Six Criteria for an Effective Market Segmentation

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Q.1 A. Explain the six criteria for effective market segmentation * Identity - The marketing manager must have some means of identifying members of the segment i.e., some basis for classifying an individual as being or not being a member of the segment. There must be clear differences between segments. Members of such segments can be readily identified by common characteristics as they display similar behavior.

* Accessibility - It must be possible to reach the different segments in regard to both promotion and distribution. ln other words, the organisation must be able to focus its marketing efforts on the chosen segment. Segments must be accessible in two senses. First, firms must be able to make segmented customers aware of products or services. Second, they must get products to them through the distribution system at a reasonable cost.

* Responsiveness — A clearly defined segment must react to changes in any of the elements of the marketing mix. For example. if a particular segment is defined as being cost-conscious, it should react negatively to price rises. If it does not, this is an indication that the segment needs to be redefined.

* Size - The segment must be reasonably large to be a profitable target. Lt depends upon the number of people in it and their purchasing power. For example, makers of luxury goods may appeal to small but wealthy target markets whereas makers of cheap consumption goods may sell to a large but relatively poor target markets.

* Nature of demand — lt refers to the different quantities demanded by various segments. Segmentation is required only if there are market differentiation in terms of demand. The marketing manager should not only be able to find out the total demand and the differences in demand patterns in each of these segments.

* Measurability — The purpose of segmentation is to measure the changing behavioural pattern of consumers. For example, the segment of a market for a car is determined by a number of considerations, such as economy, status, quality, safety, comforts, etc.

  B. Discuss the types of target marketing strategies. 

* Undifferentiated marketing strategy or mass marketing strategy

In the absence of a proper mechanism to classify the market into a number of markets segments and analyse their potential, many firms decide on the mass marketing strategy. In this case, the marketer goes against the idea of a differentiated market and decides to sell the product to the whole market. Here the marketing manager ignores the idea of segment characteristics and differences, and develops a unified marketing programme for the entire market. This strategy keeps the overall marketing costs low and makes it easier to manage and track the market forces uniformly. The marketer tries to find out commonalities across various segments rather than focusing on the differences between segments.

* Concentrated marketing strategy

In the second alternative strategy, the marketing manager decides to enter into a selected market segment instead of all the available market segments. When resources and market access are limited and the company has to face intense competition, the marketing manager has to stretch the budget for market coverage. In this case, the company is likely to follow the concentrated marketing strategy.

* Differentiated marketing strategy

Many marketers choose to target several segments or niches with a differentiated marketing offer to suit each market segment. Maruti is the leading automobile company, which has the distinction of having different products for different market segments.

Q.2 Explain the consumer buying decision process. 
* Problem recognition
A buying process starts when a consumer recognizes that there is a substantial discrepancy between his/her current state of satisfaction and expectations in a consumption situation. A need can be activated through internal or external stimuli. The...
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