obtain a deeper understanding of the customers in each segment, their needs, buying motives and buying behavior. %e can understand in what way each of the different segments want the product to be, he can then tailor his product, marketing offer and promotional appeal, to fit the individual segmentJ he can select the priced, distribution method-channels, media vehicles, advertising massages and sales appeal, which will be appropriate. E2am.+e o' 1enera+ Motors03M has identified about :? different 0customer needs and correspondingly, :? different market segments in which it would present with its vehicles. &or example, it has targeted the 1ontiac at
1(

active, sports4oriented, young couples, the 6hevrolet at price4conscious young families, the 'ldsmobile at affluent families, and the "uick at older, more conservative couples. A)*A#TA1ES (- MARKET SE1ME#TATI(# Harious advantages of market segmentation are!4 %elps distinguish one customer group from another within a given market. &acilitates proper choice of target market. &acilitates effective tapping of the market. %elps divide the markets and con<uer them. %elps crystalli#e the needs of the target buyers and elicit more predictable responses from them J helps develop marketing programmers on a more predictable baseJ helps develop market offer that are most suited to each group. %elps achieve the speciali#ation re<uired in productJ distribution, promotion, and pricing for matching the customer group and develop marketing offers and appeal that match the need of each group. Makes the marketing effort more efficient and economic. %elps concentrate efforts on the most productive and profitable segment, instead of frittering them over irrelevant, or unproductive, or unprofitable segment. %elps spot the less satisfied segments and succeed by satisfying such segments. "rings benefits not only to the marketer but also to the customer as well. ,hen segmentation attains high sophistication, customers and companies can choose each other and stay together.

E*A/UATI(# (- THE SE1ME#TS

1)

,hether market segmentation is successful or not can be evaluated by the following <uestions4 Is it si:eab+e0 - $i#e4wise, the popular segment is a bigger compared to the premium segment. In term of tonnage, of the total market of around 8, ??,??? tones, the popular segment account for C? percent and the premium segment for the remaining *? percent. If the firm wants a very large volume, it has to think of the popular segment. At the same time, it has to note that the premium segment too is si#eable, as it account for over 9*?,??? tones. In term of value, the premium segment is even more si#eable, formerly nearly )? percent of the total market. 6learly, the segment cannot be ruled out as lacking in si#e. Is it gro!ing0 - 3rowth rate and likely future position of the segment will be the next consideration in the evaluation processK Lsually, business firms seek out the high growth segments. Analysis will readily indicate to the firm that in bath soaps, the premium segment happens to be the high growth segment. ,hereas the popular segment has been growing at 9? percent per annum, the premium segment has been growing at over *? percent annum. ,hen this fact is taken into consideration, the firms choice may tilt toward the premium segment. The tilt will be particularly pronounced if the firms natural disposition is to strive for a position in the high growth segment of the business. Is it .ro'itab+e0 - =ext consideration will be the extend of profitability. In the present example, the firms <uickly sense that the premium segment is more profitable one. ven a relatively lower volume in the segment may bring in good returns. 'n the contrary, in the popular segment, a much larger volume will be necessary for the business to be viable, since prices and margins in the segment are low.Another point is that costs of marketing, distribution and promotion in the business are <uite high and are constantly on the rise. 6osts of launching a new brand are particularly high. The market is very competitive, aggressive promotional support through expensive media like TH becomes essential. In this background, the firm may come to the conclusion that it may be worthwhile to gamble in the premium segment rather than the popular segment. Is it a%%essib+e0 - The firm has to now consider whether the segments are accessible to it. This may need further analysis. The market realities will have to be taken into
12

consideration. The popular segment will be accessible only to the firm with a cost advantage, since price is a ma2or determinant in this segment. 1remium segment will be accessible only to firms, which en2oy a differentiation advantage, and which are also marketing savvy. +iril of %industan +ever has a commanding position in this segment. At the upper end of the segment, %++s 1ears and 5ove are well entrenched. $everal other brands of different companies are competing in the segment. The firm has to take due note of this reality. At the same time, analysis also reveals that new brands do keep entering the segment every now and then, and some of them do manage to stay. $o, the firm has no reason to believe that the premium segment is not accessible to it, unless it is convinced that it is very weak in marketing. Is it compatible with the firms resources and capabilities! 4 %aving reached the conclusion that the premium segment is si#eable, growth oriented, profitable and accessible, the firm has to now find out if the segment matches its resourcesK &or some firms, the popular segment may be the natural choice and for others, the premium segment. And, for some other choosing both. The premium segment is a highly competitive segment. 'nly firms endowed with strong resources and an aggressive marketing strategy-culture can fight and survive in the market. The firm therefore has to assess whether the particular segments are compatible with its resources and capabilities.

MARKET TAR1ETI#1 I#TR()U TI(#0 - There was a time when finding the best customers was like throwing darts in the dark. Target marketing changed all that...TodayEs savvy marketers know that finding their best prospects and customers hinges on well thought out targeted marketing strategies.

13

5efining a target market re<uires market segmentation, the process of pulling apart the entire market as a whole and separating it into manageable, disparate units based on demographics. Target market is a business term meaning the market segment to which a particular good or service is marketed. It is mainly defined by age, gender, geography, socio4economic grouping, or any other combination of demographics. It is generally studied and mapped by an organi#ation through lists and reports containing demographic information that may have an effect on the marketing of key products or services. Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small businesss success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and-or services easier and more cost4effective. Target marketing provides a focus to all of your marketing activities. Market targeting simply means choosing ones target market. It needs to be clarified at the onset that marketing targeting is not synonymous with market segmentation. $egmentation is actually the prelude to target market selection. 'ne has to carry out several tasks beside segmentation before choosing the target market. Through segmentation, a firm divides the market into many segments. "ut all these segments need not form its target market. Target market signifies only those segments that it wants to adopt as its market. A selection is thus involved in it. In choosing target market, a firm basically carries out an evaluation of the various segments and selects those segments that are most appropriate to it. As we know that the segments must be relevant, accessible, si#able and profitable. The evaluation of the different segments has to be actually based on these criteria and only on the basis of such an evaluation should the target segments be selected. $R( ESS (- H((SI#1 THE TAR1ET MARKET The process of choosing the target Market are!4 6hoosing the target market is related to, but not synonymous with, market segmentation. $egmentation is the means or the toolJ choosing the target market is the purpose. $egmentation can also be viewed as the prelude to target market selection.
24

6hoosing the target market usually follows multi4level segmentation using different bases. 6hoosing the target market involves several other tasks in addition to segmentation. +ooking at each segment as a distinct marketing opportunity. valuating the worth of each segment .sales-profit potential/. valuating whether the segment is! 5istinguishable. Measurable. $i#able. Accessible. 3rowing. 1rofitable. 6ompatible with the firms resources.

xamining whether it is better to choose the whole market, or the only a few segment, and deciding which ones should be chosen. +ooking for segments, which are relatively less satisfied by the current offers in the market from competing brands. 6hecking out if the firm has the differential advantage - distinctive capability for serving the selected segments. valuating the firms resources and checking whether it is possible to put in the marketing programmes re<uired for capturing the spotted segments with those resources. &inally selecting those segments that are most appropriate for the firm.

-A T(RS T( &E (#SI)ERE) WHI/E TAR1ET MARKET SE/E TI(#

21

Target marketing tailors a marketing mix for one or more segments identified by market segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market. Two important factors to consider when selecting a target market segment are the attractiveness of the segment and the fit between the segment and the firm's objectives, resources, and capabilities. Attra%tiveness o' a Market Segment The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment! $i#e of the segment .number of customers and-or number of units/. 3rowth rate of the segment. 6ompetition in the segment. "rand loyalty of existing customers in the segment. Attainable market share given promotional budget and competitorsE expenditures. (e<uired market share to break even. $ales potential for the firm in the segment. xpected profit margins in the segment.

Market research and analysis is instrumental in obtaining this information. &or example, buyer intentions, sales force estimates, test marketing, and statistical demand analysis are useful for determining sales potential. The impact of applicable micro4environmental and macro4 environmental variables on the market segment should be considered. =ote that larger segments are not necessarily the most profitable to target since they likely will have more competition. It may be more profitable to serve one or more smaller segments that have little competition. 'n the other hand, if the firm can develop a competitive advantage, for example, via patent protection, it may find it profitable to pursue a larger market segment.

Suitabi+it, o' Market Segments to the -irm

22

Market segments also should be evaluated according to how they fit the firmEs ob2ectives, resources, and capabilities. $ome aspects of fit include! ,hether the firm can offer superior value to the customers in the segment The impact of serving the segment on the firmEs image Access to distribution channels re<uired to serve the segment The firmEs resources vs. capital investment re<uired to serve the segment

The better the firmEs fit to a market segment and the more attractive the market segment, the greater the profit potential to the firm. TAR1ET MARKET STRATE1IES There are several different target4market strategies that may be followed. Targeting strategies usually can be categori#ed as one of the following! Sing+e-segment strateg, 4 Also known as a %on%entrated strateg,. 'ne market segment .not the entire market/ is served with one marketing mix. A single4segment approach often is the strategy of choice for smaller companies with limited resources. Se+e%tive s.e%ia+i:ation4 This is a multiple4segment strategy, also known as a differentiated strategy. 5ifferent marketing mixes are offered to different segments. The product itself may or may not be different 7 in many cases only the promotional message or distribution channels vary. $rodu%t s.e%ia+i:ation4 The firm speciali#es in a particular product and tailors it to different market segments. Market s.e%ia+i:ation4 The firm speciali#es in serving a particular market segment and offers that segment an array of different products. -u++ market %overage 4 The firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment strategy in which a separate marketing mix is offered to each segment A firm that is seeking to enter a market and grow should first target the most attractive segment that matches its capabilities. 'nce it gains a foothold, it can expand by pursuing a product speciali#ation strategy, tailoring the product for different segments, or by pursuing a market
23

speciali#ation strategy and offering new products to its existing market segment. 6hoosing the target market is a part of marketing strategy formulation, the other two parts being positioning and marketing mix formulation. ,ithout right targeting, the firm cannot formulate an effective strategy. It is through careful segmentation and targeting that firm pick up right group of consumers. Also, it is through this process that the firm gain vital knowledge about the need and buying behaviour of the consumer in each segment and the differences between one segment and the other. And, it is by using this knowledge that the firm develops marketing programmes that match the specific re<uirement of different segments. In other words, segmentation and targeting help the firm not only the characteristics of each of the segments but also the 0distinctive excellence that is re<uired for catering to the specific needs of the consumers in each of them. Another strategy whose use is increasing is individua+ marketing, in which the marketing mix is tailored on an individual consumer basis. ,hile in the past impractical, individual marketing is becoming more viable thanks to advances in technology. M )E ISI(#S I#*(/*E) I# TAR1ETI#1 STRATE13 I# /U)E0 which segments to targeting. how many products to offer. which products to offer in which segments.

TAR1ETI#1 STRATE13 )E ISI(#S ARE I#-/UE# E) &30 Market maturity. 5iversity of buyersE needs and preferences. $trength of the competition. The volume of sales re<uired for profitability.

)E I)I#1 THE SI9E (- TAR1ET MARKET After selecting the target market it is important for marketers to decide the si#e of the target market. Is the target market large enough to sustain a business which will provide products or services to themK A target market has to be of at least a minimum si#e to be viable. $uppose a firm chooses food processing and food packaging as its target market. In fact, they might be too
2&

large, and it might be wise to find a niche within those target markets. Therefore, the firm must then focus on a particular type of food market, such as a food production firm who wants to package its products for selling. Thus by targeting its product for its targeted market, the firm can decide its si#e on the basis of it. RESU/TS (- WR(#1 TAR1ETI#1 STRATE13 Ineffective augmentation and targeting led to wrong product offers, inappropriate marketing appeals, wrong pricing, and overemphasis on the brand name. =o firm can offer single product to satisfy all the segment. &or example, in Indian market many M=6s offered single product to the entire segment. The offer did not suit middle class as such. They suited only the premium segment. =aturally, the firms were unable to gather worthwhile volumes. As the firm did not target those segments and as they failed to make product offers that were appropriate for them, the end result was poor. &or this reason firms like (eebok, (ay4ban, and +evi did not showed satisfactory result for <uite some time in Indian market while they were very successful in the western markets. Thus the choice of target marketing for a given industry can decide the fate of the industry in the market. This is because firms differ in their competencies, resources, ob2ectives, and strategies

2'

2(