Segmenting consumers for evolving a retailing strategy

Date of publication: June 15, 1995

Abstract:

The focus of this paper is on leveraging on distribution to gain completive advantage especially in a highly competitive scenario. The paper demonstrates through an Indian case study pertaining to watch purchase that a. Consumers seek a distinct bag of benefits from the outlet they shop from b. There are distinct groups of consumers based on the benefit bag they seek c. A marketer must adopt differential retailing strategy to cater to each of these groups A set of distinct shopping related benefit propositions were generated through a qualitative research among recent buyers of watches. These were used in a quantitative research to identify different benefit segments existing in the market. The characteristics of each segment was examined to provide inputs to devising an optimum retailing strategy. That this approach could be used by retail chains as well is demonstrated briefly through another case. Market segmentation on different variables in order to devise product - market strategy is a commonly adopted practice by most marketers across product categories. Having decided on which consumer segment to target at, the product offer is tailored to maximise the probability of success in that chosen segment. While much thought is given to the basic elements of the product offer viz the product itself, the pricing and the communication, it is our contention that distribution element is probably not leveraged to its potential to gain competitive advantage. This paper is based on the ground realities of India where innovative approaches to retailing is just emerging - be it the mushrooming departmental stores and drains or the mail order selling. In this context, there is a tendency to view distribution just as a conduit to flow goods from the supplier to the consumers.

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