The Coffee Bean & Tea Leaf(CBTL), Business strategy case study
Identifying market segments & targets 08
1. Marketing Management
By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha
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SUMMARY by
Chapter 8
Identifying Market Segments
and Targets
This chapter deals with one of the quintessential concepts of Marketing: STP i.e.
Segmentation, Target and Positioning. It explains different levels of Market Segmentation,
bases for Segmenting Consumer Markets, choosing target Markets & finally analyses the
various requirement for effective segmentation.
Mass Steps in market segmentation, targeting and
segmentation,
positioning
Marketing: 1. Market •Identify bases for segmenting the market
Identify
The seller engages Segmentation •Develop segment profiles
Develop
in mass •Develop measure of segment attractiveness
Develop
2. Target Marketing •Select target segments
Select
production, mass
distribution and •Develop positioning for target segments
Develop
3. Market Positioning •Develop a marketing mix for each segment
Develop
mass promotion
of one product for
all buyers Levels of Market Segmentation: Micromarketing
A. Segment marketing Dividing a market into distinct groups with distinct needs,
marketing:
characteristics, or wants who might require separate products or marketing mixes.
Segment Marketing offers key benefits over Mass Marketing as the company can
offer better design, price, disclose and also can fine-tune the marketing program to
fine
better reflect competitors marketing.
B. Niche Marketing A niche is a more narrowly defined customer group seeking a
Marketing:
distinctive mix of benefits. Marketers usually define niches by dividing segments into
sub segments. For e.g. Ezee, the liquid detergent from Godrej is a fabric washing
egments.
product for woolen clothes.
2. Chapter 8 - Identifying Market Segments and Targets
C. Local Marketing: Target marketing that involves marketing programs tailored to the
needs and wants of local customer groups in trading areas, neighborhoods and even
individual stores is called as Local Marketing. E.g. Many Banks in Kerala have special
‘NRI Branches’ to cater to the needs of customers whose relatives remit money from
cater
abroad.
D. Individual Marketing: This is the ultimate level of marketing that leads to “segments of
one”,” customized marketing” or “one one marketing”. Customerization empowers
“one-to-one
customers to design the product and service offering to their choice. For e.g. Asian
design
Paints retailers facilitate customers to mix and match colors of their choice from a
catalogue.
Bases for Segmenting Consumer Markets
A. Geographic Segmentation: Division of the Market into different geographical Units
such as nations, cities, states, regions, neighborhoods etc
• Region: South India, Western Region, North, East
• City: Class cities, class-II cities, Metro cities etc
Class-I
• Rural, urban , semi urban areas
B. Demographic Segmentation: The market is divided on the basis of variables such as
age, family size, family life cycle, gender, income, occupation, education, religion etc.
Demographic variables are easy to measure and are directly associated with customer
needs and wants
FAMILY LIFE CYCLE STAGES
Stage1: Bachelorhood •Single,Focus of expenditure on self
Single,Focus
Stage2: Honeymooners •Young married couple without kids,focus on building
Young
home and relation
•Full Nest-I,1 child less than 6 yrs old
I,1
Stage3: Parenthood •Full Nest-II,youngest child under 6
II,youngest
•Full Nest-III: all adult children
III:
•Children not living with parents
Children
Stage4:Post
Stage4:Post-ParentHood •Empty Nest1 :Working
•Empty Nest2: Not Working
Empty
•One spouse dies
Stage5: Solitary Survivor(SS) •SS-I: Working
•SS-II: Not Working
C. Psychographic Segmentation: Here buyers are divided into different groups on the
basis of psychological/personality traits, lifestyles or values.
• Lifestyle: Culture-oriented, sports oriented, outdoor oriented. Classification is
oriented,
done on three parameters: AIO-Activities, Interests and Opinions.
Activities,
• Personality: Compulsive, gregarious ,authoritarian ,ambitious
D. Behavioral segmentation: Buyers are divided on the basis of their knowledge of,
attitude toward, use of, or response to a product. The behavioral variables are as
follows:
3. Chapter 8 - Identifying Market Segments and Targets
• Usage Rate: Light, Medium, Heavy
• Loyalty Status: None, medium, strong, absolute
• Readiness Stage: Unaware, aware, informed, interested, desirous, intending to
med,
buy
• Attitude towards Product: Enthusiastic, positive, indifferent, negative, hostile
Requirements for Effective Segmentation
Evaluating and Selecting Market Segments
Five patterns of target market selection that can be followed are:
• Single Segment Concentration: Concentrated Marketing where the firm gains a
Concentration:
strong knowledge of segments needs and acquires a strong market presence
• Selective Specialization: a firm selects a number of segments. Each objectively
Specialization:
attractive and appropriate, there may be little or no synergy between the segme
segments
• Product Specialization: The firm makes a certain product that it sells to several
different market segments.
• Market Specialization: The firm concentrates on serving many needs of a particular
customer.
• Full Market Coverage: The firm attempts to serve all customer groups with all
a
products they may need. E.g. Coca Cola (non alcoholic beverage segment), Microsoft
(non-alcoholic
(Software Market) etc.
P = Product
M = Market