Segmentation also has its limitations as it needs to be implemented in the proper manner. As segmentation is one of the most important process in the marketing plan or for your business, you need to know what pitfalls lie ahead if you go wrong with your target market segment.
1) Segments are too small – If the chosen segment is too small then you will not have the proper turnover which in turn will affect the total margins and the viability of the business.
Behavioral segmentation divides a population based on their behavior, the way the population respond to, use or know of a product. Consumer behavior is a subject studied in depth over time in marketing management. This is mainly because there are several factors which a consumer takes into consideration before taking a decision. Thus consumer decision making is affected by his behavior and that is exactly how the behavioral segments are targeted.
Lets take a simple example of behavioral segmentation. I am writing this article in the month of December which is Christmas time. Christmas is on the 25th of December. Would you start targeting your segment on the 23rd or 24th of December? You will probably start targeting that segment from 1st December itself. After Christmas we have new year. Thus both of the occasions are such that companies would have to finalize which behavior they want to target. They cannot target both as it leaves only 6 days for the marketing of new year. Example – Hotels and restaurants will target new year as they will have more customers over the new year which is a moment of outdoor celebration whereas Christmas is more of a family celebration. Several other mass marketing companies strategically target “Christmas and new year”.
Forms of Behavioral segmentation
Buying on occasions – As mentioned in the above example, buying on occasions is the first form of behavioral segmentation. Products such as chocolates and premium foods will sell on festivals. Similarly, confectioneries will sell when there is a party. Thus these products are generally targeted by behavioral segmentation.
The best example of targeting buying on occasions is Hallmark cards – greeting cards for all occasions. The primary targeting of hallmark was that be it any occasion, you will find the right kind of card for you. Thus you have the perfect option to express yourself.
Benefits sought – Several products are targeted towards the benefits sought by the customer. Recently, there has been a war between Colgate and sensodyne to target the people who have sensitive teeth. Similarly, there are other toothpastes which are targeted towards whitening of teeth. Hair shampoos are targeted towards split ends, anti dandruff or others.
The above examples explain what is the role of benefits in behavioral segmentation. Thus a marketer can divide a population based on the benefits they seek within a product.
Loyalty – There are two ways to grow a business. First is to acquire new customers and second is to retain your existing customers. The more loyal your customer is to you, the more your customer base will increase. That’s one more kind of behavior which marketers target. The strategies for brand loyal customers is very different from that used for acquiring new customers.
The best example of behavioral segmentation by loyalty is observed in the hospitality segment wherein airlines, hotels, restaurants and others give their best to provide the best service possible such that they can retain their customer. The hospitality sector is the one with the best loyalty programs ever. Thus the loyalty of the customer can also be used for behavioral segmentation.
Usage rate – In residential or commercial segment, the usage can be demonstrated in the form of heavy usage, moderate usage or lesser usage. Lets take the example of beauty parlors or personal care. There are some customers who use a lot of personal care products whereas others do not use personal care products much. Thus depending on their usage the customers can be targeted.
Another example of usage rate segmentations can be seen in the electronics as well as the FMCG industry in industrial buying. FMCG and electronics works on the basis of a channel with dealers and distributors. In these segments, the maximum discount goes to the one who buys the maximum whereas others get lesser profits as they also get lesser discounts.
Any product which is not targeted towards the masses generally used behavioral segmentation. It is also an excellent form of segmentation for products which are niche in nature and are targeted towards the wants and demands of customers.
Perception can be defined as an image which consumer forms of an offering before or after its usage.
Before the advent of internet, which led to free access to vast pool of information, consumer choices were more dependent on word of mouth and what company has to say about its offerings. But come internet and these all channels became less effective as consumers now had information on the go and has plethora of options to choose from. In this era of free information flow, the orthodox way of mass marketing needs a serious consideration before an organization pumps fortunes in it.
Looking at the perception formation model, the integrated marketing communication does have an impact on consumers mind and forms a blur image in his mind which evokes him to look out for more information about the offering from peers and if he gets positive inputs probably it converts into a purchase, But if we look precisely at the target market, they do have some similarity in their demographics and as per many marketers they do have similar psycho graphics but which it the major point of concern of this article.
Segmentation generally divides a population based on variables. Thus demographic segmentation too has its own variables such as Age, gender, family size, income, occupation, religion, race and nationality.
Demographic segmentation is one of the most commonly used forms of segmentation as it is clearly identifiable. The variables used for Demographic segmentation help divide a large population into specific customer groups.
Each and every individual has an age, gender, income etc. Thus for mass marketing, this becomes one of the best ways to diversify individuals. This also helps in analyzing lots of data in shorter time for market research as well as for promotions.
The article is a guest contribution by Mr Pawankumar who is the campaign manager at experience commerce digital agency and is executing the campaign on the True snexy – A reality show with your favourite snack.
Reality shows may be the order of the day but have you ever come across a reality show that has your everyday snacks, in sensational new avatars, slugging it out to become India’s Most Loved Snack?
Mumbai’s Digital Agency, Experience Commerce, has taken the concept of reality shows to a whole new level! They have organised India’s first snack reality show “THE HUNT FOR THE TRUE SNEXY” on their website http://www.snexy.in.
With more than 11,000 facebook members and massive traffic on the website, the Hunt for India’s True Snexy is seriously heating up! “7 snacks fight it out over a period of 15 days and 5 rounds to win the title of the True Snexy, i.e. India’s most loved snack”, explains Sandip Maiti, CEO, Experience Commerce Digital Agency.
Taco Bell, the American fast food chain which serves Mexican food is the latest international fast food chain to enter India. It’s been operating an outlet in Bangalore since more than a year now. It plans to expand into other major cities and finally into the tier2 towns and cities, with an aim of setting up 100 outlets in the country by 2015. “Think Outside the bun” the tagline of Taco Bell takes head on other chains selling burgers. The affordable pricing of its food items makes it easily accessible to the mass market in India and pits it directly against the Market Leader, McDonalds. It will be very interesting to see what strategy TACO BELL follows in India and whether it is able to replicate its success outside USA.
Brand – The word, the phenomenon which has revolutionised the behaviour of shoppers when they are all out in pursuit of finding THE perfect stuff in stores. Little do they worry of what goes behind in formation of a phenomenon, which magnetizes them towards itself in a shopping store.
Companies at the same time are putting in mammoth efforts to create their individual identity in the cluttered market space. In order to really understand, what needs to be done, along with its most important counter parts “when” and “how”, I invariably think it is very much necessary that we start from the very basics of it, i.e. how it all started and what does it actually mean and intend to do, so here we go:
So how was this whole concept of branding born which today governs the fate of a new product or a service in the market? Well, the word brand is derived from Old English which means “Burning stick”.
A company cannot devise a market strategy without market segmentation. Imagine that you became a teacher one day. And the only thing your employer told you is that you have to teach students!! There would be several questions asked by you. Which grade are the students in? What is the subject i will be teaching? What timing are the classes etc. If you dont ask these questions, the “Students” will be a very generic term for you, and you will have no idea whom you have to teach or what you have to teach.
The same dilemma is faced by companies. If they don’t do segmentation, they do not know whom they have to sell and what they have to sell. In my other articles on segmentation, i have emphasized on the role that segmentation plays in the Marketing mix of a company. The segmentation done by you can be based on the company’s marketing mix. Or if you are targeting a particular segment, you can change the marketing mix as required in that particular segment. Thus without segmentation, your target group is just a population and you will never understand how you can target them.
There is a very generic approach which can be used to decide which market segment you want to target. These approaches are – Mass Marketing, Differentiated marketing and niche marketing. The approaches are shown and discussed in the below three figures.
Approach 1 – Mass Marketing
When you have a mass market product such as telecom or fmcg, you need to have a complete marketing mix and then depending on the marketing mix, you target a market. For Example – in telecom and FMCG, practically the marketing mix depends on the competition itself. The saturation in these sectors is so high that they have to target their market through changes in their marketing mix itself.
One of the first principles of Marketing management is Segmentation, targeting and positioning also known as STP. However, all the three concepts are so parallel to each other that marketers may not understand importance of keeping them separate and the role that each of them play in a marketing strategy.
Lets first look at the process of STP. This in turn will help you understand the role of all three. The first step which takes place in STP is the segmentation part. This is mainly because, before segmentation, the customer base is known as a population. The population is comprised of a group of people, which have no differentiation between them. However, you cannot market to just a group of people because you might be wasting resources. You do not know which strategy to use or how to market.
Today’s Discussion
