Marketing Management

Prof M R Koshti Session 6 39 slides

Last session in brief

Will the consumers pay? Price Consumer psychology and pricing -Reference prices, Price quality inferences, Price cues Setting the price objective, demand, costs, competitors costs/prices/offers, pricing method (cost+, ROI, Perceived value, value, going rate, auction), select the final price Differentiated pricing Regulated prices in select industries / pharma**
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Who is your customer?

You manufacture and market bathing soap Production capacity 2 lac soaps per day One soap lasts for 15 days in a family All customers who have used your soap once, make repeat purchase Who are majority of your customers? Or whom you want to be majority of your customers? Write maximum possible attributes / personal characteristics, with narrowest range, which are common to majority of your customers E.g. most customers stay in Borivali, and Kandivali Say- my typical customer is resident of Western suburbs of North Mumbai rather than. He resides in India 3 of 39 Make relevant assumptions**

Segmentation / Targeting / Positioning**

Ideal marketing
Every human being is different from others His needs will therefore be different from others and unique In ideal marketing you will contact each person for his / her specific needs Make a product for him Supply the product to him Costly affair No economies of scale either in contacting the consumer or in manufacturing the product**
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Solution
Group the consumers who share a similar set of needs and wants Segmentation It is creating small homogeneous groups of consumers out of the total heterogeneous market Customer segmentation is a method for grouping customers based upon similarities they share with respect to any dimensions you deem relevant to your business - whether it be customer needs, channel preferences, interest in certain product features, customer profitability, location etc.**
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On what basis to segment your customers / prospects?

What is your objective for the segmentation? What you want the segmentation to "do for you".**

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Common segmentation objectives

Developing new products Creating differentiated marketing communications & ads Developing differentiated customer servicing & retention strategies Targeting prospects with the greatest profit potential Developing multi-channel distribution strategies** 8 of 39

Bases for segmenting consumer markets

1. 2. 3. 4. Geographic Demographic Psychographic Behavioral**

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Geographic
Region South India, Western region, North, East City / Urban Class I cities, class II cities, metro cities, cities with a population of 5 lac to 10 lac, cities with population with more than 10 lac Rural and semi-urban areas Rural villages with a population of over 10,000, semi-urban areas, small towns with a population between 20,000 & 50,000 (Distribution / promotion challenge)**
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Geographic
Air coolers (desert coolers) for dry regions, air-conditioners for humid regions South India..coffee vs tea in other areas**

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Demographic
Age Up to 6 yrs, 6-11 yrs, 12-19 yrs, 20-34 yrs, 35-49 yrs, 50-60 yrs, 60+ yrs Johnson & Johnsons baby soap and talcum powder.for infants Family size / family life cycle stage Young single, young married no kids, young married youngest child under 6, older married kids, older singles Couple migrate from motorcycle to car after they have a child Gender Male, female (why should boys only have all the fun Priyanka Chopra, scooter) Womens era, fairness cream for men**
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Demographic.
Income Low (up to 40 k pa), lower middle (4080k pa), middle (80 k 1.2 L), upper middle (1.2 1.6 k), high (above 1.6k) RinWheel (Nirma) Occupation Unskilled worker, skilled worker, petty traders, shop owners, businessman / industrialist, self employed professionals, employed ( clerk, salesperson, supervisory level, officers , junior executives, senior executives Education Illiterate, school up 4 yrs, school between 5-9 yrs, SSC/HSSC, Non-graduate, graduate, post graduate**
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One of the most powerful sources of segmenting is

Census Data
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India population 102,70,15,247 .2001 census

Uttar Pradesh 16.64 Bihar 9.81 Madhya Pradesh 7.83 Maharashtra 9.01 Punjab 2.33 **

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India population
Persons- 102,7015247 Males-53,1277078 Females-49,5738169**

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India population
Number of Literates Persons-56,6714995 Males-33,9969048 Females-22,6745947 Increase in Literacy -13.75 in 1991-2001**

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India population
Population by Age and Sex 0-14 years:- Males-17,5228164 Females16,5190951 15-64 years:- Males-32,4699562 Females30,1821383 65 years and older:- Males-2,3925371 Females-2,3138386**

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India population
Urban Population of States/Union Territories Persons-28,3741818 Males-14,9291091 Females-13,4450727**

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Psychographic
Socio-economic classification highly educated & senior executive ..illiterate & unemployed Rural market socio economic classification based on occupation of the chief wage earner and the type of house they live in Kachcha / Pakka Lifestyle Culture oriented, sports oriented, outdoor oriented Personality compulsive (acting on irresistible urge), gregarious (fond of company, sociable), authoritarian, ambitious**
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(Consumer) Behavioral
Occasions Regular, special Benefits Quality, service, economy, speed User status Nonuser, ex-user, potential user, first time user, regular user Usage rate Light, medium, heavy Loyalty status Non, medium, strong, absolute Readiness stage Unaware, aware, informed, interested, desirous, intending to buy Attitude towards product Enthusiastic, positive, indifferent, negative, hostile**
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Segmentation process
Segmenting - Dynamic process and not a static concept One can use multiple bases to segment the market Geographical Maharashtra, Gujrath Gender Males / females in Mah / Guj Age Young (20-50) Males / females in Mah / Guj**
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Effective segmentation criteria

Measurable Substantial Accessible Differentiable**

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Market targeting
Out of the total market segments that you draw, you may like to focus on specific segments for your marketing efforts The task of choosing segment (s) for focusing is called targeting All 4 Ps of the company are directed towards the target segment (s). Target Market Group of people to whom a firm decides to direct its marketing 24 of 39 efforts and ultimately goods and services**

Segmenting India (1 type)

States Income

Total Cr

Up to .5 L
.5 to 1 L

3 Cr
2

6
4 3

9
3 2

18
9 6

Above 1 1 L Total 6

13

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Targeting
States Income

Total Cr

Up to .5 L
.5 to 1 L

3 Cr
2

6
4 3

9
3 2

18
9 6

Above 1 1 L Total 6

13

14

33
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Targeting
States Income

Total Cr

Up to .5 L
.5 to 1 L

3 Cr
2

6
4 3

9
3 2

18
9 6

Above 1 1 L Total 6

13

14

33
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Targeting
States Income

Total Cr

Up to .5 L
.5 to 1 L

3 Cr
2

6
4 3

9
3 2

18
9 6

Above 1 1 L Total 6

13

14

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Most attractive segments for your business to target

One or more of your products meet the segments functional & emotional needs Your existing channels for selling, servicing & awareness-building align with the segments channel preferences and media-consumption habits Your product & brand match with the segments reasons for buying from both a functional and emotional perspective You can identify and reach the segment in a costeffective manner The segment is large enough in size, growing, and has profit-potential to merit investment in a distinct marketing 29 of 39 mix**

Why segmenting / targeting?

Sunrays ..paper..no burn Sunrays ..convex lense..paper..burn Carpet bombing vs target bombing (Iraque..Sadaam) If there is a mouse in the house, you dont need to burn the whole house for killing the rat You can not do everything for everybody Marketing without segmenting /targeting .. You spread your efforts thin No results**
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Strategies for reaching target markets

Undifferentiated marketing (Mass marketing) Market strategy that focuses on producing a single product and marketing it to all customers. Differentiated Marketing A firm has different marketing programs to address different target segments Concentrated marketing (Niche marketing) Firm focuses only on one segment Micromarketing Targeting potential customers at very narrow , basic levels, e.g. zip codes, specific occupation possibly individuals themselves**

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Types of markets
Consumer products Products bought by ultimate consumers for personal use / consumption Business products Goods and services purchased by organizations for use, either directly or indirectly in the production of other goods or services**

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Bases for segmenting business markets

1. 2. 3. 1. 1. 2. Demographic Industry Company size / Quantity they buy from you Location Purchasing approaches Centralized, tenders Situational factors Urgency, order size Buying situation Straight re-buy, modified re-buy, new buy Personal characteristics of the buying centers**
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What if more than one marketers target a similar segment

Product differentiation is the key Me too products dont succeed (Fevicol, Sintex) Unique Selling Proposition (USP) Distinctive (and compelling) benefit communicated to customers before the competition (Promise clove oil) POSITIONING Positioning is the act of placing the companys product at a certain point or location within a market in the minds of the target market / prospective buyers. Positioning is the perception or image that a customer has of the product vis a vis other products, ..in his mind**
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Perceptual mapping
Soap
Health Lux Lifebuoy Sampoorna Snan**

Beauty

Nirma
Kill germs Hamam Dettol

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Perceptual mapping
Airlines
Air India Kingfisher

Price Deccan Airways

Service quality
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Repositioning
Change in competitive environment DNA 6/10/09 Bajaj to up cargo three-wheeler play To position it as last-mile delivery vehicle for intra-city movement With some of the companies launching 4 wheelers in the cargo segment, the three wheeler segment has taken a hit. Firms intentions for different results Dabur Ayurvedic / Herbal (Products for old people only) FMCG for all**
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STP Strategy
Segmenting (multilevel, no physical boundaries, lies in the eyes of the beholder / marketer) Targeting Positioning To be formulated after core, basic and expected products have been defined**
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Questions?**
Attendance Presentation sheets***

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