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What is a Market?

PEOPLE

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 What is a Market?

PEOPLE
BUT - not just ANY people, they have to have
• Willingness to buy
• Purchasing power (money)
• Authority to buy
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 Types of Markets
 Consumer Goods and Services

 Industrial Goods and Services

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 Classes of Consumer
Products
Convenience Shopping Specialty

coke

Goods

ATM

Services
$
$

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 Industrial Goods
Industrial goods are things used in the
production of other products

Some products are both industrial and

consumer goods - eg. electricity, water,
desktop PCs

2 categories of industrial goods

 Production Goods
 Support Goods

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 Market Segmentation
 Market segmentation is the study of the
marketplace in order to discover already
existing viable groups of consumers who are
similar or homogeneous in their approaches
to choosing and / or consuming goods and
services.

 The process of dividing a

potential market into distinct
subsets of consumers and
selecting one or more
segments as a target market
to be reached with aPrepared
distinct
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 Segmentation Studies
 Discover the needs and wants of
groups of consumers to develop
specialized products to satisfy group
needs

 Usedto identify the most appropriate

media for advertising

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 Ryka
produces
sneakers that
meet the
special needs
of women’s
feet.
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 Market Segmentation Level
Segment Marketing
Segmentation would be done on the basis
of homogeneous needs. Individual Marketing
Ex: Tata entered into Jewelry market withfocus is on individual marketing. i.e. B2B
the brand name Tanishq. It segmentedMarketing or B2C marketing through Email,
the market on the basis of the level of Websites etc.
Purity required by people and targeted
those who wanted 24 carat gold.

Niche Marketing Local Marketing

Niche is small segment of the market that
“think global act local”. A product proves to be
has some specific unsatisfied needs. Successful at national or international level
Ex: 1) Alto, Wagon-R, Santro May fail at the local level because of unmatched
2) Saint Gobain, a French glass Local tastes and preferences.
manufacturing co enter into fragmented Ex: initially MacDonald’s failed in Indian market
glass market, where branded glass but letter they introduced Indianized products
Makers have made a fairly recent entry.
i.e. Allo tikka, Paneer Salsa, chicken patties etc.

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 Bases for Segmenting The
Market

Customer Based Product-Related

Segmentation Segmentation

Competition-Related
Segmentation

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 Customer Based Segmentation

Geographic Psychographic
Buyer Readiness
Segmentation Segmentation

Demographic
Segmentation Personality

Values
Age & Life Cycle Occupation
Stage Life Style

Education Behavioral
Gender
Segmentation
Marital Status
Income
Occasions
Family Size
Generation & Structure

Social Class
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 Geographic
The division ofSegmentation
a total potential market into smaller
subgroups on the basis of geographic variables
(e.g., region, state, or city)
The reason why we study geographic
segmentation is because WHERE people live
has a big effect on their consumption
patterns.
Additionally, WHERE people live in a city is
also a reflection of their income level and we
can make certain assumptions about their
ABILITY TO SPEND based upon their address.

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 Geographic
Segmentation
This helps people plan store locations and the
location of other services.

This will help the marketer only in planning

his distribution function.
Climate:

winter equipment and recreation are effected

by geographic location
you will sell more snow shovels in Shimla than
Delhi , BUT, population in Shimla is very
small.
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Geographic Segmentation

International

National

Regional/City

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Demographic Segmentation
Demographic Segmentation is the most
common approach to Market Segmentation

Age & Life Cycle Stage

age is another obvious way to divide the market

into segments since so many products are based
upon “time of life”
 diapers for babies
 toys for children
 entertainment for “over 19”
 also, people have different consumption patterns at
different ages
 eg. Milk products
 children and teens drink a lot of milk, adults don’t
 older adults need calcium, but don’t drink milk
(they take pills)
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 Family Life Cycle
Advertising
Video
cameras are
often
purchased
by young
couples with
children.
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 Gender
(male/female)
gender is an obvious way to divide the market
into segments since so many products are
gender-specific
clothing
medical products
sports products/services
entertainment
there are also the examples where the
products were manufactured to suit for one
sex but were later on being used by both the
sexes. Like COSMATICS PRODUCTS.

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 Income
as the income increases the consumption
behavior also changes.
1) Low income group
2) Middle income group
3) Upper middle income group
4) Higher income group

Social Class

It is influenced by the customer choice. The tastes and preferences

of the social class also changes according to time.
Ex: Men’s formal dress maker, Allen Solly, now focuses on female
western wear.
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 Engel’s Laws
As family income increases ……
 a smaller % goes for food - TRUE
 the % spent on housing and household
operations and clothing will remain
constant (that is grow as total income
grows) - FALSE in reality this amount declines
 the % spent on recreation, education will
increase - TRUE, but there are exceptions

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 Engel’s Laws
Why is this important……
 because marketing managers can use this
law to figure out what will happen (ie.
What kinds of spending patterns will
develop) if people’s incomes increase
 also, if you are planning on going into a
new market, where people have more
money - this “law” helps you to plan how
people’s spending patterns will be
different

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 Occupation

Education

Marital Status

Family Size & Structure

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 Psychographic
Segmentation
Psychographic / lifestyles - based on
people’s opinions, interests, lifestyles.

Often it has been seen that the two

consumers from the same demographic
characteristics may act in an entirely
different manner.

eg, people who like hard rock music

probably prefer beer to wine

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Two High-End Watches for
Different Psychological
Segments

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 Product-Related
Segmentation

Benefits Decision Criteria

Customer seek the
Usage Rates A customer uses to buy
Benefits from the a brand or product.
Product. Customer may Price
Buy for functional Heavy Light Quality
Purposes, gift, durability Medium Technology
etc Services offered

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 Benefit Segmentation
Benefits - based on the different expectation
that customers have about what a product /
service can do for them

“It is based on the Attributes (characteristics) of

products, as seen by the customers”

People buy something because it causes a

benefit to them.
i.e. Diet coke - less sugar, lose weight
i.e. Extra white toothpaste, whiter teeth, better smile
PC not only for home work of kids but also for
ENTERTAINMENT.
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 Benefit Segmentation
“Many marketers now consider benefit
segmentation one of the most useful
methods of classifying markets”
i.e. Watches
-Titan in its early commercials reminded the women that “next
time he thinks of a gift for you, ask for Titan”. Looking attractive
and pretty is very important to a woman when she buys dresses and
cosmetics. Then why not the watch would be one of them.
-The benefits customers looked for where durability
and product quality- older research was based on
dividing the watch market according to a different
segment - once they used the new segment,
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Tushar Malviy
changed the marketing plan.
Band-aid
offers
“flex” as
a
benefit to
consumer
s.

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 Competition Based
Segmentation
Hard Core Loyals Split or Soft Core Loyals
re those customers who continue to
Who uses more then more than one
buy the same brand over and over
brand. Marketer try to motivate such
again. Whenever the competing
Customer to shift to the hard-core
brand is offered customer refused.
Loyalty segment.
Ex: news paper reader, cigarette
Ex: perfumes, toilet soaps etc.
Smoker, tea drinker etc.

Loyalty Status

Shifting Loyals Switchers

ustomer who shift their loyalty from
one brand to another.
Ex: Soft drinks.
These are never stick to a brand. Thes
Are the customers for whom brand
Switching is as easy as changing a
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shirt.
Segmentation
Slide 3-12 for Industrial
Markets

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 Segmentation for Industrial
Markets

 Geographic Segmentation
useful for the automotive industry

 Product Segmentation
i.e. Special parts and components or machinery

 Segmentation by End-Use Application

ie. Paint mfg: Paint for waterproof applications,
paint for rust prevention, paint which sticks to
glass

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 Requirement for effective
Segmentation
 Measurable: Purchasing power of
potential customer is measurable.

 Substantial:Each segment must have

adequate number of customers worth
catering to. Ex: traditionally, most of
the manufacturers produced tools &
equipments suitable for right handed
persons because the manufacturers
considered that the market for left
handed persons was not substantial.
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 Accessible: A large part of the North-East
remains inaccessible either because of
weather conditions, hostile geographic
terrain or problems of insurgency.

 Differentiable:Peoples purchase bike for

fuel efficiency are different from peoples
purchase it for style and both need
different marketing strategies.

 Actionable: It should be cost effective

and profitable for the marketer. So that
to attract and serve potential customer
effectively they can develop effective
marketing plans.
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