Module 2

CONSUMER DRIVEN MARKETING STRATEGIES

MARKET SEGMENTATION
The concept of market segmentation was introduced by Wendell R. Smith in 1956. Market
segmentation is a ‗divide and rule‘ strategy. Market segmentation simply means dividing market or
grouping of customers. It is the process of dividing a market into different groups of consumers
having similar needs or characteristics. It refers to grouping of customers according to such
characteristics as income, age, race, education, sex, geographic location etc.
According to Kotler, ―Market segmentation is the subdividing of market into homogenous
subsections of customers, where any subsection may conceivably be selected as a target market to be
reached with a distinct marketing mix
Levels of market segmentation
1. Segment marketing: market is divided into two or more segments. A market segment consist of
buyers having similar needs, buying habit, etc
2. Niche marketing: a niche is a segment within the segment. Ie, sub segment. It is very small
section of whole market
3. Local marketing: here the marketing programme is tailored to the needs and wants of local
customer group
4. Individual marketing (customised marketing): this is the ultimate level of segmentation. Here
companies customise their own product , services and message on a one to one basis.
BASES OF MARKET SEGMENTATION (METHODS OF MARKET
SEGMENTATION)

Market can be segmented in a number of ways. In other words, there are several bases for
Segmenting a market.

All bases of segmentation (of consumer markets) can be broadly put into four categories:

1. Demographic Segmentation:
The word Demography is derived from two Greek words – ‗demos‘ and ‗graphein‘. Demos
means people and graphein means to measure or to study. Thus demography means study of
people or population. It is the statistical, study of human population and its size, density, location,
age, sex, race, occupation, education etc. Demographic variables or characteristics are the most
popular bases for segmenting the market.

Some of the demographic variables used area as follows:

1. Age
2. Sex
3. Family life cycle
4. Religion
5. Income
6. Occupation
7. Family size
8. Education

2. Geographic Segmentation:
This is the simplest form of segmenting the market. Here, the marketer divides the market into
different geographical units. Generally, international companies segment market geographically.
The theory behind this strategy is that people who live in same area have some similar needs and
wants and that these needs and wants differ from those of people living in other areas. For
instance, in India, South Indians prefer rice whereas North Indian prefers chapattis.

Consumers can be classified on the basis of geographical area, climatic conditions, density of
population etc.
(a)Area:
(b)Climate
(c)Population density

3. Behavioural Segmentation:
Another way to segment a market is to classify customers on the basis of their knowledge
of product, attitude towards the product, use of the product, response to products or product
characteristics. This approach is known as behavioural segmentation. In short, behavioural
segmentation is based on buyer behaviour the way people behave during and after purchase.

The market is segmented on the basis of the following factors.

(a)Attitude
(b)Product segmentation
(c)Occasion segmentation
(d)Benefit segmentation
(e)Volume segmentation
(f) Loyalty segmentation
4. Psychographic Segmentation:
Demographic segmentation is the study of people from the outside. But psychographic
segmentation is the analysis of people from the inside. The term
‗psychographic ‘was coined by marketing researcher Emanuel Demby. Psychographic
segmentation refers to grouping of people into homogeneous segments on the basis of
psychological makeup namely personality and life style. In addition to personality and life style,
psychographics include attitude, interest and opinion. In short, when segmentation is based on
personality and life style characteristics, it is called psychographic segmentation.

Under psychographic segmentation market is segmented on the basis of the following factors:
(a)Life style
(b)Personality
(c) Social class
TARGET MARKETING
A target market is a group of customers at whom the entire marketing efforts are directed. It is a
specific group of buyers on whose needs and wants a company focuses its marketing efforts.
target marketing (or targeting) is the process of assessing the relative worth of different market
segments and selecting one or more segments in which to compete. These become the target
segments.
Target Marketing Strategies
Once a firm understands its markets and the appropriate bases for segmenting those markets, it
must choose an approach for selecting its target markets. There are three different approaches for
selecting target markets.

They are as follows.

1. Mass marketing strategy: In the total market approach, a company develops a single
marketing mix and directs it at the entire market for a particular product.
2. Differentiation strategy: the entire market is divided into different segments. Then the firm
develops different marketing strategy for each segments. Distribution channel and promotion
elements may be different for different segments.
3. .Concentration approach: Under this approach, an organisation directs its marketing efforts
towards a single market segment through a single marketing mix. The total market may consist of
several segments, but the organisation selects only one of the segments as its target market.
4. Multi-segment approach: In this approach, an organisation directs it marketing efforts at two
or more segments by developing a marketing mix for each segment. This approach is used by
Coca-Cola, P & G, Toyota, General Foods, Sony etc.
5. Micro markeying strategy: this focusing on a small market segment(smaller than niche
market). The products are customised to the requirement of the customers. Also known as
customised marketing and one-to-one marketing.
6. Local marketing: it involves nearby and neighbourhood areas. To thrive on local marketing
strategy.
PRODUCT DIFFERENTIATION
Product differentiation is a marketing strategy that helps a business distinguish its product or service
from competitors.
Product differentiation means adding features to products to separate them from competitor’s
product in the eyes of customers.
Importance / advantage of product differentiation
1. Create values
2. Helps in defending high price
3. Helps in non-price competition
4. Create brand loyalty
5. Create perception of no close substitutes
6. Competitive advantage
Difference between market segmentation and product differentiation

Market segmentation Product differentiation

1. Consumer oriented 1) Production oriented
2. Focuses on group of customers 2) Focuses on product differences to attract
buyers
3. Attempt to match the supply with demand 3) Attempt to match the demand with supply
4. Aims at increasing sale 4) Aims at facing intense competition
5. Concentrated on a limited market 5) Concentrate on a large market
6. Helps to increase sale 6) Helps to win the competition
 PRODUCT POSITIONING
The act of creating an image about a product or brand in the consumers mind is known as
Positioning. In the words of Kotler, “Positioning is the act of designing the company’s offer and
image so that it occupies a distinct and valued place in the target consumers’ minds.” In short, the
process of creating an image for a product in the minds of targeted customers is known as product
positioning. Close-up tooth paste is looked upon by the consumers more as a mouth wash than a
teeth cleaner.
TECHNIQUES OF PRODUCT POSITIONING
Following technique are used in positioning a product in the market:
 Positioning by Corporate Identity: The companies that have become a tried and trusted
Household name. For example, Tata, Sony etc.
 Positioning by Brand Endorsement: Marketers use the names of company’s powerful
Brands for line extensions or while entering another product category. Lux, Surf, Dettol
etc.
 Positioning by Product Attributes and Benefits : It emphasize the special attributes and
benefits of the product. Close-up is positioned on fresh breath and cosmetics benefits.
 Positioning by use, Occasion and Time : It is to find an occasion or time of use and sit on
it. For example, Vicks vaporub is to be used for child’s cold at night.
 Positioning by Price and Quality: Company position its brand by emphasizing its price
and quality. Eg. Nirma detergent powder.
 Positioning by Product Category: Brand is perceived to be another product category. Eg.
Maruti positioned its van as omni , family car.
 Positioning by Product User: Positioning the product as an exclusive product for a
particular class of customers. Eg. Scooty as a two wheeler for teenagers.
 Positioning by Competitor: An offensive positioning strategy and is often seen in cases of
comparative advertising. Eg. Tide and Rin
 Positioning by Symbols: Some companies use some symbols for positioning their
products. [Link] symbol.

CONSUMER BEHAVIOUR
Consumer and Buyer
A consumer is a person who consumes or uses a product or service. Thus consumer is an
ultimate user of a product.
According to international Dictionary of Management, ―Consumers are purchasers of
goods and services for immediate use and consumption‖.
But buyer is a person who buys goods either for resale or for use in production or for use of
somebody else. For example, if a man buys saree and his wife uses it, he is called a buyer.

Customer is used to deal with situations where the products cannot be directly consumed.

Meaning and Definition of Consumer Behaviour (Consumer Buying Behaviour)

Behaviour simply refers to doing of anything. In the words of Great Poet Goethe,
―Behaviour is a mirror in which everyone displays his/her image.
Consumer behaviour is a study of why people buy. It is the behaviour of the consumers at the
time of buying or using goods or services.

In the words of Walters and paul, ―Consumer behavior is the process whereby
individuals decide what, when, where, how and from whom to purchase goods and service
Difference between Consumer Behaviour and Buyer Behaviour
Consumer behaviour involves the behaviour of ultimate consumes (i.e., individual
consumers). But buyer behaviour involves the behaviour of industrial customers
(organisational buyers). They make further value addition to the product to sell it to ultimate
or final consumer or end users.

Consumer Buying Process (Consumer Decision Making Process)

According to Robinson, Faris and Wind (in 1967) The buying decision process involves the
following five stages or steps:

1. Recognition of an unsatisfied need (Problem recognition):

Every individual has needs. In fact, all buying decisions start with need recognition. People
always seek to satisfy their needs. When a need is not satisfied (unfulfilled need), it creates
tension in the individual. This tension drives people to satisfy that need. Then, the need
becomes a motive. Thus motives arise from needs and wants. Suppose all friends of Raju
have car. He has no car. Slowly a desire to have a car develops within him. This desire
becomes a need. This need turns into a want and then into a motive.

2. Identification of alternatives:
After recognizing a need or want, consumers search for information about the various
alternatives (or substitutes) available to satisfy it. If the needs is usual, such as hunger, thirst
etc. the consumer may rely on past experience of what satisfies this need.

3. Evaluation of alternatives:
By collecting information during the second stage, an individual comes to know about the
brands (alternatives) and their features. Now he compares the alternative products or brands
in terms of their attributes such as price, quality, durability etc.

4. Purchase Decision:
Finally, the consumer arrives at a purchase decision. Purchase decision can beone of the
three, namely, no buying, buying later and buying now. If he has decided to buy now, he will
decide the shop (dealer) to buy it from, when to buy it, how much money to spend etc.

5. Post Purchase behaviour:

Post purchase behaviour refers to the behaviour of a consumer after purchasing a product.
After the consumer has actually purchased the product/brand he will be satisfied or
dissatisfied with it. This satisfaction or dissatisfaction will result in certain consequences.

The negative feeling which arises after purchase causing inner tension is known as cognitive
dissonance (or post purchase dissonance). It simply refers to the dissatisfaction of a
consumer with his/her product/brand after purchasing it.
Factors Influencing CONSUMER BUYING BEHAVIOUR
(Determinants of Consumer behaviour)
Throughout the buying process, various factors may influence the buyer. All these factors
which determine the buyer or consumer behaviour are broadly classified into six:-

1. Psychological factors,
2. Social factors,
3. Cultural factors,
4. Personal factors,
5. Economic factors, and
6. Environmental factors