MARKET SEGMENTATION
By- Lucky
Class- XI Science
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2.1 MARKET SEGMENTATION
INTRODUCTION:
When marketers provide a range of product or
service choices to meet diverse consumer
interests, consumers are better satisfied, and
their overall happiness, satisfaction, and
quality of life are ultimately enhanced. Thus,
market segmentation is a positive force for
both consumers and marketers alike.
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Definition of 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
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. 3
USES/BENEFITS OF MARKET SEGMENTATION
• Identifies opportunities for new product development
• Helps design marketing programs most effective for
reaching homogenous groups of buyers
• Improves allocation of marketing resources
• The organisation gets to know its customers better
• 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.
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PURPOSE OF MARKET SEGMENTATION
• To develop marketing activities
• To increase marketing effectiveness
• To generate greater customer satisfaction
• To 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 5
Market Segmentation Process
1. Determine the characteristics of segments in
the target market & separate these segments
in the market based on these characteristics.
2. Verify the market segments size if adequate
enough to support the organization's product.
3. Develop a marketing strategy to target this
market.
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Market Segmentation Process
6. Develop Marketing
Mix for Each Target Segment Market
5. Develop Positioning Positioning
for Each Target Segment
4. Select Target
Segment(s) Market
3. Develop Measures Targeting
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
Market Segmentation
1. Identify Bases
for Segmenting the Market
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Levels of Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Niche Marketing
Different products to subgroups within segments
( more segmentation)
Micromarketing
Products to suit the tastes of individuals or locations
(complete segmentation)
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2.2 BASES FOR SEGMENTATION
GEOGRAPHIC SEGMENTATION:
Region: North, South, East, West.
City Size: Major Metropolitan, Small cities, Towns.
Density of area: Urban, Suburban, Rural.
Climate: Temperate, Hot, Humid.
DEMOGRAPHIC SEGMENTATION:
Age, Sex, Marital Status, Income, Education,
Occupation.
SOCIOCULTURAL SEGMENTATION:
Culture/Subculture, Religion, Race/Ethnic, Social
class (i.e. Lower, Middle, Upper), Family Life Cycle
(i.e. Bachelors, Young marrieds etc.,) 9
PSYCHOLOGICAL/PSYCHOGRAPHIC
SEGMENTATION:
Needs-motivation: Shelter, safety, security, affection
etc.
Personality: Extroverts, novelty seeker, aggressives.
Perception: Low-risk, moderate-risk, high-risk.
Learning-involvement: Low or High involvement.
Attitudes: Positive or negative attitude.
Psychographic (Lifestyle): Economy-minded, status
seekers, outdoor enthusiasts.
USE- RELATED SEGMENTATION:
Usage rate: Heavy users, medium users, light users,
non users. 10
Awareness status: Unaware, aware, interested,
enthusiastic.
Brand loyalty: None, some, strong.
USE-SITUATION SEGMENTATION:
Time : Leisure, work, rush, morning, night.
Objective: Personal, gift, snack, fun, achievement.
Location: Home, work, friends home, in-store.
Person: Self, family members, friends, boss, peer.
BENEFIT SEGMENTATION:
Convenience, social acceptance, long lasting,
economy, value for the money.
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HYBRID SEGMENTATION:
Demographic/psychographic profiles: Combination of
demographic and psychographic profiles of consumer
segments.
Geodemographics: Latino America, Young Literati
etc.,
VALS(Values & Lifestyles): Actualizers (Most
Resources), fulfilled, believer, (Principle Oriented),
striver, achievers (Status Oriented) experiencers,
makers (Action Oriented), strugglers (Least
Resources).
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2.3 CRITERIA FOR EFFECTIVE TARGETING OF
MARKET SEGMENTS
• Differentiable: market response is homogeneous within
segments and heterogeneous between segments;
• Identifiable: individuals can be assigned to a segment based
on a meaningful profile of segment characteristics;
• Stable: segments and segment membership do not change in
the short run;
• Measurable: the size and purchasing power of relevant
segments can be determined;
• Actionable: the company is able to develop a marketing mix
that will appeal to the members of a given segment;
• Accessible: members of a segment can be reached with the
appropriate marketing mix;
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Evaluating Market Segments
Segment Size and Growth
-Analyze sales, growth rates and expected
profitability.
Segment Structural Attractiveness
-Consider effects of Competitors, Availability of
Substitute Products and, the Power of Buyers &
Suppliers.
Company Objectives and Resources
-Company skills & resources relative to the
segment(s).
-Look for Competitive Advantages.
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2.4 IMPLEMENTING SEGMENTATION
STRATEGIES
Firms that use market segmentation can pursue a
concentrated marketing strategy or a differentiated
marketing strategy. In certain instances, they might
use a countersegmentation strategy.
Targeting several segments using individual marketing
mixes is called differentiated marketing.
Targeting just one segment with a unique marketing
mix is called concentrated marketing.
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Market Coverage Strategies
Company
Marketing Market
Mix
A. Undifferentiated Marketing
Company
Marketing Mix 1 Segment 1
Company Segment 2
Marketing Mix 2
Company
Marketing Mix 3 Segment 3
B. Differentiated Marketing
Company Segment 1
Marketing
Mix Segment 2
Segment 3
C. Concentrated Marketing 16
COUNTER SEGMENTATION STRATEGY
Counter segmentation strategy is a strategy in
which it combines two or more segments. For
example, for some schools, a counter
segmentation strategy effectively solved the
problem. (e.g. by combining advertising, sales
promotion, and personal selling courses into a
single course called promotion.)
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Factors to be considered in Choosing a Market-
Coverage Strategy
Company
Resources
Product
Variability
Product’s Stage
in the Product Life Cycle
Market
Variability
Competitors’
Marketing Strategies
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Positioning for Competitive
Advantage: Strategies
Product Product
Class Attributes
Away from Benefits
G
Competitors H
C Offered
A
D
E
B
Against a F Usage
Competitor Occasions
Users
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Developing Competitive
Differentiation
Product Service
Areas for Competitive
Differentiation
Personnel Image
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