Marketing Management Core Concepts. Segmentation and Its Strategies

1. Prof Murugan Kandaswamy
SRM Institute of Science and Technology
Segmenting &
Targeting the Market

2. Number of Product Categories with Relative
Penetration of Top Three Brands
Ratio of
Penetration
Income Category Urban Rural
High Ratio Low
Low Middle
Middle High
5
5
8
4
3
7
Medium Ratio Low
Low Middle
Middle High
1
3
-
2
4
-
Low Ratio Low
Low Middle
Middle High
4
3
-
4
2
3
Note : The top three brands are concentrated in the high ratio. It shows that in relation to the
other brands in the category the tope three are dominant. This is more so among the middle
and high levels of income
Source: NCAER: Consumer Market Demographics in India (Revised Ed), Ed: S.L. Rao, Jan 1994, p.18

3. Below
SSC
66%
SSC
Grad
26%
Grad
8%
SSC
Grad
33%
Below
SSC
58%
Grad
9%
TV
Viewers
46%
Non-
Viewers
54%
TV
Viewers
62%
Non-
Viewers
38%
Ilterate
42%
Literate
58%
Ilterate
42%
Literate
58%
Non
Work
80%
Work
13%
Student
7%
Non
Work
76%
Work
15%
Student
9%
1983 1990
A: Literacy Profile
1983 1990
C: Education Profile
1983 1990
B: Occupational Profile
1983 1990
D: TV Viewership

4. Rural Customers
Brand
Price
Size
Feature
Rural Customers
Brand
Price
Size
Feature
Rural Customers
Brand
Price
Size
Feature
Rural Customers
Brand
Price
Size
Feature
Lower Income H.H.
Middle Income H.H.
Upper Middle Income H.H. Rich H.H.

5. Very
Rich: 1.2
Consuming
Class: 32.5
Climbers: 32.5
Aspirants: 44.0
Destitute: 33.0
Segmenting the Indian Market: The Income Route

6. C(19.5%) Skilled Workers,clerks, salespersons etc
D(22.4%) Same as above, occupation profile with SSC
E1&E2 (13.2%) Primarily unskilled labour
Socio-Economic Pyramid of Indian Population

7. Segmentation
• Market segmentation is the process of
dividing a heterogeneous market into
homogenous sub units.
• Need for segmentation –
• To be able to compete in a highly competitive
market.
• To position itself as segment leader.
• To gain competitive edge.

8. BASES FOR SEGMENTING THE MARKET
(a) Customer based segmentation
(b) Product related segmentation
(c) Competition related segmentation
• Customer Based Segmentation
• Geographic location of customers:
• RURAL vs. URBAN
• METRO vs. NON METRO

9. • Demographic Characteristic
• Age
• Gender
• Child Pester Power
• Youth Market
• Income
• Occupation
• Gender
• Education
• Marital Status
• Family Size & Structure
• Psychographic Variables
• Life Style
• Personality
• Buyer Readiness

10. Where Kids Reign Supreme Role in FMCG purchase
71
59
52 49 47
42
37 36
32 31
0
10
20
30
40
50
60
70
80
1
FMCG
%
of
kids
who
affluence
what
FMCG
brand
their
family
buys
Biscuits
Burgers & Pizzas
Fruit Juice
Shoes
Hot milk additives
Cheese
Tomato ketchup
Tooth paste
Soap
Shoepolish
Where kids reign supreme in FMCG purchase-Case
of food products

11. Product Related Segmentation
Product Use situations – Different customers may use the
same product in different situations.
• Benefits Segmentation – Marketers identifies benefits
that a customer looks for when buying a product.
• Quantity consumed- one of the basis of segmentation
beverages – tea ,coffee,soft drinks,liquor and cigarette
markets.Following segments are visible –
a) Heavy users
b) Moderate users
c) Light users

12. Product Related Segmentation
• Decision Criteria – Used by customer to
evaluate and buy a brand or the product.
Following four parameters are considered in
consumer decision making today –
• Price
• Perceived quality of the product/ service
• Service offered by the firm
• Technology

13. Contemporary Indian women – By Sec Group
Religious
Prefers to work hard themselves
Anxious and worried about change
Seeking equality
Quality conscious
Disturbed by vulgarity and Western influences
Seeking luxury
Outgoing
Fashion conscious
Bolder and liberated
Seeking economy
Self- sacrificing
Social conservatism
Self Denial Pleasure
Sec D
Sec C
Sec B
Sec A
Sec A1+

14.  Bolder
 Outgoing
 Consumerist
 Anxious , worried about
change
 Nostalgic
 Self- indulgent
 Discontented
 Fashion conscious
 Seeking freedom
 Seeking pleasure away from home
 Impulsive
 Disturbed by vulgarity and Western
influences
 Discomfort with luxury
 Discomfort with vulgarity
 Guilt about spending on self
 Self sacrificing
20-29years
30-39 years
40-49 years
15-19 years
50+ years
Modern/Individualistic Traditional/conservative
By Age

15. •Competition Based Segmentation
• Hard Core Loyal
• Soft Core Loyals
• Switchers

16. Segmenting Industrial Markets
• Based on Size & purchase of the customer,there are
a) Category customers – large buyers
b) Category customers – medium sized buyers
c) Small buyers
• Geographical Location – Firms located in a particular region
form a part of segmentation
• End Use – by differentiating end users of firms products
• Within end use segment further market can be segmented on
basis of purchase criteria.
• Combining purchase criteria, size and geography – Matrix form
of market segmentation .

17. Segment 1 Segment 2 Segment 3 Segment 4
Buyer characteristics
and buying motives
Marketing mix
(a)Large
(b)Average order
size Rs.
2,00,000
(c)Standard
product
(d)Quality
conscious
(e)Competitive
price-price
important
(f)Delivery
crucial
(g) Western India
(a)Large
(b)Average
order size Rs.
2,00,000
(c)Standard
product
(d)Not much
'concerned
about
quality
(e)Extended
credit
If)Highly
price sensitive
(g) North
India
(a)Medium sized
(b)Average order size
Rs. 2,00,000
(c)Tailor-made product
(d)Moderate on price
sensivity
(e)Value for money
(f)Vendor reliability
(g) Extended credit
(h) Returns Policy
(i)South based
(a)Small
(b)Avemge order
size Rs. 2,00,000
(c)Tailor-made
product
(d)After sales
service
(e)Price sensitivity low
Spread all over India
Product quality
product features
Warranties
After sales service
Financmg plans
Price
Credit terms
Delivery
Prompt availability
Personal selling
Direct mail
Yes
No
No
No
No
Yes
No
Yes.
Yes
Maybe
May be
No
No
No
No
No
Yes
'Yes
May be
May be
May be
May be
Yes
Yes
Yes
Yes
Maybe
Yes
Yes
Yes
Yes
Yes
Mav he
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
Buying Behaviour/Motivation or Purchase Criteria
Market Segmentation in Industrial products --The matrix Approach

18. Three Stages of Market Segmentation
• Survey Stage- Divided into two parts-
1) Focus group discussions & in depth interviews with a view to getting an
insight into consumer motivation,attitudes and behavior.
2) Based on this insight, developing a questionnaire for a sample group of
customers.
• Analysis Stage – using factor analysis. Identifying factors that
differentiate customer groups.
• Profiling Stage- Each cluster is profiled in terms of demographics,
psychographics, media habits,attitudes,behavior and consumption habits.
• Requirements for Effective Segmentation-
a) Accessibility
b) Measurable
c) Viable
d) Intensity in Competition.

19. Targeting Strategies
• Standardization – Firm offers the same product to different market
segments. It uses the same communication,pricing and distribution
strategies.
• Differentiation
• Focus - Focus is a combination of standardization & differentiation,
where the core strategy remains the same,but differentiation is
made to take into account specific customer group requirements.
• Positioning- the differentiation could be along following lines-
a) Product
b) Service
c) Channel
d) Price
e) People
f) image

20. THANK YOU
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