8/13/2019 Explain Process of Retail Market Segmentation and Discuss Segmentation Based on Consumer Products

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1. Explain process of retail market segmentation and discuss segmentationbased on consumer products. Give examples.

Ans;-Retail market segmentation is the process of aggregating customers with similar wants, needs,

preferences, or buying behaviour.

The segmentation process is divided into a heterogeneous process follows four broad steps:

i) The definition of the market to be addressed.

ii. The identification of alternative bases for segmentation.

iii. An examination of these based and the choice of the best base or base for

segmentation.

iv. The identification of individual market segments, an assessment of their attractiveness and the

selection of specific target market.

A market is a group of potential customers with similar needs who are willing to exchange something of

value with sellers offering various goods and services that can satisfy these needs.

The marketer has the option of either approaching the entire set of customers with a uniform marketingapproach or adopting a differentiated approach for different sets of customers. hile the former refers to

mass marketing, the latter refers to the strategy of market segmentation

!egmentation : "eterogeneous total market to small groups of homogenous segments with similar

wants , needs and characteristics that responds to specific marketing mix # $ %)

&xamples total market : 'en and women

omen: orking women and housewives

orking women: (oung, middle aged

A segment is a relatively homogeneous group and hence responds to a marketing mix in a similar

way. ifferent groups or segments re*uire different promotional strategies and marketing mixes

because they have different wants and needs.

+f you are marketing fashion garments above segmentation is useful. ut if you are marketing rice

then this segmentation may not serve the purpose

-iche : A niche is a more narrowly defined group seeking a distinctive mix of benefits.

'arketers usually identify niches by dividing a segment into subsegments.

/uture group has special outlets called 0 All1 for those +ndian men and women typically short ,overweight with higher income group. -ormally niche market is not served by large scale competitors

working on volumes.

&ntrepreneur finds a gap and develop -iche market giving customi2ed marketing mix.

Segmentation based on Consumer products:

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3onsumer products are those products that are intended for the ultimate consumer.

3onsumer products can be subdivided into four subgroups:

4. 3onvenience products

5. !hopping products

6. !pecialty items$. 7nsought items

Convenience products

3onvenience products are products that are purchased fre*uently but on which the consumer not willing to

spend much time or effort. These include staples like packaged foods, milk, bread, and emergency products

like medicine.

Shopping products( comparison products) :!hopping products are products that a customer feels are

worth the time and effort to compare with competing products. These include furniture, clothing, washing

machines, television sets, etc.

Specialty items:!pecialty products are consumer products that the customer makes a special effort to

purchase. The consumer is willing to search for such specialty products. Any branded product that

customers insist on by name is a specialty product.

Unsought items:7nsought goods are products that potential customers do not yet want or know about.

3ustomers do not buy such products unless promotion shows their value. 8ife insurance and encyclopedias

are examples of unsought products.

5. Explain any four theories of institutional changes taking place in retail.Give examples.

Ans;- Theories of institutional changes

4. Dialectic process5. Gravity model6. Retail accordion theory$. Wheel of retailing theory9. Natural selection theory. Central place theory

1-ialectic process

!Dialectics are based around three concepts:

1: Everything is made out of opposing forces/opposing sides

!: Gradual changes lead to turning points" #here one force overcomes the other

$: Change moves in spirals not circles%

&n evolutionary theory based on the premise that retail institutions evolve

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'he theory suggests that ne# retail formats emerge by adopting characteristics from other formsof retailers in much the same #ay that a child is the product of the pooled genes of t#o differentindividuals

(elting pot : t#o institutional forms #ith different advantages modify their format till they developa format that combine the advantages of both

&dvantages of ne# competitors are copied by e)isting businesses by adopting same strategies*ence both companies practically gets in distinguishable unless competitor changes

The ialectic "rocess

T#E$%$

epartment store

#igh margin&o' turnover

#igh price(ull serviceo'nto'n location"lush facilities

$)*T#E$%$

iscount department store

Average marginsAverage turnover+oderate prices&imited services

$uburban locations+odest facilities

A*T%T#E$%$

iscount store

&o' margin#igh turnover&o' price$elf-service

&o' rent location$partan facilities

Examples of dielectric process

+ndian udipi and specialty restaurants no# trend is +ndian udipi restaurants serves south +ndian",un-abi and Chinese dishes" pi..a etc

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While (cDonald is going for +ndian dishes such as Wada pav

Cheap air line lo# service 0 *igh end airline #ith high service

Will change both so that both are middle price middle service airline

+ndian udipi and specialty restaurants no# trend is +ndian udipi restaurants serves south +ndian",un-abi and Chinese dishes" pi..a etc

While (cDonald is going for +ndian dishes such as Wada pav

Cheap air line lo# service 0 *igh end airline #ith high service

Will change both so that both are middle price middle service airline

Gravity model

& theory about the structure of maret areas: 'he model states that the volume ofpurchases by consumers and the fre2uency of trips to the outlets are a function of thesi.e of the store and the distance bet#een the store and the origin of the shopping trip

Gravity is pull it depends upon the mass of item

3igger the mass " it has capacity to attract smaller masses 4orce of attraction depends

upon mass and inversely proportional to s2uare of distance

+n Retail more assortment and larger the store means more pull to attract customers &nd morethe distance of store from customer lesser is the pull

'his means customers have inertia to move 5nless the pull 6large format" large assortment% ismore they #ill prefer to buy at a closer location 6 small format" less assortment%

+n 17$1 a gentleman name William 8 Reilly #rote a retail a)iom that is still used today for

maret planning of retail stores +t is commonly no#n as Reilly9s a# of RetailGravitation and #as inspired by Ne#ton9s la# of Gravitation #hich stated ;t#o bodiesattract each other #ith a force that is proportional to the product of their masses andinversely proportional to the s2uare of the distance bet#een them; Reilly9s formula isused to predict the liely division bet#een t#o trade centers at #hich shoppers #ill goone #ay or the other

Reilly recogni.ed that trade centers produce gravitational pull 4urther he reali.ed thatbigger trade centers had more mass and therefore" as stated in Ne#ton9s a#" moregravity *ere9s a ne# scoop" though

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6. ,romotion$. ocation

Changes can be social" economic" political" legal " technological

ResourceAadvantage theory

+s based on the idea that all firms see superior performance in an everAchangingenvironment

+llustrates t#o important lessons for retailers:

>uperior performance at any point in time is a result of achieving a competitive

advantage in the maret place as a result of some tangible or intangible entity6resource%

&ll retailers cannot achieve superior results at the same time

entral "lace Theory

'he essence of the theory is that settlements act as central places providing one or more

services for their surrounding areas" and that they vary in their importance" or order"according to the number and type of other settlements dependent upon them" andaccording to the number and type of services" or functions" they provide >ervices arealso ordered: lo#erAorder functions include the types of services provided by a villageshop higherAorder functions include department stores and hospitals Cities and largeto#ns are classified as highAorder settlements because they supply both lo#A and highAorder services" the latter to both their o#n inhabitants and to those living further a#ay &village #ith one small shop #ould be of a very lo# order

+t is a model that rans communities according to the assortment of goods available in

each &t the bottom of the hierarchy are communities that represent the smallest centralplaces 6centers of commerce% 'hey provide the basic necessities of life 4urther up thehierarchy are the larger central places" #hich carry all goods and services" found inlo#erAorder central places plus more speciali.ed ones that are not necessary

6. efine retail strategy and discuss retail mix for ma2or retailers like ,al-mart 3ig ba4ar "une entral and ,est side

Ans;-etail market strategy0

(eaning"

Retail strategic planning process"

retail organi.ation"

management and human resource policies"

>trategic positioning"

developing competitive advantage

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$uccess in retail

5

,ell thought plans

6 "rocesses

6implementation

$trategy the retail perspective0

Definition: & clear and definite plan that retailer outlines to tap the maret and build a longterm relationship #ith customers

+t define purpose and provide guidance ho# retailer should face challenges in dynamicconditions

Retail strategy also enables areas #ithin organi.ation to define their strategies

>tore location

>tore formats

(erchandising

(areting : Retail maret strategy

4inance

@rgani.ation

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7-escribe the process of retail planning and net'orking. Give examples

Ans;->trategic retail mareting is the process of planning the retail concepts on effective manner

eeping in mind the comparative environment to place the products effectively

,lanning of mareting program

+mplementation by net#oring #ith ey partners

etail "lanning *et'orking

4. Develop mission statement5. Establish @b-ectives

6. Conduct situational analysis$. +dentify strategic alternatives9. >elect maret to compete. @btain resource needed to compete;. Developing positioning strategy