MARKET

SEGMENTATION
The Basics - the Market

 People with needs,

 who have money (or something of value),
and
 a willingness to trade that value to satisfy
those needs
Types of Markets
Consumer Market (made up of ultimate
consumers)
Industrial Market (made up of producer firms)
Intermediate Market (wholesalers and retailers)
Government Market (federal, state, county, or local
agencies)
Institutional Market (non-profit organizations)
Marketing’s Main Task

SATISFYING WANTS AND NEEDS

..........mostly wants....
 Contents
Evolving Marketing Strategies
What is Market Segmentation?
Why segmentation?
 What are the requirements of Segmentation?
Benefits & Limitations of Segmentation
Segmenting Consumer Markets
 - Geographic Segmentation
 - Demographic Segmentation
 - Psychographic Segmentation
 - Benefit sought Segmentation
 - Behavioral Segmentation
 Evolving Marketing Strategies
Mass Marketing :The term mass market refers to a large, undifferentiated market of
consumers with widely varied backgrounds. Products and services needed by almost
every member of society are suited for the mass market.
Such items as electric and gas utilities, soap, paper towels and gasoline, for example,
can be advertised and sold to almost anyone, making them mass market goods
Mass Marketing –
An attempt to appeal to an entire market with one basic marketing strategy utilizing
mass distribution and mass media. Also called undifferentiated marketing.
The appeal of mass marketing is in the potential for higher total profits. Companies
that employ the system expect the larger profit to result from (1) expanded volume
through lower prices and (2) reduced costs through economies of scale made possible
by the increased volume.
Product Variety
After the mass marketing strategy another strategy with similar
characteristics but overcoming its predecessor’s shortcomings came into
existence. That is product variety strategy.
An attempt to appeal to the entire market with a huge variety of products
produced in mass is made.
However, like Mass marketing in this case also the customers needs &
wants are not taken into account while developing the product.
Target Marketing-

Is a market segmentation and market coverage strategy whereby a product is

developed and marketed for a very well-defined, specific segment of the
consumer population.
Target marketing is particularly effective for small companies with limited
resources because it enables the company to achieve a strong market position
in the specific market segment it serves without mass production, mass
distribution, or mass advertising. It enables firms to capitalize on the respective
serve market share
 Requirements of Market Segments
(Effective Segmentation Criteria)-MASDA
In addition to having different needs, for segments to be practical they should be
evaluated against the following criteria:
Identifiable (Differentiable): the differentiating attributes of the segments must be
measurable so that they can be identified.
Accessible: the segments must be reachable through communication and
distribution channels.
Measurable: It has to be possible to determine the values of the variables used for
segmentation with justifiable efforts. This is important especially for demographic
and geographic variables.
Substantial: the segments should be sufficiently large to justify the resources
required to target them.
Actionable: Effective programs can be formulated for attracting and serving the
segments.
Defining Marketing Segmentation
Market Segmentation
People or organizations with
Market needs or wants and the ability and
willingness to buy

A subgroup of people or organizations

Market
sharing one or more characteristics that
Segment cause them to have similar product needs.

The process of dividing a market into

Market
meaningful, relatively similar, identifiable
Segmentation segments or groups.
 Market Segmentation is the sub-dividing of
customers into homogeneous sub-set of customers
where any sub-set may conceivably selected as
market target to be reached with distinct marketing
mix.

- Philip Kotler
Why Segmentation?
To develop marketing activities
Increase marketing effectiveness
Generate greater customer satisfaction
Create savings
To identify strategic opportunities and niches
Allocation of marketing budget
Adjustment of product to the market need
To estimate the level of sales in the market
To overcome competition effectively
To develop effective marketing programmes
To contribute towards achieving company goals
Levels Of Market Segmentation

Segment Marketing
Niches marketing
Local Marketing
Individuals Marketing
 1. SEGMENT MARKETING
Consists of a group of customers who share a similar set of
needs and wants.

Identifiable Group within a Market with

Similar

• Wants
• Purchasing Power
• Geographical Location
• Buying Attitudes
2. NICHE MARKETING
Concentrating all marketing efforts on a small but specific and well
defined segment of the population. Niches do not 'exist' but are 'created'
by identifying needs, wants, and requirements that are being
addressed poorly or not at all by other firms, and developing and
delivering goods or services to satisfy them.
3. LOCAL MARKETING
Marketing programs tailored to the needs &
wants of local customer groups in trading
areas, neighborhoods , etc.

This trend is also called grass roots

marketing.
4. INDIVIDUAL
MARKETING
Ultimate segmentation – segments of one or
customized marketing or one to one
marketing.
Customization – empower the consumers to
design the product or service offering of their
choice.
Bases for Segmentation
Geography
Geography

Demographics
Demographics
Bases
Bases
Used
Used to
to
Segment
Segment Psychographics
Psychographics
Consumer
Consumer
Markets
Markets Benefits
Benefits Sought
Sought

Usage
Usage Rate
Rate
Geographical Segmentation
Segmentation of consumer based on factors like climate zone,
continents/ country, region, state, district, and urban/rural area,
constitutes geographic segmentation

Marketer, who operate globally, often segment the market

segments the market by continents/country/region in the first
instance, and then go for segmentation on other bases.

National markets within a country like India, often segment the

market by region, state, district and urban/rural area, in the first
instance, and then go for segmentation on other bases.
Geographic Segmentation
When an organization localizes its marketing efforts to accommodate the
unique needs of specific geographic regions

Geographic Variables
•Region
•City or metro size
•Density
•Climate
 Demographic Segmentation
Demographic segmentation is the most popular basis for dividing groups, primarily
because consumer usage and wants or needs.
Demographic Variables
• Age
• Gender
• Occupation
• Family size
• Education
• Nationality
• Religion
• Income
 Age: Based on age on can have the 1) Infants 2) Child Market
Teen Market 3) Youth Market 4) Middle Aged Market 5)Elders
Market
Genders: On the basis of gender, the consumer market may be
classified into male market female market.
Social Class: Companion design their products and services for
particular social classes. There are three social classes: 1 Upper
classes 2. Middle classes 3. Lower class
 Socio Culture Segmentation

Culture and social class are the two main bases of segmentation
here.
Culture: Culture influence consumer behavior, deeply. A given
culture brings in its own unique pattern of social conduct. A
person usually acquires his cultural attributes right at his
childhood. Culture includes religious, caste, traditional,
language, pattern of social behavior .

Social Factor: Social group of varying types exert influenced on

the consumer. Social group include family, peer group, close
colleges. They adopt their common life style.
Example:
Zee Televisions deals with variety of channels regional channel,
sports channel, movie channel.
McDonald has both veg and non veg burger.
McDonald has veg burger for vegetarian and nonveg
burger for non vegetarian.
Example:
Zee Televisions deals with variety of channels regional channel,
sports channel, movie channel.
McDonald has both veg and non veg burger.
McDonald has veg burger for vegetarian and nonveg
burger for non vegetarian.
 Psychographic Segmentation
Grouping customers together based on social
class, lifestyles and psychological characteristics
Psychographic Variables
Lifestyle Personality
• Hobbies Compulsory
• TV viewing habits Outgoing

• Social activities Authoritarian

• Club membership Ambitious
 Psychographic Segmentation groups customers
according to their life-style and buying psychology.
Many businesses offer products based on the attitudes, beliefs
and emotions of their target market
The desire for status, enhanced appearance and more money
are examples of psychographic variables.
They are the factors that influence your customers' purchasing
decision.
In psychographic segmentation, elements like life
attitude,
style, self-concept and value system, form the base.
A person’s pattern of interests, activities
opinions, and combine to represent his or
her lifestyle.
 Knowledge of lifestyle can provide a very rich and meaningful
picture of a person.
It can indicate whether the person is interested in outdoor
sports, shopping, culture, or reading.
It can include information concerning attitudes and personality
traits.
Lifestyle also can be used to define a segment empirically; this
is often called psychographic (as opposed to demographic)
segmentation..
Benefits-Sought Segmentation
Markets can be segmented based on the benefits that consumers desire
from using a specific product
 Behavior/Usage Segmentation
Markets can be segmented by how often or how heavily
consumers use a specific product
Behavioral Variables
• Occasion
• Benefits
• User status
• Usage rate
• Loyalty status
• Readiness stage
• Attitude towards product
 The customer can also be divided into certain segments on the
basis of their knowledge, attitude, use, or response to a product.
Such behavioural variables are discussed below
Occasions : (Marraiges, festival occasasions)
Benefits sought : (Colgate- White teeth stops bad breath,
Cibaca Provides Therapeutic benefits, Vicco vajradanthi and
neem gives ayurvedic benefit)
User Status: (Ex-users, first users, regular users, Potential
users)
Usage rate: (Light, Medium, and heavyu user segments)
Loyality status: (Hard core loyals, Split Loyals(Two r Three
brans), Shifting Loyals (Shift from one brand to another),
Switchers (No loyalty to any brand))
Attitude: Customers are divided into five groups(Enthusiastic,
Positive, Indifferent, Negtive and Hostile)