MARKET SEGMENTATION

MARKET AGGREGATION
Market Aggregation A.K.A Mass Marketing Or Undifferentiated Marketing, Is Simply Marketing A Product To The Largest Audience Possible This Leads To Heavy Exposure Of The Brand And Product. This Also Leads To Reduced Cost In Marketing The Product. Usually Undifferentiated Marketed Products Are Simple And Seen As Necessities Such As Toothpaste Or Toilet Paper. The Key Disadvantage To Mass Marketed Products Is That It Leaves Opportunities For Competitors To Set Up Business And Market A Product To A Individual Segmented Market, Meaning It Is More Difficult To Satisfy The Needs And Wants Of Customers In The Total Market. The Key Advantage Is It Operates In A Larger Market And Hence More Opportunities. An Example Would Be Let's Say For Toothpaste, Toothpaste For Sensitive Teeth Would Be Segmentation Whereas Toothpaste For The Entire Market Would Be Using Market Aggregation Theory. E.G. Cyrus Broachas ad for CadburyKane wallonko Khaneka Bahana Chahiye Dishing out cadbury to all age groups in the same advert. Colgate Toothpaste advert appealing to the entire family comprising Children, parents, grandparents

ADVANTAGES OF MARTKET AGGREGATION

Assumptions a. Most people are similar and have similar characteristics and needs/wants b. People may have different characteristics and needs but it is not worthwhile identifying different needs. Advantages 1. Exposure to a large customer base. 2. Long Production Runs 3. Economies of scaleLower Costs 4. Low Inventory Costs 5. Lower Promotion Costs 6. Lower R & D Costs and market Research Costs. Disadvantages 1. Ignores differences in customer preferences. 2. Ignores that market is heterogeneous. May work in some commodity products cheap like salt or in Oligopolies and Monopolies such as Fiat, ambassador cars prior to 1991, Petrol in India.

MARKET SEGMENTATION
Market Segmentation Is Referring In This Case To A More Niche Market Or Differentiated Marketing, It Is Simply A Product Which Is Marketing To A Distinct Target Market. That Is The Product Is Marketed To A Specific Segment Of The Total Market And Thus It Is More Easily Tailored To Satisfy The Needs And Wants Of The Target Market. This Has A Key Advantage To Satisfy The Customers But Has The Disadvantage Of A Smaller Market And Hence Less Opportunities.

An Example Would Be For Computers, Computers Which We're Sold In The Earlier Days Were Standard And Sold To The Entire Market With The Exact Specifications, Computers Today Sold By Certain Vendors Are Sold With Customized Specifications.

WHY MARKET SEGMENTATION

Markets Are Heterogeneous. Market Segmentation Is Defining Homogeneous Groups Within The Heterogeneous Markets. Identification Of People With Common Needs And Preferences. Identification Of Groups That Respond In Similar Manner To A Particular Product Offering And To Marketing Programmes And Marketing Communications However Large A Firm The Resources Are Usually Limited Compared To Alternative Market Segments Available For Investment. The Firm Is Compelled To Prioritize And Make Choices That Lead To Optimum Allocation Of Resources. Products Are Maturing Fast And Competition Is Severe. Increase In Brand Extensions Struggle For Market Share. Increasing Disposable Incomes Leading To Demand For Greater Choice. Greater Awareness And Greater Sophistication Varied Lifestyles, Tastes And Preferences Increasing microsegmentation For organisations, easier to focus sharply on smaller segments

BENEFITS OF MARKET SEGMENTATION

Focused And Concentrated Attention To Segments Effective Marketing Programs Ease In Assessment Of Success Of Marketing Efforts Strategic Allocation Of Marketing And Financial Resources Ease In Identification Of New Opportunities Due To Greater Proximity To The Market Segments E. ComputersMainframe, Desktops, Laptops, Palm Tops
IMPERATIVES FOR MARKET SEGMENTATION STRATEGY TO SUCCEED SEGMENTS MUST BE: Substantial Sustainable Accessible and Profitable

BASES FOR SEGMENTATION IN CONSUMER MARKETS

Geographicregion, Size Of Area (METRO, URBAN)RURAL), Population Density, Climate Demographicage, Gender, Family Size, Generation, Income, Occupation, Education, Ethnicity, Nationality, Religion, Social Class Psychographicactivities, Interests, Opinions, Attitudes, Values Behavioralisticbenefit Sought, Usage Rate, Brand Loyalty, User Statusfirst Time, Regular, Readiness To Buy, Occasionsholidays, Events BASES FOR SEGMENTATION IN INDUSTRIAL MARKETS Location Company Type Behavioral Characteristics

TARGET MARKET SELECTION

MARKET SEGEMENT ATTRACTIVENESS Size of the Segment (Number of Customers/Number of units) Growth Rate of the segment Competition in the Segment Brand Loyalty of Existing Customers in the Segment Attainable market Share given promotional Budget and Competitors expenditure Required Market Share to Break Even Sales potential for the firm in the Segment Expected profit margins in the Segment

NOTE: LARGER SEGMENTS ARE NOT NECESSARILY THE MOST PROFITABLE TO TARGET AS THEY MAY HAVE MORE COMPETITION.

SUITABILITY OF MARKET SEGMENTS TO THE FIRM

The Segment Must Fit The Firms Objectives, Resources And Capabilities.

Whether The Firm Can Offer Superior Value To The Customers In The Segment
The Impact Of Serving The Segment On Firms Image

Access To Distribution Channels To Serve The Segment.

The Firms Resources Vs. Capital Investment To Serve The Segment.

The Better The Firms Fit To A Market Segment, The More Attractive The Market Segment, The Greater The Profit Potential To The Firm.