4. Market Segmentation
Dividing a market into smaller groups (segments) of
buyers with distinct needs, characteristics or behavior
who might require separate products or marketing
mixes.
6. Setting the competitive positioning for the product and
creating a detailed marketing mix.
Market Positioning
7. Market Segmentation
MarketMarket
Market
Segment
Market
Segment
Market
Segmentation
Market
Segmentation
People or organizations with
needs or wants and the ability and
willingness to buy
People or organizations with
needs or wants and the ability and
willingness to buy
A subgroup of people or organizations
sharing one or more characteristics that
cause them to have similar product needs.
A subgroup of people or organizations
sharing one or more characteristics that
cause them to have similar product needs.
The process of dividing a market into
meaningful, relatively similar, identifiable
segments or groups.
The process of dividing a market into
meaningful, relatively similar, identifiable
segments or groups.
8. Segmentation
Why segment?
– Identifies opportunities and needs.
– Allows firm to focus on specific needs.
– Improves marketing mix for each segment.
– Allows small firm to exist.
9. Objectives of Market Segmentation
• Grouping of customer on the basis of their homogenous
characteristics, such as nature, tastes, habits, income, behavior,
qualities and needs etc.
• To locate or identify the tastes, buying motives, needs, priorities
and preference of the customer
• To determine marketing strategies, target and goals
• To make the activities of the firm customer-oriented. Customer
orientation makes marketing segment an important pillar of the
marketing concept
• To identify the areas or sectors where the customer may be
created.
10. Importance of Market Segmentation
• Better position to locate Marketing Opportunities
• Effective utilization of Resources
• Facing the competition effectively
• Marketing Program
• Effective advertising Appeals
• Adjustment in products
• Enhances marketing efficiency
• Consumer satisfaction
• Assist in Marketing Research
• Effective evaluation of Distribution channels
13. Geographic Segmenting by country, region, city or other geographic
basis.
Demographic Segmenting based on identifiable population
characteristics, such as age, occupation, marital status and
so on.
Psychographic This segmentation approach involves an understanding of a
consumer’s lifestyle, interests, and opinions.
Benefits soughtThis approach segments consumers on the basis of specific
benefits they are seeking from the product, such as
convenience, or status, or value, and so on.
Behavioral Segmenting the market based on their relationship with the
product or the firm. Examples include: heavy or light users,
brand loyal or brand switchers, and so on.
14. Type of Firm Segmentation Base Possible Market
Segments
Banking Demographic segmentation Young couples, young
families, older families,
pre-retirement, retired
Mobile phone carriers Benefit segmentation Highly social, work-
oriented, safety contact,
status symbol
Frozen food
manufacturers
A broad mix is used here:
•Demographic
segmentation
•Psychographic
segmentation
•Behavioral segmentation
Single households, diet-
conscious, family dining,
parties, budget-conscious,
variety seekers
Toothpaste Benefit segmentation Teeth whitening, sensitive
teeth, fresh breath, cavity
protection, tartar control
Restaurant Behavioral segmentation Regulars, special
occasion, business lunch,
quick spot
15. Cosmetics and
perfumes firms
(such as L’Oreal)
Demographics
(gender, age)
OR
Benefit
Cosmetics and perfumes firms could
effectively use a variety of
segmentation variables.
For example, males and females
would have different needs, as would
younger and older consumers.
Benefit segmentation could be used
(some possible could include: skin
repair, remove wrinkles, glowing
skin, acne reduction, attractive look,
social status, celebrity identification).
Type of Firm Suitable Segmentation
Approach
Rationale
16. Type of Firm Suitable Segmentation
Approach
Rationale
Car
manufacturer
Psychographic
(social class)
OR
Geographic
Segmenting by social class makes
sense for this product category, as
cars are often a reflection of a
consumer’s lifestyle and used as a
social symbol of success.
Geographic segmentation (such as
urban versus rural) could also be an
effective approach
17. What is hybrid (multivariate)
segmentation?
• Hybrid segmentation (which is also sometimes referred to as
multivariate segmentation) refers to using multiple
segmentation variables in the construction of market segments.
• For example, using a demographic segmentation variable
together with a psychographic segmentation variable in order
to determine the market segment.
18. Segmenting Differences in the Same Market
• Even firms operating within the same industry can segment the
market in different ways (often for strategic reasons).
• Using the breakfast cereal market as an example, the following
diagrams highlight some different possible approaches.
• This first segmentation example uses age group (demographics)
and then benefits sought to construct nine different market
segments.
• Obviously, each of these segments would be of different sizes
and attractiveness, but it does give a good overview of the range
of consumer needs in the market.
19.
20. Let’s now look at another approach using the
same market.
21. • In this example, two quite distinct segmentation variables have
been used.
• The first base is a geographic variable of weather/climate and
the second is a psychographic (lifestyle) variable relating to
whether the breakfast meal is typically consumed in a family
setting (people eating together).
• Remember the point of these examples is to demonstrate that
the same market can be segmented and viewed in many
different ways.
• By doing so, the marketer gains a greater understanding of the
overall market and is more likely to identify unmet needs
alone.
22.
23.
24. Bases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographicGeographic
BasesBases
Used toUsed to
SegmentSegment
ConsumerConsumer
MarketsMarkets
BasesBases
Used toUsed to
SegmentSegment
ConsumerConsumer
MarketsMarkets
25. Geographic Segmentation
• Region of the country or world
• Market size
• Market density : TV Companies
• Climate: woolen clothes
• City
26. Geographic
Country/continent England, UK, Europe
Region/area of the country North India, West India, South India
City New York, Los Angeles, Dallas,
Chicago
Urban/rural Measured by the area’s population
density
Climate Tropical, arid
Coastal/inland Measured by distance to the coast
27. Bases for
Demographic Segmentation
• Age: Cartoon Network; MTV; News Channels
• Gender: Cosmetics & After Shave
• Income: Economical & Luxury goods
• Ethnic background: Food
• Family Life Cycle: Life Insurance Companies
• Generation: Apparels
• Education
• Occupation: PC Selling
28. Demographic
Age group Pre-teens, teens, young adults, older adults
Generation Baby boomers, Gen X, Gen Y
Gender Male, female
Marital status Married, single, widowed
Family life cycle Young married no kids, married young kids
Family size Couple only, small family, large family
Occupation Professional, trade, unskilled
Education High school, university
Ethnic background African-American, Hispanic, Asian
Religion Christian, Jewish, Hindu, Muslim
29. Psychographics
• Psychographic segments market in terms of shared attitudes,
interests, and opinions
• Segments include demographic information such as age and
income, but also includes richer descriptions
30. Psychographic
Lifestyle Family, social, sporty, travel, education
Values (VALS) VALS = values and lifestyles
Social class Upper class, middle class, lower class
Personality/self-concept Ongoing, creative, innovator, serious
Activities, interests,
opinions (AIO)
Various hobbies, sports, interests
33. Bases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
BasesBases
Used toUsed to
SegmentSegment
ConsumerConsumer
MarketsMarkets
BasesBases
Used toUsed to
SegmentSegment
ConsumerConsumer
MarketsMarkets
34. Benefit Segmentation
The process of grouping customers into
market segments according to
the benefits they seek
from the product .
Maruti Esteem, Honda City
36. Bases for Segmentation
BehavioralBehavioral
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
BasesBases
Used toUsed to
SegmentSegment
ConsumerConsumer
MarketsMarkets
BasesBases
Used toUsed to
SegmentSegment
ConsumerConsumer
MarketsMarkets
37. Segmenting by Behavior
• Behavioral segmentation slices consumers on the basis of how
they act toward, feel about, or use a product
38. Behavioral
Occasion Birthday, anniversary, Valentine’s Day
Buying stage Ready to buy, gathering information only
User status Regular, occasional, never
Usage rate Heavy, light
Loyalty status Loyal, occasional switcher, regular switcher
Brand knowledge Strong, some, none
Shopping style Enjoys shopping, functional, avoids
Involvement level High, medium, low
39. Behavioral Segmentation Variables
Market Segmentation
• Occasions
• User Status
• User Rates: Airlines
• Loyalty Status: Credit Cards
• Readiness Stage
Attitude Toward the Product
40. Business Marketing Segmentation
Geographic
Customer Type
Customer Size
Product Use
BusinessBusiness
MarketsMarkets
BusinessBusiness
MarketsMarkets
Purchasing Criteria
Purchasing Strategy
Importance
Personal
Characteristics
Micro-
segmentation
Micro-
segmentation
Macro-
segmentation
Macro-
segmentation
41. Business Marketing Segmentation
• Business MarketsBusiness Markets
Macro segmentation & Micro-segmentation
Geographic
Customer Type
Customer Size
Product Use
Purchasing Criteria
Purchasing Strategy
Importance
Personal
Characteristics
42. Steps in Segmenting a Market
Select
a market
for
study
Choose
bases
for
segmenta
tion
Select
descrip-
tors
Profile
and
analyze
segments
Select
target
markets
Design,
imple-
ment,
maintain
mkting
mix
43. Steps in Segmenting a Market
• Select a market for study
• Choose bases for segmentation
• Select descriptors
• Profile and analyze segments
• Select target markets
• Design, implement, maintain marketing mix
44. Choosing a Targeting Strategy
• Undifferentiated (Mass) Marketing
• Differentiated (Segmented) Marketing
• Concentrated (Niche) Marketing
• Local (Micro or Individual) Marketing
45.
46. Undifferentiated Marketing
• The undifferentiated marketing strategy focuses on an entire
target market rather than a segment of it.
• This strategy employs a single marketing mix -- one product, one
price, one placement and a single promotional effort -- to reach
the maximum number of consumers in that target market
• Effective when most consumers have similar needs
• Television commercials are an example of mass media advertising
along with Big Bazaar, Vishal Mega Mart etc.
• Print Advertising
• Billboards
• Radio
47. Examples of undifferentiated marketing
• When Henry Ford introduced the Ford Automobile, he offered
one model to the market with one color option, black. As you
now know, Ford has grown into a great brand with many types
of vehicles and colors and they segment their cars and trucks
to different markets, worldwide.
• Another example of undifferentiated marketing involves
Coke-Cola. When Coke was first introduced, there was one
beverage flavor introduced into the general market. Now
Coke-Cola has many different brands that they segment to
different markets
48. Henry Ford epitomized this strategy when he offered the Model-
T Ford in one colour , black.
49.
50. Differentiated Marketing
• A differentiated marketing strategy targets different market
segments with specific marketing mixes designed especially to
meet those segments' needs.
• Each mix includes a product, price, placement and promotional
program customized specifically for a particular segment.
– For example, a company that manufactures vitamin supplements
might identify gender-based market segments.
– It could produce one multivitamin formula for women and another
for men.
– It could further differentiate by segmenting the gender groups by life
stage and creating different marketing mixes around each one.
– Differentiated marketing is best suited for markets with readily
identifiable segments, each with distinctive needs.
51. • Example of product differentiation was in the early 2000s, when
Google began taking over the search engine business on the Internet.
Before Google, there was a variety of options to use if you had to
search for something online.
• While most of those search engines would give you the same, adequate
results, they also all followed the same presentation, which at the time
was pretty much just a list of webpages among some busy
advertisements, news links, and images.
Google's differentiation strategy was twofold.
• First, it was simplicity. Google was minimalistic. When you went to
Google.com, you saw two things: the name 'Google' and a box where
you could type your search term. Users loved the simplicity of it.
• The second differentiation was the algorithm used to find the results
that would be returned to the user. This would come to be a very
important differentiation, but one that the end user wasn't always aware
existed.
52. • For a typical query, there are thousands, if not millions, of
webpages with helpful information. Algorithms are the
computer processes and formulas that take your questions and
turn them into answers.
• Today Google’s algorithms rely on more than 200 unique
signals or “clues” that make it possible to guess what you
might really be looking for.
• These signals include things like the terms on websites, the
freshness of content, your region and PageRank.
53.
54. Concentrated Marketing
• Concentrated marketing (or niche marketing) strategy focuses
on going after a large share of one or a few smaller segments,
instead of going after a small share of a larger market.
• The ability to specialize to this degree has the advantage of
allowing a company to focus its resources on meeting the needs
of a single, well-defined and well-understood market, which
makes it more competitive against larger companies.
• On the downside, a concentrated marketing strategy can
pigeonhole a company into a single product and market and
leave it vulnerable to the effects of changing conditions within
that market.
55. • Toyota has had exceptional success with this stratify because of its
brand name that reminds people of reliability.
• Toyota began its hybrid market share about 15years ago with Prius
as its first vehicle (in 2000).
• Ever since then, it began expanding its selection of hybrid vehicles
by including the Toyota Camry (America's top selling mid-size
sedan), and the Toyota Highlander.
• By introducing a selection of different hybrid vehicles, Toyota was
able to capture more customers, thus making it the World leading
Hybrid System.
• Customers have a lot of discretion in choosing their vehicle
preference.
• Whether they prefer a small size efficient vehicle (the Prius), or
America's favorite mid-size sedan (the Camry), or even the Hybrid
SUV (the Highlander); it caught many consumers thinking about
TOYOTA!
56. • Providing the largest selection of hybrid vehicles in its make,
carrying a reputation for reliable cars, and by being one of the
first car manufacturers to enter the hybrid market, Toyota was
successful in grabbing a large market share in the small
segment.
• By capturing the largest market share for hybrid vehicles,
Toyota will not face as much difficulties when we enter the
market of electric vehicles because its hybrid vehicles have
proved to be a leader in innovating new opportunities for
drivers.
• Toyota is a great example of concentrated marketing because
it has successfully dominated a large share in the small
segment of hybrid vehicles.
57. • Niche marketing refers to competing within a narrowly defined
market segment with a specialized offering.
• The firm’s competitive advantage comes both from its expertise (as
it’s a specialist) and from having a high market share (of a relatively
small market segment).
• Niche marketing is a somewhat rare strategy to implement and the
term is sometimes confused with one-to-one marketing and being a
small market player.
• Most small businesses are generally not niche marketers; they
simply have a very small share of a large segment (whereas niche
marketers have a large market share in a small/tight segment).
NICHE MARKETING
58. • A portion of a market that you've identified as having some special
characteristic and that's worth marketing to
• A niche marketis the subset of the market on which a specific product
is focused.
• The market niche defines the product features aimed at satisfying
specific market needs, as well as the price range, production quality and
the demographics that is intended to impact.
• It is also a small market segment. For example, sports channels like
STAR Sports, ESPN, STAR Cricket, and Fox Sports target a niche of
sports enthusiasts.
59.
60. NICHE MARKETING
An example of concentrated marketing is the marketing of
Rolls Royce cars, which targets the premium car market
segment
Another examples are
• Washing detergents hard & gentle washes . Surf excel for
tough stains ( hard on clothes) & Ezee from Godrej for
delicate clothes.
--- Astha , Sanskar , Q TV – focus on religion & spiritualism.
DISTINCT NEEDS
SPECIALIZATION
LESS COMPETITION
POTENTIAL
63. Local or Customized Marketing
• Also known as ‘neighborhood marketing,’ local marketing generally refers
to any marketing techniques a business uses to market and promote itself to
the area in which it operates.
• In most cases, local marketing often becomes the responsibility of the
franchisee with the parent company being responsible for the national and
regional marketing initiatives.
• An example of this is how McDonald’s would focus on national
advertisements that focus on brand awareness and new products that will be
at all the stores across the nation, while the individual franchise owner may
promote special deals they have on Monday’s at their own location
64. LOCAL MARKETING
• Marketing programs tailored to the needs & wants of local customer
groups in trading areas, neighborhoods , etc.
• this trend is called grass roots marketing.
Ex. – Spiderman 3 was released in 5 different language in India
including Bhojpuri.
Pune sarees
Kashmiri silk
67. Geographic Segmentation
Dividing the market into different geographical unit such
as nations, regions, states, countries, cities or even
neighborhood
71. Demographic Segmentation
Divides the market into groups based on variables such as age,
gender, family size, family life cycle, income, occupation,
education, religion, race, generation, and nationality.
77. • For small income, Coke has small returnable glasses price
ranges from P7-12.
• For middle people, it has non-returnable bottle.
• For high income people, it has Coke Tin.
80. • Lifestyle groups
Young Associations
• Mobile
• High valued house/flat
• Good Salary
• Young branded car.
Third Agers Associations.
• 50's
• Retired early from profession.
• Time to spare
• Adventure Seekers
81. Social Class
• Different consumers fall in
different social classes.
• This depends mainly on their
buying power.
• The buying power is affected
by the background of the
customer, his income as well
as his spending habits.
82. Everyone has different clothing habits based on their lifestyles.
the customer might be school going, college going, office going
or other.
Lifestyle
83. Personality
Personality in psychographic segmentation is dependent on both –
lifestyle as well as social class.
A person will have a rich personality only if he has high buying
power as well as the taste in clothes to maintain such a lifestyle.
85. • OCCASIONS - Archies and Hallmarkcards, Monaco at tea
time.
• BENEFITS – Shampoo for hair conditioning, cleaning , hair
fall defence dandruff control
• USER STATUS- light – medium – heavy user
• LOYALTY STATUS- hardcore loyal , split loyal- loyal to 2-3
brand ,shifting loyal, switcher
87. Occasion Segmentation
Dividing a market into groups
according to occasions where buyers
get the idea to buy, actually make
their purchase or use the purchased
item.
88. Benefit
Segmentation
•Dividing the market into groups
according to the different benefits that
the consumers seek from the product.
•Requires finding the major benefits
people look for in the product class, the
kinds of people who look for each
benefits and the major brands that
deliver each benefit
91. Evaluating Market Segments
Segment Size and Growth
Analyze current segment sales, growth rates, and expected
profitability.
Segment Structural Attractiveness
Consider effects of: competitors, existence of substitute
products, and the power of buyers & suppliers.
Company Objectives and Resources
Examine company skills & resources needed to succeed in that
segment.
Offer superior value and gain advantages over competitors.
92. Selecting Target Market Segments
Target Market
consists of a set of buyers who share common
needs or characteristics that the company decides
to serve.
94. Undifferentiated (mass) Marketing
Firm decides to ignore market segment differences
and target the whole market with one offer.
Focus is on common (not different) needs of the
consumers.
95. Differentiated (segmented) Marketing
Firm targets several market segments and designs
separate offers for each.
•The goal is to have higher sales and a stronger
position with each market segment.
97. Micromarketing
Practice of tailoring products & marketing programs to the needs
and wants of specific individuals and locations.
Local Marketing: Tailoring brands and promotions to the
needs and wants of local customer groups—cities,
neighborhoods, specific stores.
Individual Marketing: Tailoring products and marketing
programs to the needs and preferences of individual
customers.
98. Choosing a Target Marketing Strategy
Company Resources
Product Variability
Product’s Life-Cycle Stage
Market Variability
Competitors’ Marketing Strategies
99. Socially Responsible Target Marketing
Smart targeting helps both companies and consumers.
Target marketing sometimes generates controversy and concern.
•Vulnerable and disadvantaged can be targeted.
•Cereal, cigarette, beer, and fast-food marketers have received
criticism.
•Internet has raised fresh concerns about potential targeting
abuses.
101. Product Position
Is the way the product s defined by consumers on important
attributes – the place the product occupies in consumers’ minds
relative to competing products.
102. Positioning
Developing a specific marketing mix
to influence potential customers’
overall perception of a brand, product
line, or organization in general.
103. Position
The place a product, brand, or group
of products occupies in consumers’
minds relative to competing offerings.
