Presented to:- Prof. T. S. Shibin
Prepared by :- Ashish Jaint
A market segment consists of a group of
Customers who share a similar set of needs
MAJOR SEGMENTATION VARIABLES
These are divided in four parts-
- Geographic segmentation
- Demographic segmentation
- Psychographic segmentation
- Behavioral segmentation
Geographic segmentation divides the market into
Geographical units such as nations, states, regions,
Counties, cities, or neighborhoods.
Rural and semi- urban areas
Demographics are statistical measures of significant facts about
a population, starting with its size and including such other
age, gender, housing, mobility, income, occupation, education
Demographic variables are often associated with consumer
needs and wants.
AGE- Consumer wants and abilities change with age.
E.g.- Hungama channel for children's and Astha channel for
LIFE STAGE – People in the same part of life cycle may
differ in their life stage. It defines a person’s major concern
such as getting married, deciding to buy a home, sending a
child to school, taking care of older parent etc.
E.g.- Insurance companies offer various schemes like child
education and products for retired people.
GENDER- Men and women have different attitudes and they vary
in their shopping behavior as well.
E.g.- Mahindra Rodeo uses Kareena kapoor as its brand
ambassador, Emami launced a fairness cream for men.
INCOME- It determines the ability of consumers to participate in
the market exchange.
E.g.- TAG Heuer and rolex watches for rich people, and titan or
maxima For medium income peoples.
SOCIO-ECONOMIC CLASSIFICATION- Based on the
combination of two factors- Income and education level.
Psychographics is the science that uses psychology and
demographics to understand consumers.
In psychographic segmentation, buyers are divided into different
groups on the basis psychological/personality traits, lifestyle, or
Values, lifestyles and religions affect product/brand choice of
• One of the most popular commercially available classification
systems based on psychographic measurements is strategic
business insight’s (SBI) VALS ( Value and Lifestyle) frame
• The main dimensions of VALS segmentation framework are
consumer motivation (Horizontal dimension) and consumer
resources ( vertical dimension ).
• Consumers are motivated by three primary motivations:
THE VALS SEGMENTATION SYSTEM:
AN EIGHT-PART TYPOLOGY
• Marketers divide buyers into groups on the basis of their
knowledge of, attitude towards, use of, or response to a product.
NEEDS & BENEFITS- The needs and wants of a product varies
from person to person.
DECISION ROLES- People play 5 roles in buying decision.
Initiator, influencer, decider, buyer and user.
USER AND USAGE- REAL USER AND UASAGE-
RELATED VARIABLES- Marketers believe variables related
to various aspects of users or their usage- occasions, user status,
usage rate, buyer-readiness stage, and loyalty status- are good
starting points for constructing market segments.
• Occasions- Occasion’s mark a time of day, week, month, year,
or other well-defined temporal aspects of a consumer’s life.
E.g.., Cards on Christmas and new year & Friendship bands
on Friendship day.
• User status- Every product has its nonusers, ex-users,
potential users, first-time users and regular users.
E.g., Donors in blood banks and Johnson Baby products.
• Usage Rate- We can segment market into light, medium and
heavy product users.
• buyer readiness:- some people are unaware of the product
Some are aware, some are informed , some are interested,
Some are desire the product, some intend to buy.
- Marketers can employ a marketing funnel to break down the
market into different buyer readiness.
- Marketers need to educate, inform, and persuade consumers so
that they start accepting the new offer.
• Loyalty Status- Company can divide market on the basis of
degree of brand loyalty.
Hard-core loyals, Split loyals, Shifting loyals, Switchers
Attitude:- five consumer attitudes about products are
Enthusiastic, positive, indifferent, negative, and hostile.
e.g.- in political campaign workers use attitude to determine:
- How much time to spend with each voter.
- They thank to enthusiastic voters and remind to vote them.
- reinforce those are positively disposed.
- Try to win the votes of indifferent voters.
- Spend no time trying to change the attitudes of negative and
Multiple bases:- combining different behavioral bases
Can provide a more comprehensive and cohesive view
Of a market and its segments.
BASES FOR SEGMENTING BUSINESS
1. Industry: which industries should we serve?
2. Company size: what size companies should we serve?
3. Location: what geographical areas should we serve?
1. Technology: what customer technologies should we focus on?
2. User or nonuser status: should we serve heavy users, medium
users, light users, or nonusers?
3. Customer capabilities : should we serve customers needing
many of few services?
1. Purchasing-function organization: should we serve companies with
highly centralized or decentralized purchasing organization?
2. Power structure : should we serve companies that are engineering
dominated, financially dominated and so on?
3. Nature of existing relationships; Should we serve companies with
which we have strong relationship or simply go after the most
4. General purchasing policies: should we serve companies that
prefer leasing? Service contract? Systems purchases? Sealed
5. Purchasing criteria : Should we serve companies that are seeking
Quality? Service? Price?
1. Urgency: Should we serve companies that need quick and sudden
delivery or service?
2. Specific application: Should we focus on application of our
product rather than all applications?
3. Size or order : Should we focus on large or small orders?
1. Buyer-seller similarity: Should we serve companies whose
people and value are similar to ours?
2. Attitude should risk: Should we serve risk-avoiding customers?
3. Loyalty; Should we serve companies that show high loyalty to
Effective segmentation criteria
Market segments must rate favorably on five key criteria:
Measurable- Size, purchasing power, and characteristics of the
segments can be measured.
Substantial- Segments are large and profitable enough to serve.
Accessible- Segments can be effectively reached and served.
Differentiable- Segments are conceptually distinguishable and
respond differently to different marketing –mix programs.
Actionable- Effective programs can be formulated for attracting
and serving the segments.
PORTER’S FIVE FORCE MODEL
Michael Porter has identified five forces that determine the
intrinsic long-run attractiveness of a market or market segment
1. Threat of intense segment rivalry
2. Threat of new Entrants
3. Threat of substitute products
4. Threat of buyer’s growing bargaining power
5. Threat of supplier’s growing bargaining power
EVALUATING AND SELECTING THE
1. FULL MARKET COVERAGE- With full market coverage, a
firm attempts to serve all customer groups with all the products
they might need. E.g. coca-cola (non alcoholic beverage
market) undertake a full market coverage strategy.
Large firms can cover a whole market in two broad ways:
Undifferentiated marketing-The firm ignores segment
differences and goes after the whole market with one offer.
Differentiated marketing – The firm sells different products to
all the different segments of the market.
2. MULTIPLE SEGMENT SPECIALIZATION- With selective
specialization, a firm selects a subset of all the possible segments,
each objectively attractive and appropriate.
A firm attempt to achieve some synergy with product or market
Product specialization- Firm sells a certain product to several
different market segments.
Market specialization- Firm concentrates on serving many needs of
a particular customer group.
3. SINGLE-SEGMENT CONCENTRATION- The firm markets to
only one particular segment.
E.g., Porsche concentrates on the sports car market.
4. INDIVIDUAL MARKETING- Segments of one, Customized
market or one-to-one marketing.