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1. Principles of
Segmentation
MANAGEMENT OF BUSINESS UNIT 2

2. Objectives:
Define the term segmentation
Discuss the importance of segmentation
Outline the reasons for segmentation
Outline the benefits of market
segmentation
Discuss the drawbacks of market
segmentation

4. Market segmentation –
�Dividing a market into distinct
groups with distinct needs,
characteristics or behavior who
might require separate products or
marketing mixes.
In other words, it's the identification of
sections of the market that are different

5. Market
Segmentation Why
Market Segments
Are Important

6. After video presentation, students will share their view
on
● Discuss the following after watching the video:
○ Why do companies divide populations into market
segments?
Mini-activity: split class into small groups. Each group
should pick any famous company they want (no
repeats). They should identify three market segments
the company is probably most interested in and three
market segments that the company probably avoids.
Students will need to justify their selections

7. Why market segmentation is important?
When marketers use market segmentation it makes
planning campaigns easier, as it helps to focus the
company on certain customer groups instead of
targeting the mass market. Segmentation helps
marketers to be more efficient in terms of time, money
and other resources. Market segmentation allows
companies to learn about their customers. They gain
a better understanding of customer’s needs and wants
and therefore can tailor campaigns to customer
segments most likely to purchase products.

8. Reasons for segmentation

9. �To maintain a competitive edge by catering to
the specific needs of each segment
�To get a better understanding of the firm's target
market
�To broaden customers base by including people
from all ages, gender, etc.
�To facilitate product differentiation as the
firm aims to reach all its potential customers
�To give information to the marketing department
of a business on how to position its marketing
mix

10. Benefits of market segmentation

11. � The firm can adjust its product to meet the needs of the
different segments, improving customer satisfaction
� Knowing the needs of each segment can save money
that would otherwise be spent on promotion campaigns
that might have failed without prior information.
� The firm can make better use of its limited resources
and in the process reduce waste, since it would be
knowledgeable about each segment’s needs.
� Retaining Customer -It is a great way to retain
customers. Firms can establish a life-long relationship
with their consumers via formulating an effective market
segmentation strategy.

12. Drawbacks of market segmentation

13. .Researching information about each segment
can result in very high administrative costs
.the firm may forgo revenues by focusing on
just one or two segments
.Promotional costs may also be higher as
different strategies will be required for different
segments
.Research and development and production
costs could be high in order to produce
several different product variations

14. Concepts of market segmentation

16. 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.
OR

17. mass marketing is a strategy which is
directed towards attracting a huge portion
of the audience. It aims to address the
highest number of potential customers
while ignoring niche demographic
differences. The strategy involved in this
type of marketing strategy focuses on a
higher volume of sales at lower prices so
as to obtain maximum exposure for the
product.

18. Some core features of mass marketing are:
● It generally focuses upon a big portion
of the audience.
● The objective includes the scattergun
approach. Companies need to hit as
many people as possible to get some
return.
● Mass media is used to spread the
undifferentiated message of the product.

21. Niche marketing
� Concentrating all marketing efforts on a small but
specific and well defined segment of the
population. Niches do not 'exist' but are
'created' by identifying needs, wants, and
requirements that are being addressed poorly or
not at all by other firms, and developing and
delivering goods or services to satisfy them. As a
strategy, niche marketing is aimed at being a big
fish in a small pond instead of being a small fish
in a big pond. Also called micromarketing or
concentrated marketing.

22. Characteristics of niche market
�Lower sales volume
�Higher prices to offset higher cost
�The product is tailored to the
segment
�Higher “per unit” costs of
production

23. Benefits of niche marketing
� Lower competition – focus on smaller
group
� Brand loyalty
� Improve efficiency

24. Drawbacks of niche marketing
�Small –scale production often
nullifies economies of scale
�If the single product being
offered fails, then the business
could also fail
�vulnerability

27. MARKET COVERAGE
STRATEGIES
�Undifferentiated marketing –
this is where the firm uses one
product and uses the same
marketing mix for the entire
market. Example - Dettol

28. �Concentrated marketing
The firm uses the same
marketing mix within a segment
of different segments of the
market. Example - Mouthwash

29. �Differentiated marketing –
The firm creates different
marketing mixes for
different segment within the
market. Dairy producer

32. https://www.linkedin.com/pulse/20140730082827-41390803-market-segmentation-criteria-five-
essential-criteria

33. BASES OF SEGMENTATION
https://www.youtube.com/watch?v=Xq11ejr2do8&t=36s

37. Factors influencing buying behaviour