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Strategic
Issues
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Segmentation
In Dynamic Markets
Dr. S
Ramesh Kumar
Professor of Marketing, Institute of Management, Bangalore
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The
problem of finding niches for especially higher-end
products is compounded by the competitive fact
that even though a market may not be ready to
accept an offering, there is a need for a brand
to launch the variant due to image reasons
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Markets,
products and brands undergo a number of changes in a
dynamic environment, and the value of academic concepts
are probably felt under such situations as they could
clearly direct the marketers to a specific framework
which will be useful across markets. The clarity of
analysis thus emerging may act as a springboard, which
could result in a host of options. Segmentation a few
decades back meant at the most division of the market
into broad clusters based on geographic and probably
demographic data.
Targeting happened more by accident than by planned
design when there were only a few offerings from the
company (Fiat and Ambassador had very few offerings
and Standard had a few more but even all of them were
not available simultaneously in the market). Focused
positioning, which is the fundamental starting point
for most brands, was just not there. There were a few
advertisements of Panama cigarettes in certain media
vehicles, a few jingles of Modern bread and a few more
brands on the radio. Positioning in terms of specific
profiling of the target segment, media graphics and
the competitive angle involved are specific concepts,
which have contributed to marketing thinking in the
recent years probably because of competitive pressures.
Marketers invest time, money and effort to profile the
target segment and position brands and it is only logical
that they have to be concerned with the dynamic changes
that sweep markets. These changes could either be in
terms of fashion and fads or in terms of a break-through
product innovation or in terms of entering the psyche
of the consumer. A brand like Bacardi can just not ignore
certain niche TV channels, which draw a lot of viewership
from the target segment towards which the brand is positioned
(if liquor advertisements are permitted in a particular
environment). Shampoos are sold in sachets (to the extent
of 60 to 70 per cent of the total volume in the country).
Allen Solly (casual-formal dressing) and Ruf and Tuf
(the very Indian positioning) have found innovative
ways to enter the mind of the consumer in categories
that are cluttered with brands and propositions. Another
vital aspect of changing markets is the impact on the
product line offered by the company (a product line,
in simple terms, consists of several variants of the
product; Surf and Close-Up for example have several
variants). This aspect is vital because it has an impact
on the profitability of the brand. Each variant needs
to be developed through appropriate positioning and
promotional methods. Segmentation has to be worked out
to ensure that there is clear-cut differentiation in
the mind of the consumer.
Is the segment/niche ready for the offering?
It may be worthwhile to find out if a specific segment/niche
is ready to receive a new offering of a brand (new or
old). The Merlin home-theatre systems of the mid-eighties
and the concept of lime tea (Paloma brand) during the
same time period are examples that convey the utility
of this point. The implications of this aspect could
be applied to the music industry. Higher-end music systems
(MP3 etc.) are co-existing with traditional (and probably
obsolete ones in developed markets) in this country.
BPL, which has launched world space music, has a number
of offerings for the lower-end of the market. The problem
of finding niches for especially higher-end products
is compounded by the competitive fact that even though
a market may not be ready to accept an offering (Plasma
TV from Philips), there is a need for a brand to launch
the variant due to image reasons.
The appropriate solution lies in the timing associated
with the development of such a niche -it involves expenditure
in creating visibility for the brand, establishing an
extensive service network for the new variant and devising
dealer-oriented promotional schemes for the entire product
line. During the initial stages, when it may not be
possible to find a feasible niche for the variant, the
brand could create just the visibility required to have
a positive rub-off of the mother brand on the other
offerings (variants) lower down the product line. Samsung
World Series advertisements (televisions), BPL’s advertisements
of 300-litres plus refrigerators and Citizen’s Ecodrive
advertisements may be such examples. New offerings should
also take into account the implications these would
have on related subproduct categories. For example,
the concept of world space music (by which different
kinds of music would be available for 24 hours) may
have a direct impact on CD changers, and high-end music
systems, which are in the same price bracket. This is
not to imply that the sub-categories will get substituted
with new offerings; it only means that marketers should
be conscious of the fact that at least a cross- section
of consumers associated with related categories may
buy the new offering.
Timestyles and Segmentation
Timestyles is the process of how consumers allocate
their time for various activities. At least in urban
markets, there seems to be a great demand for time due
to several environmental changes that have taken place
in recent times—nuclear families, dual-income families
and commuting to work. Time as a segmentation criteria
could open up several dimensions which can be used by
marketers.
Time as a concept could be divided into paid time (work),
non-discretionary time, which is oriented towards physical
and social obligation (travel to workplace, attending
business parties, sleeping and personal care to ensure
good personal grooming). Discretionary time is to do
with leisure-hour activities and entertainment etc.
As it can be observed in the urban context, consumers
may like to have more of discretionary time while also
having certain needs with regard to non-discretionary
time. Work or paid time may also be oriented towards
certain products.
Regular shopping for essentials could involve non-discretionary
time. Creating a good ambience and layout may even transfer
shopping (for housewives) to a discretionary activity.
Shoppers’ Stop, with its layout, has positioned itself
as an outlet that offers shopping as a leisure activity.
Brands of ready-to-wear and cars have positioned themselves
as necessities, which complement work-related paraphernalia.
It is interesting to note that Titan (after strongly
conveying the gift proposition) is currently using occasion-based
segmentation for its higher-end watches oriented towards
different occasions involving discretionary and non-discretionary
time.
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Time
as a concept could be divided into paid time
(work), non-discretionary time, which is oriented
towards physical and social obligation (travel
to workplace, attending business parties, sleeping
and personal care to ensure good personal grooming)
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Time-price is a kind of pricing which would appeal to
consumers who place importance on the time factor. A
brand of computer may charge an extra price for consumers
who may prefer to have it installed in a very short
time (busy/small- office-home-office segments). A brand
may or may not charge a time ‘price’ but this aspect
could be made use of to appeal to a cross-section of
target segments. Marketers of TVs and cars could promise
to repair the product within a specific time-frame and
could charge the customer a reasonable price for this
time-guarantee. Research has shown that consumers pressurised
for time visit fewer stores and indulge in fewer brand
comparisons. Even location of retail outlets (large
ones) in busy cities is a variant of the ‘time-price’
concept.
There are too many offerings competing for the discretionary
time of the consumer in the leisure market and these
offerings may not be in the same product or service
category. For example a family theme park may be in
competition with a holiday resort package offered by
a travel agency or exercise equipment may be in competition
with a tennis club. Though each product/service is in
a different category and apparently consumers may consciously
have a distinctive knowledge of the respective product/service,
the reduction in discretionary time in an urbanised
timestyle coupled with limited resources draw up a list
of priorities in the mind of the consumer.
These priorities also play a role in the frequency of
usage of these products and services. A consumer who
joins a tennis club may decide not to buy (or postpone
the purchase of) exercising equipment. Hence there is
a need to target consumers based on the availability
of discretionary time and combine it with research data
on demographic and psychographic aspects. This also
enables the marketer to draw up a marketing mix to target
segments. (See chart)
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