Market Segmentation

MARKET SEGMENTATION Let us first understand the concept of a market. First of all, we must find out whether there is a need for the product. Secondly, we must know whether those who need a product are interested in buying or using the product. After this the next step is to find out whether the interested and needy consumers have the wherewithal to buy it. Perhaps, they have the money, but it is necessary to find out whether they are willing to buy the product. In short, a demand for a product that satisfies a need becomes effective when it is backed up by the purchasing power and the willingness to buy. A market is thus by definition comprises people or businesses with a potential interest, purchasing power and willingness to spend the money to buy a product or service that satisfies a need. The following diagram illustrates this concept: What is a market? Let us take an illustration. Tatas have started producing a Mercedes Benz car here in India. Many individuals have Godrej No.1 is a successful toilet soap brand in the Indian consumer goods market. Its success is reckoned with a glorious history of 66 years. Over a period of time the brand witnessed declining sales and lost its appeal due to heavy competition and eventually it was withdrawn from the market in the year of 1988. After a decade, in 1998 the Godrej group revived the brand with a new appeal placed in a new positioning and packaging and relaunched into the market. Garnering an enviable success, the brand witnessed huge popularity and loyalty only to clinch the 3rd position. Giving a jolt to the iconic brands of its competitors, the brand made the major players to hedge their belts and reinvigorate their marketing strategies to combat this tough competition. The case discusses Godrej Consumer Products Ltd.s design and implementaition of the brand relaunch exercise for the Godrej No.1. It provides the detailed description of the innovations followed by the company to promote the brand and make it successful. Pedagogical Objectives: To understand the motive behind the relaunch of Godrej No.1 To debate and analyse various channels and platforms and the conducive environment to relaunch a brand and what are the success and failure ratings To debate and analyse the role of marketing mix in the success of a relaunch product and its sustainability To debate on the success of Godrej No.1 soap as a trail blazer in redefining the 4Ps of marketing management.

Keywords : Market Positioning, Repositioning, Repositioning Strategies, Brand Relaunch, Market segmentation, Marketing Mix, Brand Management Strategies, Neo Promotion, Customised Segmentation, Market Targeting, Brand Re-positioning, TFM, Godrej

Contents: Bubbling Indian Soap Industry Godrej No.1 from the Verge of Extinction to Extension Godrej No.1 Back with a Bang The Strategy Qualit(y)ative Promotion Customised Segmentation: A New Strategy in the Making? Neo Promotional Strategies Soap without a Woman's Face? Godrej No.1's Success Tapping the Untapped Markets? Redefining the Distribution Strategies with a Cutting Edge Godrej Aadhaar A One of Its Kind Experiment Project Sampark The Soap Opera

Godrej Consumer Products Limited

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Godrej Consumer Products Limited

Type

Public

Traded NSE: GODREJCP as BSE: 532424

Industry Consumer goods Founded 2001 Headqua Mumbai, Maharashtra, IndiaHYPERLINK "/wiki/India"[1] rters Area served Key people Products Revenue Net income India Adi Godrej, Chairman A Mahendran, Managing Director Toilet soaps, hair colour, household insecticides, liquid detergents, toiletries and others 3,793 crore (US$756.7 million) (2010-11)[2] 481 crore (US$95.96 million) (2010-11)[2]

Employee 1,200 (2012) s Parent Godrej Group Subsidiar ies Essence Consumer Care Products Pvt. Ltd. Naturesse Consumer Care Products Pvt. Ltd. Godrej Hygiene Products Ltd.

Godrej Netherlands B.V. Website godrej.com Godrej Consumer Products Limited (GCPL) is an Indian consumer goods company based in mumbai, India. GCPLs product range includes soaps, hair colourants, toiletries and liquid detergents. Some of the leading brands are Cinthol, Godrej Fair Glow, Godrej No.1 and Godrej Shikakai in soaps, Godrej Powder Hair Dye, Renew, ColourSoft in hair colourants and Ezee liquid detergent. GCPL has five manufacturing facilities in India at Malanpur (Madhya Pradesh), Guwahati (Assam), Baddi- Thana (Himachal Pradesh), Baddi- Katha (Himachal Pradesh) and Sikkim A market segment is a classification of potential private or corporate customers by one or more characteristics, in order to identify groups of customers, which have similar needs and demand similar products and/or services concerning the recognized qualities of these products, e.g. functionality, price, design, etc. The term segmentation is also used when customers with identical product and/or service

needs are divided up into groups so they can be charged different amounts for the services. A customer is allocated to one market segment by the customers individual characteristics. Often cluster analysis and other statistical methods are used to figure out those characteristics, which lead to internally homogeneous and externally heterogeneous market segments. Examples of characteristics used for segmentation: Gender Price Interests Location Religion Income Size of Household Age Education Occupation Social Class Ethnicity Nationality End use (Example work or leisure)

While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage. Definition: Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small businesss success. The beauty of target marketing is that it makes the promotion, pricing and distribution of

your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities. So if, for instance, I open a catering business offering catering services in the clients home, instead of advertising with a newspaper insert that goes out to everyone, I could target my market with a direct mail campaign that went only to particular residents. While market segmentation can be done in many ways, depending on how you want to slice up the pie, three of the most common types are: Geographic segmentation based on location such as home addresses; Demographic segmentation based on measurable statistics, such as age or income; Psychographic segmentation based on lifestyle preferences, such as being urban dwellers or pet lovers.

If youre interested in target marketing, the first step is to do the research that will help you define and zero in on your target market. How to Find and Sell to Your Target Market will help you get started. Also Known As: Niche marketing. Common Misspellings: Targit marketing, target markiting. Examples: The target marketing example above is an example of how demographic market segmentation could be used.
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How to Find HYPERLINK "http://sbinfocanada.about.com/cs/marketing/a/targetmarket.htm"&HYPERLINK "http://sbinfocanada.about.com/cs/marketing/a/targetmarket.htm" Sell to Your Target Market

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Overview Discover the latest market trends and uncover sources of future market growth for the Home Care industry in India with research from Euromonitor's team of in-country analysts. Find hidden opportunities in the most current research data available, understand competitive threats with our detailed market analysis, and plan your corporate strategy with our expert qualitative analysis and growth projections. If you're in the Home Care industry in India, our research will save you time and money while empowering you to make informed, profitable decisions. When you purchase this report, you also get the data and the content from these category reports in India for free: Air Care

The Home Care in India market research report includes: Analysis of key supply-side and demand trends Historic volumes and values, company and brand market shares

Five year forecasts of market trends and market growth Robust and transparent market research methodology, conducted in-country

Our market research reports answer questions such as: What is the market size of Home Care in India? What are the major brands in India? What is the importance of the trend towards environmentally friendly products in home care? What are the main growth drivers of the home care market in India?

Why buy this report? Gain competitive intelligence about market leaders Track key industry trends, opportunities and threats Inform your marketing, brand, strategy and market development, sales and supply functions

This industry report originates from Passport, our Home Care market research database.

Sample Analysis EXECUTIVE SUMMARY

Home care retail sales register muted value growth Home care value sales recorded value growth for 2010 that was lower than the review period CAGR, and it was primarily so because of limited price increments in major home care categories. Both laundry care and dishwashing products had extremely constrained rises in unit prices as mass-market categories such as hand dishwashing and bar detergents witnessed intense competition over the year. However, 2010 sales growth in terms of retail volume was comparable to and slightly higher than that seen over the review period. Major categories see heightened competition The trinity of laundry care, dishwashing and insecticides was alight with competitive pressures in 2010. In laundry care, detergent brands Wheel, Tide, Rin, and Ghari indulged in widespread advertising and enhanced retail presence across the country in order to maintain or increase their respective value shares. Exo, the dishwashing brand by Jyothy Laboratories, strived to increase its retail coverage and challenge the leading brand Vim. Similarly, insecticide players Godrej Consumer Products, Reckitt Benckiser (India) and Karamchand Appliances focused on development of their respective brands through rebranding exercises and new product launches.

Little difference between multinational and domestic brand pricing The historical presence of ingrained brands such as Wheel, Vim and Good Knight in India has not only blurred the difference of domestic and international brands in the eyes of the consumer, but bridged the gap between their price points as well. As such, multinational players such as Hindustan Unilever and Procter & Gamble Home Products had product offerings priced only marginally higher than domestic manufacturers such as Rohit Surfactants and Jyothy Laboratories across home care categories. Thus, domestic players listed above not only depended on their lower price points, but also on locally successful marketing and established regional brand loyalty which they looked to emulate across the country. Kirana stores still direct home care retail sales in India Independent small grocers, or kirana stores, were extremely influential in determining consumer sentiments towards certain product categories and deciding manufacturers retail strategies in 2010. The controlled unit price hikes further enhanced the importance of such stores, as consumers looked for value-for-money offerings amongst a plethora of reasonably priced brands. Although the convenience and familiarity of such stores have ensured their influence on home care sales, this is likely to wane gradually over the forecast period. Several chained supermarkets/hypermarkets were targeting ambitious expansion plans in the forecast period, and are expected to marginally reduce the retail share of kirana stores. Upcoming categories and variants expected to drive growth The forecast period is likely to see an increased impact of relatively small product categories in home care. As subcategories such as automatic detergents and spray/aerosol insecticides, and even entire product categories such as air care, toilet care, and surface care increase their respective contributions to the home care sales in India, associated brands will have an increased influence on directing consumer sentiment. These product types are likely to concentrate on urban, and eventually on semi-urban areas as they look to establish a loyal consumer base in the country. Driven by them, home care value sales are expected to grow at a constant value CAGR of 3% in the forecast period.

Segmentation, Targeting, and Positioning

Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way.

Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that You cant be all things to all people, and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable.

Generically, there are three approaches to marketing. In the undifferentiated strategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really cant offer much that another one cant. Usually, this is the case only for commodities. In the concentrated strategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices. In contrast, most airlines follow the differentiated strategy: They offer high priced tickets to those who are inflexible in that they cannot tell in advance when they need to fly and find it impractical to stay over a Saturday. These travelersusually business travelerspay high fares but can only fill the planes up partially. The same airlines then sell some of the remaining seats to more price sensitive customers who can buy two weeks in advance and stay over. Note that segmentation calls for some tough choices. There may be a large number of variables that can be used to differentiate consumers of a given product category; yet, in practice, it becomes impossibly cumbersome to work with more than a few at a time. Thus, we need to determine which variables will be most useful in distinguishing different groups of consumers. We might thus decide, for example, that the variables that are most relevant in separating different kinds of soft drink consumers are (1) preference for taste vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price sensitivitywillingness to pay for brand names; and (4) heavy vs. light consumers. We now put these variables together to arrive at various combinations. Several different kinds of variables can be used for segmentation. Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Campbells soup, for instance, has found that Western U.S. consumers on the average prefer spicier soupsthus, you get a different product in the same cans at the East and West coasts. Facing flat sales of guns in the traditional male dominated market, a manufacturer came out with the Lady Remmington, a more compact, handier gun more attractive to women. Taking this a step farther, it is also possible to segment on lifestyle and values. Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd. Another basis for segmentation is behavior. Some consumers are brand loyal i.e., they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are heavy users while others are light users. For example, research conducted by the wine industry shows that some 80% of the product is consumed by 20% of the consumerspresumably a rather intoxicated group. One can also segment on benefits sought, essentially bypassing demographic explanatory variables. Some consumers, for example, like scented soap (a segment likely to be attracted to brands such as Irish Spring), while others prefer the clean feeling of unscented soap (the Ivory segment). Some consumers use toothpaste

primarily to promote oral health, while another segment is more interested in breath freshening. In the next step, we decide to target one or more segments. Our choice should generally depend on several factors. First, how well are existing segments served by other manufacturers? It will be more difficult to appeal to a segment that is already well served than to one whose needs are not currently being served well. Secondly, how large is the segment, and how can we expect it to grow? (Note that a downside to a large, rapidly growing segment is that it tends to attract competition). Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers? Firms may already have an established reputation. While McDonalds has a great reputation for fast, consistent quality, family friendly food, it would be difficult to convince consumers that McDonalds now offers gourmet food. Thus, McDs would probably be better off targeting families in search of consistent quality food in nice, clean restaurants. Positioning involves implementing our targeting. For example, Apple Computer has chosen to position itself as a maker of user-friendly computers. Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for nongeeks. The Visual C software programming language, in contrast, is aimed a techies.

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that most successful firms fall into one of three categories: Operationally excellent firms, which maintain a strong competitive advantage by maintaining exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly lower cost than those of less well organized and well run competitors. The emphasis here is mostly on low cost, subject to reliable performance, and less value is put on customizing the offering for the specific customer. Wal-Mart is an example of this discipline. Elaborate logistical designs allow goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will be needed.

Customer intimate firms, which excel in serving the specific needs of the individual customer well. There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the customer. Reliability is also stressed. Nordstroms and IBM are examples of this discipline. Technologically excellent firms, which produce the most advanced products currently available with the latest technology, constantly maintaining leadership in innovation. These firms, because they work with costly technology that need constant refinement, cannot be as efficient as the operationally excellent firms and often cannot adapt their products as well to the needs of the individual customer. Intel is an example of this discipline.

Treacy and Wiersema suggest that in addition to excelling on one of the three value dimensions, firms must meet acceptable levels on the other two. Wal-Mart, for example, does maintain some level of customer service. Nordstroms and Intel both must meet some standards of cost effectiveness. The emphasis, beyond meeting the minimum required level in the two other dimensions, is on the dimension of strength. Repositioning involves an attempt to change consumer perceptions of a brand, usually because the existing position that the brand holds has become less attractive. Sears, for example, attempted to reposition itself from a place that offered great sales but unattractive prices the rest of the time to a store that consistently offered everyday low prices. Repositioning in practice is very difficult to accomplish. A great deal of money is often needed for advertising and other promotional efforts, and in many cases, the repositioning fails. To effectively attempt repositioning, it is important to understand how ones brand and those of competitors are perceived. One approach to identifying consumer product perceptions is multidimensional scaling. Here, we identify how products are perceived on two or more dimensions, allowing us to plot brands against each other. It may then be possible to attempt to move ones brand in a more desirable direction by selectively promoting certain points. There are two main approaches to multi-dimensional scaling. In the a priori approach, market researchers identify dimensions of interest and then ask consumers about their perceptions on each dimension for each brand. This is useful when (1) the market researcher knows which dimensions are of interest and (2) the customers perception on each dimension is relatively clear (as opposed to being made up on the spot to be able to give the researcher a desired answer). In the similarity rating approach, respondents are not asked about their perceptions of brands on any specific dimensions. Instead, subjects are asked to rate the extent of similarity of different pairs of products (e.g., How similar, on a scale of 1-7, is Snickers to Kitkat, and how similar is Toblerone to Three Musketeers?) Using a computer algorithms, the computer then identifies positions of each brand on a map of a given number of dimensions. The computer does not reveal what each dimension meansthat must be left to human interpretation based on what the variations in each dimension appears to reveal. This second method is more useful when no specific product dimensions have been identified as being of particular interest or when it is not clear what the variables of difference are for the product category. Decision Making

Copyright (c) Lars Perner 1999-2010.