RETAIL MANAGEMENTSEGMENTATION IN RETAIL

Question to Ponder

Given the wide variety of population, social, and economic trends, and the importance to retailers of targeting specific consumer groups, what segments provide the greatest opportunities for new retailers today?

2

What is market segmentation

The process of dividing the heterogeneous total market into small groups of customers who share a similar set of wants’

Major characteristics

is an aggregating process: clustering people with similar or homogenous needs and respond to the marketing mix in the same way

- different kind of promotional activities are developed for serving different market segments

- identifying niche segments- customized products and services are provided to

customer groups (Whirlpool automatic washing machines in urban Mumbai with large groups of working women can be segmented

Benefits of segmentation

Benefits of segmentation

• Development of marketing mix- helps to identify target audience - customize marketing strategies in terms of product,

price and promotion for customers • Store location decision

- to concentrate stores where target population are found

• Understanding customer behavior - how and why the target group behaves and acts - determining the buying behavior after segmenting

the market

Benefits of segmentation contd

• Merchandising decisions- deciding on which items will occupy the store

shelves for display- understanding the preference of target groups

• Promotional campaigns - effective and accurate promotional campaigns

• Positioning - major feature of segmentation . Saravana stores

are positioned for lower middle class consumers where as the clientele of Lifestyle and Shoppers Stop are for the upper income class and the elite

Criteria for effective market segmentation

Choice of segments to target the market

Choice of segments to target the market measure the attractiveness and capacity of the segmentestimate its size, purchasing power, growth rate, presence of competition, etc.opt for an untapped segmentchoose to operate in a segment where there are already existing players

e.g. CROSSROADS targets clientele from upper middle-class customersdevoted to each of the four shopping categories—women, kids, men, and home furnishings

10

11

Where did the term Melting Pot originate?

12

LO 1

The Melting Pot is the name of a play about immigrants written by Israel Zangwell. In the

play, which opened in Washington D.C. in 1908, one of the characters declared:

“America is…the great melting pot where all the races of Europe are melting and reforming Germans and Frenchman, Irishmen and Englishmen, Jews and Russians into the crucible he will be the fusion of all races, the coming superman.”

Generation Gap in the Information Age

13

LO 1

Those who say... Under 30Age 50or over

Change brings exciting opportunitiesThey want to be their own bossThey own a computerThey’ve used E-mailThey have Internet accessSocial Security will not be available to themMedicare will not pay any of their health expensesTechnology brings more confusion and complications than it does exciting opportunitiesIt is difficult to use computers

78%

72%85%

15%

52%54%23%

18%

58%58%46%40%28%21%14% 6%

38%53%

Boomerang Effect Occurs when grown children return home to live

with their parents.

14

LO 2

Population Trends

15

GeographicTrends

AgeDistribution

PopulationGrowth

Social Trends

16

EducationState of Marriageand Divorce

Makeup of theAmerican

Household

ChangingNature ofWork

Economic Trends

17

IncomeGrowth

PersonalSavings

Women in the Labor

Force

Widespread Use ofCredit

Segmentation under Intratype and Intertype Competition

• Intratype competition for books.

18

Intratype and Intertype Competition

Intertype competition for video rentals.

19

20

Target MarketTarget Market

The Limited has a well-defined target market: the moderate-income, career-oriented woman who is fashion conscious.

21

Retail Formats for Accessing a Target MarketRetail Formats for Accessing a Target Market

Retail Formats

Store-Based Nonstore-Based

Freestanding

BusinessDistrict

Nontraditional

ShoppingCenters/Malls

InteractiveTV

Mail-Order

Internet

AutomatedMerchandising

Systems

DirectSelling

StreetPeddling