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79 MASTERS OF COMMERCE PART 1(SEMESTER-I) UNDER THE GUIDANCE OF: PROF. NEETA NERURKAR
PTVAs M.L DAHANUKAR COLLEGE OF COMMERCE Vile Parle (East), Mumbai 2012-2013
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CERTIFICATE
I, Prof. Neeta Nerurkar here by certify that Shefali P. Malshe of M. L. Dahanukar College of Commerce of Master of Commerce (Part1) has completed project on Performance appraisal MARKET SEGMENTATION during academic year 20122013. The information submitted is true and original to the best of my knowledge.
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DECLARATION
I, SHEFALI P. MALSHE of M. L. Dahanukar College of Commerce of Masters of Commerce Part 1 , hereby declare that I have completed project on MARKET SEGMENTATION
TITAN WATCHES, in the academic year 2012-13, as per the
requirement of the University of Mumbai as a part of Masters of Commerce Part 1 (Semester I ) . The information submitted is true and original to the best of my knowledge.
SIGNATURE OF
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ACKNOWLEDGEMENT
I would like to convey my heartiest gratitude to several people for help and support during this project. First and foremost I seek the blessings of my beloved TEACHERS who keep lot of expectations on me and showering their infinite love for ever. I would like to thank University of Mumbai for giving me this opportunity of taking such a challenging project, which has enhanced my knowledge about the topic MARKET SEGMENTATION TITAN WATCHES. I show my gratitude to the Principal, Vice Principal and co-ordinator of M.L.DAHANUKAR COLLEGE OF COMMERCE who gave me a lot of moral support and under their guidance I was successfully able to complete my project. And with deep sense of gratitude I would like to thank Prof. NEETA NERURKAR for her immense help and co-operation. Last but not the least, my endless appreciation goes to my family who has stood by my side and given me moral support whenever I was low and boosted my will power. Thank You. SHEFALI PRADEEP MALSHE. M. L. DAHANUKAR COLLEGE OF COMMERCE. VILE PARLE ( EAST ) MUMBAI.
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SR NO
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CONTENTS
INTRODUCTION. NEED FOR SEGMENTING THE MARKET. LEVES OF MARKET SEGMENTATION. TYPES OF SEGMENTATION.
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MARKET SEGMENTATION VARIABLES FOR BUSINESS 16. MARKETS. EFFECTIVE SEGMENTATION. MARKET TARGET. MARKETING STRATEGY TITAN WATCHES. ADVANTAGES & SEGMENTATION. CONCLUSION BIBLIOGRAPHY. DISADVANTAGES OF
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4. Benefits the Customer as well: Segmentation brings benefits not only to the marketer, but to the customer as well. When segmentation attains higher levels of sophistication and perfection, customers and companies can conveniently settle down with each other, as at such a stage, they can safely
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rely on each others discrimination. The firm can anticipate the wants of the customers and the customers can anticipate the capabilities of the firm.
(2) Diffused Preferences: Where the consumers preferences may be scattered throughout the space. Examples: Branded Clothes
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(3) Clustered Preferences: Where the consumers preferences are similar or restricted to some of the products only. Example: Coke and Pepsi.
Niche Marketing:
A niche is a more narrowly defined customer group seeking a distinctive mix of benefits. Marketers usually identify niches by dividing a segment into sub segments. An attractive niche is characterized as follows: The customers in the niche have a distinct set of needs; they will pay a premium to the firm that best satisfies their needs; the niche is not likely to attract other competitors; the niche gains certain economies through specialization and the niche has size, profit, and growth potential. 9|Page
Whereas segments are fairly large and normally attract several competitors, niches are fairly mal and normally attract only one or two. Example: Ezee the liquid detergent from Godrej is a fabric-washing product for woolen clothes, Crack Cream by Paras Pharmaceuticals, local language TV channels.
Local Marketing:
Target marketing is leading to marketing programs tailored to the needs and wants of local customers groups. Example: Local courier companies in many cities that specialize in delivering mail and packets on the same day within a specified geographical area, usually within the same city.
Customerization:
The ultimate level of segmentation leads to segment of one, customized marketing or one-to-one marketing. Example: Maentel which produces Barbie dolls go for this type of marketing.
TYPES OF SEGMENTATION
There are many ways in which a market can be segmented. A marketer will need to decide which strategy is best for a given product or service. The major segmented variables are: i) ii) iii) Geographic segmentation. Demographic segmentation. Psychographic segmentation.
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iv)
Behavioral segmentation.
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Geographic Segmentation:
It is the division of market according to the different geographical units. That is, segmentation of consumers based on geographical factors, such as, country, climatic zone, region, district, state, city, town, population density etc. Geographic segmentation can be a useful strategy to segment markets because it provides a quick overview of differences and similarities between consumers according to geographical unit; Can identify cultural differences between geographical unit takes into consideration climatic differences between geographical units; Recognizes language differences between geographical units. Different geographic segments have different consumption patterns. Introducing different products for different geographic segments can bring more sales.
Demographic Segmentation:
In demographic segmentation, the market is divided into groups on the basis of variables such as age, gender, income, occupation, education, religion and social class. Demographic variables are most popular bases for distinguishing customer groups.
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Figure 7.3 Demographic segmentation Age Life-cycle Stage Income Social Class
E.g. Bachelor kids Full w/child under Full child nest over Youngest 6 Full nest 3: Older married with dependent children Empty Older couples children home at no nest 1: couples 6 2: Nest 1: State, Newly Wed: No
E.g. A = Upper, upper B = Upper lower C1= middle class C2= class workers) D= upper lowers E= Lower, lower Working (skilled
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Age: Consumer needs and wants change with age. So the marketers design and promote their products differently to meet the wants of the different age groups. Gender: Gender segmentation is widely used in consumer marketing . The best examples include clothing, hairdressing, magazines, cosmetics etc. Income: The market is also segmented on the basis of the consumers income level. Social class: Many companies design products and services for special social classes.
Psychographic Segmentation.
In psychographic segmentation, buyers are divided into different groups on the basis of customers life style or personality or attitude or values. People with the same demographic group can exhibit very different psychographic profiles. The company makes their product with a brand personality that corresponds to a target consumer personality. For Example: A significant number of consumers in India are strictly vegetarians. Even among those, who consume non-vegetarian food, many avoid beef. Mc. Donalds changed their menu in India to adapt to consumer preference. Beef was stuck off the menu and the company introduced vegetarian burgers and other products based on the preference for vegetarian food.
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Behavioural Segmentation:
Some marketers regularly attempt to segment their markets on the basis of productrelated behavior, they utilize behavioral segmentation. Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses or responses to a product. Behavioral segments can group consumers in terms of:
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Occasions: Buyers can be distinguished, according to the occasions. segmentation helps firm to expand the product to sales. Occasion
For example,
Greeting cards brand such as Archies and Hallmark make cards for different occasions, such as birthdays, weddings, marriage anniversary, friendship days, etc.
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Usage: Some markets can be segmented into light, medium and heavy user groups. For example, in the mobile phone service provider market, heavy users are targeted by giving those special packages or offers and also for low tariff targeted at the entry level and light users of mobile phones.
c. Loyalty: Loyal consumers - those who buy one brand all or most of the time-are valuable customers. Many companies try to segment their market into those where loyal customers can be found.
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iii) Purchasing approaches: purchasing function, power structure, buyer-seller relationships, purchasing policies, purchasing criteria iv) Situational factors: urgency of order, product application, size of order v) Buyers personal characteristics: character, approach
Demographics are the usual variables we think of at the most macro level: SIC code, company size, and geographic location. Operating variables are a look at how the company works. What technology do they employ, are they currently a user or non-user of your type of product, do they have the financial resources to make this purchase? Often, your sales force is the best resource for this level of information. Purchasing approach focuses in on the purchasing department. How are they organized, is there a power structure within the group, what kind of relationships do they have with other vendors, how do they interact with your competitors, what are their purchasing policies? Situational factors help you define particular segments within a given organization. What is the urgency of the purchase? This can vary dramatically among buying influencers within the company. How will the product be used? One person in the company may use a database package to create a small contact manager for their own personal use; another may develop an inventory management system for the entire company. Just be careful as situational factors can lead to an infinite number of 17 | P a g e
market segments. Make sure you define segments that are big enough to warrant the distinction in marketing strategies. Personal characteristics include individual buyer motivation, personal strategies for reducing risk, and individual perceptions. Within one company, the purchasing manager may prefer to handle all account matters face-to-face, whereas the engineering manager may prefer e-mail and the web.
EFFECTIVE SEGMENTATION
Not all segmentation is useful. For examples, salt buyers could be divided into blond and brunette customers, but hair color is not is not relevant to purchase of salt. Furthermore, if all salt buyers buy the same amount of salt each month, believe all salt is the same, and would ay only one price for salt, this market would be minimally segmentable from a marketing point of view. To be useful, segment must be: Measurable: The size, purchasing power, and characteristics of the segments can be measured. Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth going after with a tailored marketing program. It would not pay, for examples, for an automobile manufacturer to develop cars for people who are less than four feet tall. Accessible: The segments can be effectively reached and served. Differentiable: The segments are conceptually distinguished and respond differently to different marketing-mix elements and programs. If married and unmarried women respond similarly to a sale on perfume, they do not constitute separate segments. Actionable: effective programs can be formulated for attracting and segment. 18 | P a g e
MARKET TARGET
Once the firm has identified its market segment opportunities, it has to decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller, better-defined target groups. Thus, a bank may not identify a group of wealthy retire adult, but within that group distinguished several segments depending on current income, assets, savings, and risk preferences. This has led some market researches to advocate a need-based market segmentation approach.
Product specialization: The firm makes a certain product that it sells to several
segments. An example would be a microscope manufacturer who sells to university, government, and commercial laborites. The firm makes different microscope for the different customers groups and built a strong reputation in specific product area. The downside risk is that the product may be supplanted by an entirely new technology.
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Full market coverage: The firm attempts to serve all customers groups with all
the products they might need. Only very large firm like IBM (computer market), General motors (vehicle market), and Coca cola (drink market) can undertake a full market coverage strategy .Large firms can cover a whole market in two broad ways: through undiffertiated marketing or differtianted marketing. In differtiated marketing, the firm operates in several market segment and designs different product for each segment .General motors does this when it says that it produces a car for every purse, purpose, and, personality. IBM offers many hardware and software packages for different segment in the computer market.
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TITAN-AN INTRODUCTION
Titan Industries Limited, Formerly Titan Watches, is a joint venture of the Tata Group and the Tamilnadu Industrial Development Corporation [TIDCO]. It was promoted in 1984. And, in 1987 the company set up its production facilities for the manufacture of quartz analogue electronic watches at Hosur, near Bangalore. Within three years of launch, Titan emerges as the leader in the Indian quartz watch market- the fastest growing segment of the industry. Titan sold 7, 50,000 watch in the very first year and crossed the 3-million mark by the fourth year, securing 60 per cent share of the quartz watch market.
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Aggressive Launching
Having made the decision to favour of quartz. Titan launched its product with a real bang. In fact, the Titan launch was so grand that the market got the impression that Titan was the first company in India to introduce quartz watches. Actually, HMT had already done in 1981, followed by Allwyn in 1984. Titan went the whole hog towards spreading the quartz culture.
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Product Quality
Titan flew down technicians from Europe to train its Indian staff. Watch movements in the jewellery range had to be finer and more carefully assembled Gold and precious stones were sourced from Surat and Jaipur. To Ensure Quality, Titan Resorts to Vertical Integration In the early stages, Titan had to obtain a gold portion of the components through outsourcing from vendors developed within the country. Some imports were also involved. But, Titan was clear that over the long-term, bulk of the requirements should be made in-house. Titan believed that in-house manufacturing was essential to maintain high product quality. Titan soon launched a programme of vertical integration. The first phase of this programmed involved watch case manufacture; and from there, it moved on to other product components. AN EFFECTIVE POSITIONING STRATEGY TITAN is known for offering variety in its product till now people gave attention to dress, ornaments, and even footwear but nobody was much bothered about the wrist watch HMT positioned the product as just the time keeping device. They wee termed as the time keepers of the nation. But TITAN tried out something different and innovative which also led them as a successful player in the market. Following are some of their effective strategy.
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TITAN POSITIONS THE GENERIC DEVICE WATCH AS AN ORNAMENT TITAN positioned the watch, which till then was a commodity like product, into an ornament one would like to wear; it was an ornament showing time. This strategy of TITAN was to change the individuals perception towards watch, it tried to position the watch as an ornament or rather a dress. This strategy promptly drew peoples attention and was a quiet a lot successful in changing their perception. They started seeing a watch more as an expression of an individual taste and style than as a mere timekeeping device. As a result of this demand of designed and stylish watch started growing. This was the real success of titans positioning strategy
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The other market which was segmented by the titan was the corporate world. the corporate campaign said that it was something that your customer will be happy to receive it .for this it also decided to get a corporate watch designed specially for corporation .once titan established itself among the leading corporate, it used the fact for its promotion .for example, it highlighted that companies like HLL, Brooke Bond, Eureka Forbes, Lipton, Diners club and Nestle were already using titan watches as gifts.
INNOVATIVE DISTRUIBITION
Matching with this product positioning, titan adopted an innovative distribution strategy. Titan had made a quick study of the 8000 odd retail watch outlets in the country. The majority of the existing outlets were perceived by the consumers as just stores, not as showrooms of watches titan voted for the showroom idea and started franchising a network of trendy titan showrooms. To quote titan, we felt the need for such excusive showrooms, where we have control on the dcor, the ambience, the selection of staff and the level of inventories, as we wanted to upgrade the quality of display of our wares and also to expand the market for watches. It was Titans conviction that if the watch is positioned as a fashion wear, the store image was very important and had to be in tune with the overall product positioning.
SELECTION OF FRANCHISEES/SHOWROOMS
Titan went about the task of selecting the franchisees/showrooms in a systematic manner. It released an elaborate advertisement in the national and regional press, inviting applications from prospective dialers and giving a resumes of Titans activities, its marketing strategy and the plans of the company for appointing franchises/showrooms all over the country. Titan also briefly outlined the benefits the franchisees would get and the inputs required of them. The high standards of merchandising, display, sale and service expected of the franchisees were also specifically mentioned.
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The applicant should possess a showroom of approximately 50 sq. m; in a high consumer traffic area; should have excellent salesmanship; should be willing to invest in interiors as per the companys advice; and should be able to maintain high standards in merchandising, displaying, selling and servicing watches. Titan also took care to communicate the point that the watches are proof the House of Tata. The ads communicated, Tata presents a promising business opportunity through the Titan franchise. Since the Titan watch was positioned as a symbol of fashion, status and contemporariness, rather than a utility. Titan insisted on attractive showroom in the best location as a major criterion in dealer selection. The ads carried a picture of the Titan showroom that was already functioning in Bangalore, attractively displaying more than 150 international designs of watches. Titan wanted the franchisees to perceive the Titan business as one of dealing in ornaments, rather than watches. As a result of this focus, Titan was able to recruit excellent franchisees within a short period. Three years later, when Titan went in for another round of selection of franchisees, it organized an equally systematic selection. This time, it employed the pithy slogan in its ads: Titan Is Shopping For Showrooms.
Titans Dealer Network Today: Titan watches are now sold for more than 6,000 retail shops, spread throughout the country, covering 1,200 towns. They are backed by a wide service network. Titans 140 exclusive showrooms (World of Titan) and 150 multi-brand showrooms (Titan Time Zones) have set a new trend for watch retailing in India. The showroom has indeed been the key to Titans distribution strength and it forms an important part of the companys marketing strategy. Well-Focused Promotion: 32 | P a g e
In promotion too: Titan chosen aggressive approach, matching with its overall strategy of confronting the leader. Sales Promotion: Titan paid good attention to sales promotion too. One of its sales promotion schemes Gold Bonanza offered a first prize of jewellery worth Rs. 1.5 lakh in cash. The budget for this campaign was Rs. 50 lakh. Titan spent over Rs 20 crore per year for advertising in the initial years. The Titan message was truly persuasive
CUSTOMER SERVICE
Customer service was also the one of the strong point in the titans marketing mix. Titan understood that in most businesses, service is neglected and poor service is often cause hurt to the feelings of a customer. Titan therefore laid down its service objectives very carefully .to quote titan it is our belief that, when a customer walks into a shop to get a titan watch serviced, there are in fact three types of repairs which need to be effected: repairing the watch, repairing the feelings of the customer and the repairing damage done to the companys image. Attention, therefore, has to be given to the physical environment in which the customer is received, the manner in which he or she is dealt with by the service personnel. The speed and the quality of the actual repair job and the charges collected for the repair. Such a corporate concern for the customer and for the quality of service rendered to him was not a common feature in the then prevailing Indian business scene. Titan, in fact, made its service a much-talked about affair. Titan under priced repair and service charges, battery and other replacement spares.
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From a leadership position in the business, HMT started decline. Throughout the first half of the 1990s, HMTs Losses went up. It touched Rs 53 crore in 1994-1995, when it sales revenue was Rs 138 crore, and sales volume was 2.9 million units.
HMTS Defense
It had to sharpen its marketing, widen its product range, and add teeth to distribution, advertising and sales promotion. HMT launched its elegance series of watches in the high price range of Rs 1600 to Rs 3500. With, HMT too moved in to the world of high fashion in the watch business. To strengthen its position at the lower end, HMT launched its low-price digital watches and the plastic quartz range-Pace and Astra. HMTS new strategy had to naturally cover the distribution aspect, especially the showrooms.
Titan now strengthened its distribution and promotion. By 2001, the number of Titan outlets was hiked to 6000 from 5500. Product Innovation Continues as a Central Theme Launch of Nebula, another Range of All Gold Watches: By the close of the 1990s, Titan launched another gold range watch-Nebula. Aimed at the well-to-do, 25 years plus segment, the company initially launched 24 models. The range was meant for both men and women. Titan Launches Digital Watches Titan also moved up in technology and brought in the Digital Fastback-a range of digital watches, designed exclusively for the young and sporty. There were 22 designs in four series, to start with. The Indian digital watch market consisted of mainly Timex and Sitco, plus the grey market brands. Titan wanted to fill the gap left by its break with Timex.
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Conclusion
The underlying principle of market segmentation is that the product and Services needs of individual customers differ. Market segmentation Involves the grouping of customers together with the aim of better Satisfying their needs whilst maintaining economies of scale. It consists Of three stages and if properly executed should deliver more satisfied Customers, few direct confrontations with competitors, and better Designed marketing programmes.
Bibliography:
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Books: Marketing Management-Philip Kotler Marketing Management-NamanKumari & Ramaswamy Website: www.titanworld.com www.images.google.co.in www.marketingteacher.com
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