MARKET SEGMENTATION

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
- Behavioural 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.
Henry Ford applied the concept in the automobile industry. His Model
T was conceived and marketed as a "universal" carone that would
meet the needs of all buyers.




PRODUCT VARIETY
After the mass marketing strategy another
strategy with similar characteristics but
overcoming its predecessors 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

In addition to having different needs, for
segments to be practical they should be
evaluated against the following criteria:

Identifiable: 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. For an organization
with direct sales (without intermediaries), the
own customer database could deliver
valuable information on buying behavior
(frequency, volume, product groups, mode of
payment etc).
Substantial: the segments should be
sufficiently large to justify the resources
required to target them.
Unique needs: to justify separate offerings,
the segments must respond differently to
the different marketing mixes.
Durable: the segments should be relatively
stable to minimize the cost of frequent
changes.


DEFINING MARKETING
SEGMENTATION
MARKET SEGMENTATION
Market Segmentation is the sub-
dividing of customers into
homogenous sub-set of customers
where any sub-set may conceivably
selected as market target to be
reached with distinct Marketing Mix
Philip Kotler


Segmentation is essentially the identification
of subsets of buyers within a market that
share similar needs and demonstrate similar
buyer behaviour. The world is made up of
billions of buyers with their own sets of
needs and behaviour. Segmentation aims to
match groups of purchasers with the same
set of needs and buyer behaviour. Such a
group is known as a 'segment'.

The process of defining and subdividing a
large homogenous market into clearly
identifiable segments having similar needs,
wants, or demand characteristics is called
Segmentation. Its objective is to design a
marketing mix that precisely matches the
expectations of customers in the targeted
segment.
Market Segmentation consists of taking the
total heterogeneous market for a product &
dividing into several sub-market of segments,
each of which tends to be homogenous in
full significant aspects William Stanton

Market Segmentation is the marketing
process of identifying and breaking up the
total market into groups of potential
customers with similar motivations, needs or
characteristics, who are likely to exhibit
homogeneous purchase behaviour.
Undertaking this process allows marketing
efforts to be targeted at select groups.
Market segmentation involves the
subdividing of a market into distinct
subgroups of customers, where any
subgroup can be selected as a target market
to be met with a distinct marketing mix. -
CIMA


A marketing term referring to the
aggregating of prospective buyers into
groups (segments) that have common
needs and will respond similarly to a
marketing action. Market segmentation
enables companies to target different
categories of consumers who perceive the
full value of certain products and services
differently from one another.
Market Segmentation is the process of
splitting customers, or potential
customers, in a market into different
groups, or segments, within which
customers share a similar level of interest
in the same or comparable set of needs
satisfied by a distinct marketing
proposition.


Market segmentation is the process of
dividing the whole market of goods or
services in groups of people with similar
needs. By making this division there is a
high chance that each group responds in
favour to a specific market strategy.

BENEFITS AND LIMITATIONS
Benefits:
The Organisation gets to know its customers better.
Provides guidelines for resource allocation.
It helps focus the strategy of the organisation.


Limitations:
Targeting multiple segments increases marketing
costs.
Segmentation can lead to proliferation of products.
Narrowly segmenting a market can hamper the
development of broad-brand equity.

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

BASES FOR SEGMENTATION IN CONSUMER
MARKETS
GEOGRAPHIC SEGMENTATION
The following are some examples of geographic variables
often used in segmentation.
Region: by continent, country, state, or even neighbourhood.
Size of metropolitan area: segmented according to size of
population.
Population density: often classified as urban, suburban, or
rural.
Climate: according to weather patterns common to certain
geographic regions.

GEOGRAPHIC SEGMENTATION
The salt worth its salt.
Age

Gender

Life-cycle stage: Dividing a market into different groups based on which stage in the life-cycle,
presented in the table below, reflects the fact that people change the goods and services they
want and need over their lifetime.

Life-cycle stages
Bachelor Stage young, single people not living at home
Newly Married Couples young, no children
Full Nest I youngest child under six
Full Nest II youngest child six or over
Full Nest III older married couples with dependent children
Empty Nest I
older married couples, no children living with
them
Empty Nest II
older married couples, retired, no children living at
home
Solitary Survivor I in labour force
Solitary Survivor II retired
PSYCHOGRAPHIC SEGMENTATION

AIO INVENTORIES
AIO studies envisage a wide variety of
variables and measures the major
dimensions shown

Activities

Interests

Opinions

Demographics
Work Family Themselves Age
Hobbies Home Social Education
Social events Job Politics Income
Vacation Community Business Occupation
Entertainment Recreation Economics Family size
Club member Fashion Education Geography
Community Food Products City size
Shopping Media Future Lifecycle
Sports Achievements Culture Dwelling
VALS SYSTEM CLASSIFICATION:

The VALS theory and database were first applied to
markets in 1978. VALS provides a dynamic framework of
values and lifestyles; which helps to explain why people act
as they do as social groups and as consumers. VALS,
unlike some other approaches, waves together:
Demographics, 2. Attitudes, 3. Activities, 4. Consumption
patterns, 5. Brand preferences. 6. Media graphics.

The VALS study leads to the identification of four major
groups:

The need driven
The outer directed
The inner directed
The integrated

FEMALE LIFESTYLE TYPES
Cathy the contented housewife
Cathy epitomises simplicity. She is devoted to her family
and faithfully serves them as mother housewife and cook.
She enjoys a relaxed pace and avoids anything which
might disturb her equilibrium.

Candice-the chic subarbanite
Candice is an urban woman.She is well educated and
genteel. Socializing is an important part of her life. She is
a doer, interested in sports and the outdoors, politics and
current affairs. Her life is hectic and lived at a fast clip.
She is a voracious reader and there are few magazines
she does not read.

Eleanor-the elegant socialite: Eleanor is a woman with style.
She lives in the city because that is where she want to be.
She likes the socio-economic aspects of the city in terms of
her career and leisure time activities. She is fashion
conscious and dresses well. She is financially secure and
hence not a careful shopper. She shops for status and style
and not for price. She is a cosmopolitan woman who has
travelled abroad and wants to.

Mildred-the militant mother Mildred is a woman who got
married young and had children before she was ready to raise
a family. Now she is unhappy. She is frustrated and vents her
frustration by rebelling against the system. Television provides
an ideal medium for her to live out her fantasies

Thelma-the old fashioned traditionalist: Thelma is a lady who
has lived a good life. She has been a devoted wife, a doting
mother and a conscientious housewife. Even now, when most
of her children have left home, her life is centred around the
kitchen. She lacks higher education and has little appreciation
for the arts or cultural activities. Her spare time is spent
watching TV.



SIMILARLY THE SUGGESTED MALE LIFESTYLE
TYPES ARE :

Ben-the self made businessman.
Scott-the successful professional.
Dale-the devoted family man
Fred-the frustrated factory worker
Herman the retiring homebody.
Experiencers


Theyre the
young
enthusiastic,
impulsive
people who
seek variety
and
excitement.
They spend a
comparatively
high proportion
of income on
fashion,
entertainment,
and socializing.
Thinker
s
Theyre mature,
satisfied, and
reflective people
motivated by
ideals and who
value order,
knowledge, and
responsibility.
They seek
durability,
functionality,
and value in
products. Here
were
considering
Mont-Blanc
Achievers

Theyre successful,
goal oriented people
who focus on career
and family. They
favour premium
products that
demonstrate success
to their peers. In this
segment we can
consider most of the
premium timeless
luxury watches, such
as Rolex, TAG Heuer,
and Omega. Neil
Armstrong gave
Omega speed master
the ultimate
endorsement when he
wore it on his historic
moon walk in 1969.
Innovators
Theyre usually
successful, sophisticated,
active, take charge
people with a high self
esteem. Purchases often
reflect cultivated tastes
for relatively upscale,
niche oriented products
and services. Here were
considering the niche
market of upscale
segmentation by
technology adaptation.
Believer
s
Theyre conservative,
conventional, and
traditional people with
concrete beliefs. They
prefer familiar, Indian
made products and are
loyal to established
brands. Here we
consider Bisleri. As one
of the worlds most
trusted brands. Bisleri
is leading the way in
bringing about positive
change in our daily
lives. They believe in
being a part of a
meaningful movement
called the Aqua Green
Revolution
Strivers
Theyre trendy fun
loving people who are
resource constrained.
They favour stylish
products that emulate
the purchases of those
with greater material
wealth. They favour
stylish products that
emulate the purchases
of those with greater
material wealth
Makers
Theyre
practical,
down to
earth, self
sufficient
people who
like to work
with their
hands.
They seek
Indian
made
products
with a
practical or
functional
purpose.
Survivor
s
Theyre
elderly,
passive
people
concerned
about change
and loyal to
their favourite
brands.
While to the
consumers it's
a beacon of
faith and trust,
competitors
look upon
them as an
example of
marketing
brilliance.
BEHAVIOURAL SEGMENTATION

USAGE
Customers can be
segmented on the
basis of usage status-
heavy users, light
users & non-users of
a product category.
The profiling of heavy
users allows this
group to receive most
marketing attention
(particularly promotion
efforts) on the
assumption that brand
loyalty among these
people will pay heavy
dividends.
User status
Every product has its
nonusers, ex-users,
potential users, first-
time users and
regular users. A
company cannot
always rely on the
regular users, it has to
attract the other types
as well. The key too
attracting potential
users, or possibly,
even non-users, is
understanding the
reasons due to which
they are not using
your product.
Attitude
Attitude is defined as
a learned tendency
to respond towards
something. Peoples
response towards a
product may range
from Enthusiastic,
Positive, Indifferent,
Negative, Hostile .
Occasio
ns
Brand
Loyalty
Benefit Sought
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