Marketing (management) is the process of planning and executing the conception, pricing,

promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and
organizational goals.

Marketing Management: Marketing Management is the process of choosing target markets

and getting, keeping and growing customers through creating, delivering and communicating superior
customer value and satisfaction.

Scope of marketing
Now a day, marketing offers are not confined into products and services. The scope of marketing is now
becoming larger. Marketing people are involved in marketing several types of entities:

Goods: Physical goods constitute the bulk of most countries’ production and marketing effort. Most of
the country produces and markets various types of physical goods, from eggs to steel to hair dryers. In
developing nations, goods— particularly food, commodities, clothing, and housing—are the mainstay of
the economy.

Services: As economies advance, a growing proportion of their activities are focused on the production
of services. The U.S. economy today consists of a 70–30 services-to-goods mix. Services include airlines,
hotels, and maintenance and repair people, as well as professionals such as accountants, lawyers,
engineers, and doctors. Many market offerings consist of a variable mix of goods and services.

Experiences: By orchestrate several services and goods, one can create, stage, and market experiences.
Walt Disney World’s Magic Kingdom is an experience

Event: Marketers promote time-based events, such as the Olympics, trade shows, sports events, and
artistic performances.

Persons: Celebrity marketing has become a major business. Artists, musicians, CEOs, physicians, high
profile lawyers and financiers, and other professionals draw help from celebrity marketers.

Place: Cities, states, regions, and nations compete to attract tourists, factories, company headquarters,
and new residents. Place marketers include economic development specialists, real estate agents,
commercial banks, local business associations, and advertising and public relations agencies.

Properties: Properties are intangible rights of ownership of either real property (real estate) or financial
property (stocks and bonds). Properties are bought and sold, and this occasions a marketing effort by
real estate agents (for real estate) and investment companies and banks (for securities).

Organizations: Organizations actively work to build a strong, favorable image in the mind of their
publics. Philips, the Dutch electronics company, advertises with the tag line, “Let’s Make Things Better.”
The Body Shop and Ben & Jerry’s also gain attention by promoting social causes. Universities, museums,
and performing arts organizations boost their public images to compete more successfully for audiences
and funds.
 Information: The production, packaging, and distribution of information is one of society’s major
industries. Among the marketers of information are schools and universities; publishers of
encyclopedias, nonfiction books, and specialized magazines; makers of CDs; and Internet Web sites.

Ideas: Every market offering has a basic idea at its core. In essence, products and services are platforms
for delivering some idea or benefit to satisfy a core need.

Importance of Marketing
1) Customer Satisfaction : Marketing is customer oriented. The essence of marketing is to understand
the need and wants of consumers. It starts with consumers and ends only after satisfying their needs.

2) Helps to face competition : Effective marketing helps to face competition in Market through pro-
active decision making.

3) Corporate Image : Effective marketing helps the firms to develop and enhance its corporate

4) Brand loyalty : Effective marketing helps to develop brand loyalty of customers. Loyal customers do
repeat purchases and gives recommendations to friends, relatives etc.

5) Brand Equity : Effective marketing develops brand equity as customers are willing to pay premium
price for effectively marketed brands.

6) Generates Employment : Marketing generates job opportunities directly or indirectly in distribution,

advertising, promotion etc.

7) Improves Standard of living : Marketing helps consumers to enjoy new and better varieties of
products and services at reasonable prices. It is marketing which has converted "yesterdays luxuries into
today’s necessaries".

8) Price Control : Marketing brings a proper balance between demand and supply and provides price
stability.

9) Economic growth : Marketing brings industrial and economic growth. It facilitates full utilization of
available natural resources.

10) Creates Social awareness : Marketing helps non-profit organisation that creates social - awareness
on public issues.

11) Expansion of other sectors : Marketing helps in expansion of supporting sectors like banking,
communication, transport etc.

12) Market Expansion : Effective marketing helps business firms to expand its business from local to
national and international level.

IMPORTANCE OF MARKETING
TO THE SOCIETY :
  Marketing is a connecting link between the consumer and producer. Marketing process
brings new and new items for retail shops, from where the consumers can have them .

 Marketing helps to increase the nation’s income. Efficient system of marketing reduces
the cost to the minimum ; this in turn lowers the prices and the consumer’s purchasing
power increases. This will increase the national income.

 Marketing process increases employment opportunities. For continuous

production ,continuous marketing is needed. Continuous marketing invites numerous
activities and thus job opportunities are provided to many people.

 Marketing removes the imbalances of supply by transferring the surplus to deficit areas,
through better transport facilities.

TO THE INDIVIDUAL FIRM :

 Marketing generates revenue to firms. A firm fulfils its motive through marketing.
Development of market is possible local to world market. When markets are widened,
sales increase, and thus profit to the firm increases.

 Marketing section of a firm is the source of information to the top management for
taking overall decisions on production. The information is the basis on which decisions
will be taken by the management.

 Marketing and innovations are the two basic functions of all businesses. The world is
dynamic. Changing a business, on the basis of requirements of customers – new
products , new methods etc. is more important than running a business efficiently. The
behaviour and demand of customers keep on changing. In order to run a business
successfully one should adopt changing preference, changing styles, changing fashion,
etc. the marketers inform retailers, retailers inform wholesalers, and they in turn
inform manufacturers.

 Marketing facilitates development of business and creates employment opportunities

for many people.

Nature of Marketing

Marketing is pervasive in nature, it covers a wide range of activities, and it influences all
functions of a business. It is a social process because it takes place in a social environment
where people interact with each other. It is also a managerial process because it involves
decision making, planning, organizing, directing, and controlling.
Marketing is dynamic as it changes with the changing environment. It involves constant
interaction with customers, competitors, and other external factors. It requires creativity and
innovation to meet customer needs in a unique way and to stay ahead of competitors.
Finally, marketing is a value-creating and delivering process. It identifies the needs of
consumers, determines the demand for a product or service, and creates and delivers the
desired value to the consumer.

Difference between Marketing and Selling

Basis Selling Marketing

An important functional area

A part of the marketing process
of management that involves
which involves all the personal
activities undertaken by an
and impersonal activities that are
Meaning organisation for the promotion
involved in finding, securing, and
of buying and selling of a good
developing a demand for a good
or service is known as
or service is known as Selling.
Marketing.

As marketing also includes

As selling is only a part of the selling, it has a wide scope. All
marketing process, it has a the activities concerned with
Scope narrow scope and is limited to the identification and
increasing the sales volume of satisfaction of the wants of
an organisation. consumers are covered in
marketing.

The main focus of marketing

Selling focuses on the transfer of
is to achieve maximum
Focus title and possession of products
satisfaction of the needs and
to the users or consumers.
wants of consumers.

Selling aims to maximise the

Marketing aims at earning
profits of an organisation through
Objective profits with the help of
an increase in the volume of
consumer satisfaction.
sales.
 Basis Selling Marketing

The main emphasis of

The main emphasis of selling is
marketing is on the
on the bending or moulding of
Emphasis development of the product
the consumer according to the
according to the needs of the
product.
consumer.

Strategies such as promotion Integrated marketing efforts

and persuasion for selling the are used in this area of
product are used in it. management and involve
Strategy
strategies relates to product,
price, promotion, and physical
distribution/place.

The marketing activities start

way before the product is
The selling activities of an
manufactured and does not
organisation start after the
Start and end after the sale of the
product is manufactured or
End product. It continues even
developed and end after it is
after the sale of the product by
sold.
way of after-sales services,
etc.

The organisation supposes from

Demand is created and
the beginning that there is a
Demand maintained in the marketing
demand for the product in the
process.
market.

Core Concepts of Marketing

Needs:
Existence of unmet needs is precondition to undertake marketing
activities. Marketing tries to satisfy needs of consumers. Human needs
are the state of felt deprivation of some basic satisfaction. A need is the
state of mind that reflects the lack-ness and restlessness situation.

Needs are physiological in nature. People require food, shelter,

clothing, esteem, belonging, and likewise. Note that needs are not
created. They are pre-existed in human being. Needs create
physiological tension that can be released by consuming/using
products.

Wants:
Wants are the options to satisfy a specific need. They are desire for
specific satisfiers to meet specific need. For example, food is a need
that can be satisfied by variety of ways, such as sweet, bread, rice,
puff, etc. These options are known as wants. In fact, every need can be
satisfied by using different options.

Maximum satisfaction of consumer need depends upon availability of

better options. Needs are limited, but wants are many; for every need,
there are many wants. Marketer can influence wants, not needs. He
concentrates on creating and satisfying wants.
Demand:
Demand is the want for specific products that are backed by the ability
and willingness (may be readiness) to buy them. All wants are not
transmitted in demand. Such wants which are supported by ability and
willingness to buy can turn as demand.

Marketer tries to influence demand by making the product attractive,

affordable, and easily available.
Product:
Product can also be referred as a bundle of satisfaction, physical and
psychological both. Product includes core product (basic contents or
utility), product-related features (colour, branding, packaging,
labeling, varieties, etc.), and product-related services (after-sales
services, guarantee and warrantee, free home delivery, free repairing,
and so on). So, tangible product is a package of services or benefits.
Marketer should consider product benefits and services, instead of
product itself.

Marketer can satisfy needs and wants of the target consumers by

product. It can be broadly defined as anything that can be offered to
someone to satisfy a need or want. Product includes both good and
service. Normally, product is taken as tangible object, for example,
pen, television set, bread, book, etc.

However, importance lies in service rendered by the product. People

are not interested just owning or possessing products, but the services
rendered by them. For examples, we do not buy a pen, but writing
service.

Similarly, we do not buy a car, but transportation service. Just owning

product is not enough, the product must serve our needs and wants.
Thus, physical product is just a vehicle or medium that offers services
to us.
Utility (value), Cost, and Satisfaction:
Utility means overall capacity of product to satisfy need and want. It
is a guiding concept to choose the product. Every product has varying
degree of utility. As per level of utility, products can be ranked from
the most need-satisfying to the least need-satisfying.

Utility is the consumer’s estimate of the product’s overall capacity to

satisfy his/her needs. Buyer purchases such a product, which has more
utility.

Cost means the price of product. It is an economic value of product.

The charges a customer has to pay to avail certain services can be said
as cost. The utility of product is compared with cost that he has to pay.
He will select such a product that can offer more utility (value) for
certain price.

Satisfaction means fulfillment of needs. Satisfaction is possible when

buyer perceives that product has more value compared to the cost paid
for. Satisfaction closely concerns with fulfillment of all the
expectations of buyer. Satisfaction releases the tension that has
aroused due to unmet need(s). In short, more utility/value with less
cost results into more satisfaction.

Exchange:
Exchange is in the center of marketing. Marketing management tries
to arrive at the desired exchange. People can satisfy their needs and
wants in one of the four ways – self-production, coercion/snatching,
begging, or exchanging.
Marketing emerges only when people want to satisfy their needs and
wants through exchange. Exchange is an act of obtaining a desired
product from someone by offering something in return. Obtaining
sweet by paying money is the example an exchange.

Exchange is possible when following five conditions are

satisfied:
i. There should be at least two parties

ii. Each party has something that might be of value to the other party

iii. Each party is capable of communication and delivery

iv. Each party is free to accept or reject the exchange offer

v. Each party believes it is desirable to deal with the other party

Relationship Marketing
Relationship marketing is the practice of building long-term profitable
or satisfying relations with key parties like customers, suppliers,
distributors, and others in order to retain their long-term preference
in business.

A smart marketer tries to build up long-term, trusting, and ‘win-win’

relations with valued customers, distributors, and suppliers.
Relationship marketing needs trust, commitment, cooperation, and
high degree of understanding.

Relationship marketing results into economical, technical, social, and

cultural tie among the parties. Marketing manager is responsible for
establishing and maintaining long-term relations with the parties
involved in business.

Market, Marketing, Marketer, and Prospect:

A market consists of all potential customers sharing a particular need
or want who might be willing and able to engage in exchange to satisfy
this need or want.

Marketing is social and managerial process by which individuals and

groups obtain what they need and want through creating and
exchanging product and value with others.

Marketer is one who seeks one or more prospects (buyers) to engage

in an exchange. Here, seller can be marketer as he wants other to
engage in an exchange. Normally, company or business unit can be
said as marketer.

Prospect is someone to whom the marketer identifies as potentially

willing and able to engage in the exchange. (In case of exchange
between two companies, both can be said as prospects as well as
marketers). Generally, consumer or customer who buys product from
a company for satisfying his needs or wants can be said as the
prospect.

Marketing Orientations/Approaches
MARKETING ORIENTATIONS

 Production concept
 Product concept
  Selling concept
 Marketing concept
 Holistic Marketing concept

PRODUCTION CONCEPT : The production is one of the oldest concept in business. The
production concept holds that consumers will prefer product that are widely available and
inexpensive. Manager of production – oriented business concentrate on achieving high
production efficiency, low costs & mass distribution. They assume that consumers are primarily
interested in product availability and low prices. This orientation makes sense in developing
countries, where consumers are more interested in obtaining the product then its features.

PRODUCT CONCEPT: The product concept holds that consumers will favour those
products that offer the most quality , performance and innovative features. Managers in this
organisations focus on making superior product and improving them over time. A new &
improved product will not necessarily be successful unless the product is priced, distributed,
advertised and sold properly.

SELLING CONCEPT: The selling concept of marketing emphasizes on high promotions for
aggressive selling. The aim of selling concept of marketing is to determine how the products will
reach to the customers. Selling concept holds that consumers and businesses , if left alone , will
ordinarily not buy enough of the organisations’ products. An organisation must therefore
undertake an aggressive selling & promotion effort. Selling concept is practiced most
aggressively with unsought goods , goods that buyers normally do not think of buying. Such as
insurance , encyclopedias. Most firms practice the selling concept when they have overcapacity.
Their aim is to sell what they make rather than what the market wants.

MARKETING CONCEPT : Marketing Concept Emerged In Mid 1950s. Marketing concept holds
that the key to achieving organisational goals concentrate on determining the needs and wants
of market and deliver the desired satisfaction more effectively and efficiently than competitor.

FEATURES :

• Find the wants of consumer

• Love the customer , not the product

• Customers are the boss (putting people first)

Marketing concept rest on four pillars : Target market, customers need, Integrated marketing
& Profitability

This concept is consumer oriented. All business activities are concentrated on satisfying customer’s
needs. Here the aim is to make selling beneficial to both parties of exchange. The product should be
profitable to the producer and useful to the buyer.

HOLISTIC MARKETING CONCEPT

 There are four components of holistic marketing like relationship marketing, integrated
marketing, internal marketing and social responsibility marketing.

 INTERNAL MARKETING : Internal marketing is the task of hiring, training, and motivating
able employees who want to serve customers well. . “IT MAKES NO SENSE TO PROMISE
EXCELLENT SERVICE BEFORE THE COMPANY’S STAFF IS READY TO PROVIDE IT”

 Internal marketing must take place on two levels. At one level, various marketing
functions – sales force, advertising, customer service, product management, marketing
research – must work together. At another level, marketing must be embraced by the
other department; they must also think customer.

 INTEGRATED MARKETING : The marketer’s task is to devise marketing activities and

assemble fully integrated marketing programmes to create, communicate and deliver
value for consumers.
 RELATIONSHIP MARKETING : Relationship Marketing has an aim of building mutually
satisfying long term relationship with key parties – customers, suppliers, distributors
and other marketing partners in order to earn and retain their business.

 SOCIAL RESPONSIBILITY MARKETING : The societal marketing concept holds that the
organisation’s task is to determine the needs, wants and interest of target markets and
to deliver the desire satisfaction more effectively and efficiently than competitors.
Societal marketing concept calls upon marketers to build social and ethical
considerations into their marketing practices. They must balance the often conflicting
criteria of company profits, consumer satisfaction and public interest.
Marketing Environment

Meaning of Marketing Environment: The marketing environment refers to all internal and

external factors, which directly or indirectly influence the organization’s decisions related

to marketing activities. Internal factors are within the control of an organization;

whereas, external factors do not fall within its control. The external factors include

government, technological, economical, social, and competitive forces; whereas,

organization’s strengths, weaknesses, and competencies form the part of internal

factors. Marketers try to predict the changes, which might take place in future, by

monitoring the marketing environment. These changes may create threats and
opportunities for the business. With these changes, marketers continue to modify their

strategies and plans.

Types of Marketing Environment:

The sale of an organization depends on its marketing activities, which in turn depends on the marketing

environment. The marketing environment consists of forces that are beyond the control of an

organization but influences its marketing activities. The marketing environment is dynamic in nature.

Therefore, an organization needs to keep itself updated to modify its marketing activities as per the

requirement of the marketing environment. Any change in marketing environment brings threats and

opportunities for the organization. An analysis of these changes is essential for the survival of the

organization in the long run. A marketing environment mostly comprises of the following types of

environment:

1. Micro Environment

2. Macro Environment

Micro Environment:
Micro environment refers to the environment, which is closely linked to the organization, and directly
affects organizational activities. It can be divided into supply side and demand side environment. Supply
side environment includes the suppliers, marketing intermediaries, and competitors who offer raw
materials or supply products. On the other hand, demand side environment includes customers who
consume products.

Let us discuss the micro environment forces in the following points:

i. Suppliers: It provides raw material to produce goods and services. Suppliers can influence the profit
of an organization because the price of raw material determines the final price of the product.
Organizations need to monitor suppliers on a regular basis to know the supply shortages and change
in the price of inputs.

ii. Marketing Intermediaries: It helps organizations in establishing a link with customers. They help in
promoting, selling, and distributing products.

Marketing intermediaries include the following:

a. Resellers: It purchases the products from the organizations and sell to the customers. Examples of
resellers are wholesalers and retailers.
b. Distribution Centers: It helps organizations to store the goods. A warehouse is an example of
distribution center.
c. Marketing Agencies: It promotes the organization’s products by making the customers aware about
benefits of products. An advertising agency is an example of marketing agency.
d. Financial Intermediaries: It provides finance for the business transactions. Examples of financial
intermediaries are banks, credit organizations, and insurance organizations.

iii. Customers: Customers buy the product of the organization for final consumption. The main goal of
an organization is customer satisfaction. The organization undertakes the research and development
activities to analyze the needs of customers and manufacture products according to those needs.

iv. Competitors: It helps an organization to differentiate its product to maintain position in the market.
Competition refers to a situation where various organizations offer similar products and try to gain
market share by adopting different marketing strategies.

Macro Environment: Macro environment involves a set of environmental factors that is beyond
the control of an organization. These factors influence the organizational activities to a significant
extent. Macro environment is subject to constant change. The changes in macro environment bring
opportunities and threats in an organization.

Let us discuss these factors in details:

Demographic Environment: Demographic environment is the scientific study of human population in

terms of elements, such as age, gender, education, occupation, income, and location. It also includes the
increasing role of women and technology. These elements are also called as demographic variables.
Before marketing a product, a marketer collects the information to find the suitable market for the
 product. Demographic environment is responsible for the variation in the tastes and preferences and
buying patterns of individuals. The changes in demographic environment persuade an organization to
modify marketing strategies to address the altering needs of customers.

Economic Environment: Economic environment affects the organization’s costs structure and
customers’ purchasing power. The purchasing power of a customer depends on the current
income, prices of the product, savings, and credit availability.
The factors economic environment is as follows:
a. Inflation: It influences the customers’ demand for different products. For example, higher
petrol prices lead to a fall in demand for cars.
b. Interest Rates: It determines the borrowing activities of the organization. For example,
increase in interest rates for loan may lead organizations to cut their important activities.
c. Unemployment: It leads to a no income state, which affects the purchasing power of an
individual.
d. Customer Income: It regulates the buying behavior of a customer. The change in the
customer’s income leads to changed spending patterns for the products, such as food and
clothing.
e. Monetary and Fiscal Policy: It affects all the organizations. The monetary policy stabilizes the
economy by controlling the interest rates and money supply in an economy; whereas, fiscal
policy regulates the government spending in various areas by collecting the revenue from the
citizens by taxing their income.

Natural Environment: Natural environment consists of natural resources, which are needed as raw
materials to manufacture products by the organization. The marketing activities affect these natural
resources, such as depletion of ozone layer due to the use of chemicals. The corrosion of the natural
environment is increasing day-by-day and is becoming a global problem.

Following natural factors affect the marketing activities of an organization in a great way:

a. Natural Resources: It serves as raw material for manufacturing various products. Every organization
consumes natural resources for the production of its products. Organizations are realizing the problem of
depletion of resources and trying best to use these resources judiciously. Thus, some organizations have
indulged in de-marketing their products.

For example, Indian Oil Corporation (IOC) tries to reduce the demand for its products by promoting
advertisements, such as Save Oil, Save India.

b. Weather: It leads to opportunities or threats for the organizations. For example, in summer, demand
for water coolers, air conditioners, cotton clothes, and water increases while in winter, the demand for
woolen clothes and room heaters rises. The marketing environment is greatly influenced by the weather
conditions of a country.
c. Pollution: It includes air, water, and noise pollution, which lead to environmental degradation. Now-a-
days, organizations tend to promote environment friendly products through its marketing activities. For
example, the organizations promote the usage of jute and paper bags instead of plastic bags.

iv. Socio-Cultural Environment: Socio-cultural environment comprises forces, such as society’s basic
values, attitudes, perception, and behavior. These forces help in determining that what type of products
customers prefer, what influences the purchase attitude or decision, which brand they prefer, and at
what time they buy the products. The socio-cultural environment explains the characteristics of the
society in which the organization exists. The analysis of socio-cultural environment helps an organization
in identifying the threats and opportunities in an organization. For example, the lifestyles of people are
changing day-by-day. Now, the women are perceived as an active earning member of the family. If all the
members of a family are working then the family has less time to spend for shopping. This has led to the
development of shopping malls and super markets, where individuals could get everything under one
roof to save their time.

v. Technological Environment: Technology contributes to the economic growth of a country. It has

become an indispensible part of our lives. Organizations that fail to track ongoing technological changes
find it difficult to survive in today’s competitive environment. Technology acts as a rapidly changing force,
which creates new opportunities for the marketers to acquire the market share. Marketers with the help
of technology can create and deliver products matching the life style of customers. Thus, marketers
should observe the changing trends in technology.

Following points explain the technological trends that affect the marketing environment:

a. Pace of Technological Change: It leads to product obsolescence at a rapid pace. If the pace of
technological change is very rapid then organizations need to modify their products as and when
required. On the other hand, if the technology is not changing at a rapid pace then there is no need for
the organization to bring constant changes in the product.

b. Research and Development: It helps in increasing growth opportunities for an organization. Many
organizations have developed a separate team for R&D to bring innovation in its products.
Pharmaceutical organizations, such as Ranbaxy and Cipla, have started putting greater force in R&D and
these efforts have led to great opportunities in global market.

c. Increased Regulation: It refers to government guidelines to ban unsafe products. Marketers should be
aware of these regulations to prevent their violation. Every pharmaceutical organization takes the
approval of the Drugs Controller of India, which lays down the standards for drugs manufacturing.

vi. Political and Legal Environment: Political and legal environment consists of legal bodies and
government agencies that influence and limit the organizations and individuals. Every organization should
take care of the fact that marketing activities should not harm the political and legal environment
prevailing in a country. The political and legal environment has a serious impact on the economic
environment of a country. For example, in some regions of Uttar Pradesh, Reliance Fresh had to shut
 down its stores because of the lack of political support. Various legislations affecting the marketing
activities are as follows:

a. Anti-pollution laws, which affect the production or manufacturing of various products.

b. b. Customer legislation, which tries to protect the customer’s interest.
c. The important acts set by the Indian government, which effect the marketing environment of an
organization: i. Prevention of Food and Adulteration – 1954
ii. Drugs Control Act – 1954
iii. Company Act – 1956
iv. Standard Weights and Measurement Act – 1956 v. MRTP- Monopoly and Restrictive Trade Practices –
1969 vi. Display of Price Order – 1963
vii. Indian Patents Act – 1970 viii. Packaged Commodities Order – 1975
ix. Environment Act – 1986

Importance of Marketing Environment:

The study of marketing environment is essential for the success of an organization. The discussion of
importance of marketing environment is as follows:

1. Identification of Opportunities: It helps an organization in exploiting the chances or prospects for its
own benefit. For example, if an organization finds out that customers appreciate its products as
compared to competitors’ products then it might encash this opportunity by giving discounts on its
products to boost sale.
2. Identification of Threats: It gives warning signals to organizations to take the required steps before
it is too late. For example, if an organization comes to know that a foreign multinational is entering
into the industry then it can overcome this threat by adopting strategies, such as reducing the
product’s prices or carrying out aggressive promotional strategies.
3. Managing Changes: It helps in coping with the dynamic marketing environment. If an organization
wishes to survive in the long run then it has to adapt to the changes occurring in the marketing
environment.

MARKET SEGMENTATION
What Is Market Segmentation?

Market segmentation is a process of dividing the market of potential customers into smaller and more
defined segments on the basis of certain shared characteristics like demographics, interests, needs, or
location. The member of these groups share similar characteristics and usually have one or more than
one aspect common among them which makes it easier for the marketer to craft marketing
communication messages for the entire group. There are many reasons as to why market segmentation
is done. One of the major reasons marketers segment market is because they can create a custom
marketing mix for each segment and cater them accordingly.
LEVELS OF MARKET SEGMENTATION

There are two levels of market segmentation

1. Mass Marketing

2. Micro marketing

• Segment Marketing

• Niche Marketing

• Local Marketing

• Individual Marketing

1. MASS MARKETING : Under mass marketing there is one single product for all. Company
does mass production, mass distribution and mass promotion of the one single product.
Mass marketing leads to low cost which in turn can lead to lower prices or higher profit
margin. For example, FORD’S CAR was initially available only in one colour i.e. BLACK,
same size and design for all the customers.

2. MICRO MARKETING :

a) Segment Marketing : A segment is a unique group of customers (or potential

customers) who share some common characteristics which make them different from
other groups of customers. For example, one segment prefer CAR for BASIC
TRANSPORTATION purpose, where as another segment prefer CAR for STATUS
(LUXURIOUS CAR )

b) Niche Marketing : A niche is narrowly defined group seeking a distinctive mix of benefits
who are ready to pay extra premium . Marketers usually identify niches by dividing
segments into sub segments. Niche marketers focus only to particular small group of
people. Niche = segment ÷ * sub-segments E.g.- Surf excel for tough stains (hard on
clothes) & Ezee from Godrej for delicate clothes. Several television channel today are
niche focused, though the size of audience may be large. For example, there are
television channels such as Astha and sanskar in India, QTV in Pakistan – focus on
religion & spiritualism. There are number of sports channels such as star Sports, ESPN,
Ten sports, etc. In fact, STAR SPORTS has launched STAR CRICKET, directed exclusively
at cricket lovers in South Asia. Niche marketing aim to understand their customers’
needs so well that the customers willingly pay a premium.

c) Local Marketing : Marketing programs are tailored to the needs & wants of local
customer groups. For example, Spiderman 3 was released in 5 different languages in
 India including Bhojpuri. Owing to such local marketing, the movie broke a number of
collection records for a foreign movie released in India.

d) Individual Marketing : Segment of one to one marketing is called individual marketing.

For example : Assembled computer

• Customisation : Four Ps of marketing can be changed as per the needs and requirements
of the customers.

• Mass Customisation : Customisation is provided to large group of customers

• Customerisation : empowers the consumers to design the product or service offering of

their choice. Customization raises the cost of goods. Customer cannot cancel the
product once the company has started working on the product. Paint companies have
started doing this – Asian Paints, Nerolac, Berger Paints. E.g. – Arvind mills launched Ruff
‘n Tuff Jeans, branded ready-to-stitch.

PROCESS OF MARKET SEGMENTATION

1. Need Based Segmentation : (Through market research company has to identify the
needs, taste and preferences, and requirements of the customers.)
2. Segment Identification : (Detailed study of the segment, to study their demographic
characteristics like income level, education, standard of living, etc. )
3. Segment Attractiveness : ( To find out which segment is the most attractive in terms of
growth, market potential and size )
4. Segment Profitability : ( More the attractive – more the profitable, less attractive – less
profitable )
5. Segment Positioning : ( To communicate the distinctive features to the target buyers,
company can communicate the characteristics of the product through advertisement )
6. Segment Acid Test : (After positioning the product, the next step is whether the
company has effectively positioned its products or not.)
7. Marketing Mix Strategy : ( Implementation of 4 Ps of marketing )

BASES OF SEGMENTATING CONSUMER MARKET

The major consumer segmentation variables are :
• Geographic
• Demographic
• Psychographic
• Behavioural
 GEOGRAPHIC SEGMENTATION : Geographic segmentation calls for division of market
into different geographical units such as nations, countries, states. Geographic
segmentation assumes importance due to variations in consumer preference and
purchase habits across different regions, across different countries and across different
states.
• One of the major geographical segmentation variables relevant for marketers is the
division of markets into rural and urban areas. Rural and urban markets differ on a
number of important parameters such as literacy levels, income, spending power, and
availability of infrastructure such as electricity, telephone network, and roads; as well as
social and cultural orientations of people that affect the market potential, and buying
patterns and habits.
• Geographical markets also vary in their product requirements. In arid regions of India
and Pakistan, during hot and dry summer seasons, air coolers are used. However, this
product is ineffective in geographical areas where the climate is hot and humid during
the summer seasons. In such areas , air conditioners are preferred. Likewise , food
habits vary significantly across states and regions. For example, consumers in southern
states show a preference for coffee whereas consumers in many other states in India
tend to prefer tea.

DEMOGRAPHIC SEGMENTATION : In demographic segmentation the market can be

divided into groups on the basis of variables such as age, family size, family life cycle,
gender, income, occupation, education, generation, nationality, and social class.
• AGE : Consumers wants and abilities change with their age. Therefore, age is important
variable to define segments. Johnson & Johnson’s baby soap and baby talcum powder
are the classic examples of products for kids. Television channels in India indicate
segmentation based on age. There are channels like Astha, or Sanskar, focused on the
older generation; Cartoon network, Disney, Hungama TV are channels addressing
children, and MTV and VTV are channels for youngsters.
• LIFE STAGE : Life stage defines a person’s major concern, like
 Bachelor hood
  Young married couple
 Couple with child
 Child’s Education
 Marrying of their child
 Retirement stage
 Discloser
When a person gets married and starts his/her family , a host of products and services such as
furniture, kitchen appliances, and cooking gas connection become necessary. Similarly, there
are savings – cum – insurance schemes to help young parents plan for the education for their
child. Insurance companies offer schemes for people who are planning their retirement life.
• GENDER : Gender differentiation has long been applied to product categories such as
clothing, hairstyling, cosmetics, and magazines. Some products have been positioned as
more masculine or more feminine.
 Scooty pep : for Female
 Fair & Handsome : For Male
 Gillette : For Male
 Fair & Lovely : For Female
• INCOME : Income determines the ability of consumers to participate in the market
exchange and hence this is basic segmentation variable. Given the nature of income
distribution in India, opportunities exist for companies to serve the requirements of
different income classes. Nirma Washing Powder , for example, was launched as the
lowest priced detergent in India primarily targeted at the middle income segment in the
country. Another example is Automobile industries, MARUTI UDHAYOG, Swift for
upper class, Alto for middle class, and Maruti 800 for lower class people
• SOCIAL CLASS : Social class has a strong influence on preferences in cars, clothing, home
furniture, reading habits, etc. , retailers and many companies design products and
services for specific social classes. The concept of social class in India is influenced by the
caste system.
PSYCHOGRAPHIC SEGMENTATION : In psychographic segmentation, buyers are divided
into different groups on the basis of personality traits, lifestyle or values.
 Values and Lifestyles significantly affect product and brand choice of consumers.
Religion has a significant influence on values and lifestyles. The strict norms that
consumers follow with respect to food habits or even dress codes are representative
examples in this regard. A significant number of consumers in India are strictly
vegetarians. Even among
those who consume non vegetarian food , many avoid beef. Mc Donald’s changed their
menu in India to adapt to the consumer preferences.
• Personality : Personality is an important determinant of the buyers’ behaviour.
Generally, people try to express their personality through the purchase of certain
products.
BEHAVIOURAL SEGMENTATION : Many marketers believe behavioural variable – occasions,
benefits, user status, usage rate, buyer readiness stage, loyalty status, and attitude – are the
best starting points for constructing market segments.
• Occasions : Greeting card brands such as Archies and Hallmark make cards for different
occasions such as birthday, Weddings, Id, Diwali and Raksha Bandhan. Occasion
segmentation can help firms expand product usage.
• Benefits : Buyers are classified according to the benefits they seek. Many product
categories offer different product targeted at people who seek different sets of benefits.
Shampoos, for example, offer benefits such as basic cleaning hair, conditioning effects,
medicinal properties etc. Brands such as Clinic, Chic, Pantene, Head & Shoulder, and
Sunsilk offer different variants addressed to diverse benefit segments.
• User Status : Every product has its own users, ex – users, potential users , first user, and
regular users. Blood banks cannot rely only on regular donor to supply blood ; they must
also recruit new first time donors and contact ex users, each with different marketing
strategy. The key for attracting potential users, or even possibly non users, is
understanding the reasons why they are not using?.
• Usage Rate : Markets can be segmented into light, medium, and heavy product users.
Heavy users are small percentage of the market but account for a high percentage of
total consumption.
 • Buyers – Readiness Stage : Some people are unaware of the product, some are aware,
some are informed, some desire the product , and some intend to buy. The relative
numbers of consumers at different stages make a big difference in designing the
marketing programme.
• Loyalty Status : Marketers usually classify four groups based on brand loyalty status :
• Hard Core loyal : Consumers who buy only one brand all the time
• Split loyal : consumers who are loyal to two or three brands
• Shifting loyal : consumers who shift loyalty from one brand to anther
• Switchers : Consumers who show no loyalty to any brand

TP Marketing Example

1. McDonald’s
Segmentation – McDonald’s segments its market based on several factors:
 Demographics: They consider age, gender, income, and family size. For
instance, they have offerings like Happy Meals for children and Value Meals for
budget-conscious consumers.
 Psychographics: McDonald’s taps into consumers’ lifestyles and personalities. For
example, they offer healthy options for health-conscious individuals and late-night
hours for those seeking convenience.
 Behavioural: They target customers’ buying behaviour, through the frequency of
visits and order preferences. They have tailored options for regular customers and
promotions to attract occasional visitors.
Targeting – McDonald’s primary target audience includes:
 Families: They provide a family-friendly atmosphere with play areas and offerings
like Happy Meals, targeting parents and children.
 Young Adults: The menu offers a range of products that are appealing to young
adults, from classic burgers to trendy items like wraps and salads.
 Teens: They attract teenagers with affordable items, quick service, and a place to
hang out.
 Children: Through Happy Meals, toys, and colourful packaging, they create an
appealing environment for kids.
Positioning -- McDonald’s positions itself using the following strategies:
 Convenience: They emphasize fast service, drive-through options, and extended
hours, positioning themselves as a quick and convenient dining option.
 Affordability: McDonald’s offers value menus and combo meals at reasonable
prices, targeting budget-conscious consumers.
 Variety: Their diverse menu caters to different tastes, from classic burgers to
salads and healthier options, appealing to a broad range of preferences.
 Consistency: McDonald’s maintains a consistent quality and taste across its global
locations, creating a sense of familiarity and reliability.