• What is Market Segmentation?
• Why segmentation?
• What are the requirements of Segmentation?
• Benefits & Limitations of Segmentation
• Segmenting Consumer Markets
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- Behavioural Segmentation
•whereby a product is developed and
marketed for a very well-defined, specific
segment of the consumer population.
• Target marketing is particularly effective
for small companies with limited
resources because it enables the
company to achieve a strong market
position in the specific market
Requirements of Market
In addition to having different needs, for segments to be
practical they should be evaluated against the following
• Identifiable: the differentiating attributes of the
segments must be measurable so that they can be
• Accessible: the segments must be reachable through
communication and distribution channels.
• Measurable: This is important especially for demographic and
geographic variables. For an organization with direct sales
(without intermediaries), the own customer database could
deliver valuable information on buying behavior (frequency,
volume, product groups, mode of payment etc).
• Substantial: the segments should be sufficiently large to
justify the resources required to target them.
• Unique needs: to justify separate offerings, the segments
must respond differently to the different marketing mixes.
• Durable: the segments should be relatively stable to minimize
the cost of frequent changes.
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
• Segmentation aims to match groups of purchasers
with the same set of needs and buyer behaviour. Such
a group is known as a 'segment'.
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. - AAA
Benefits and LimitationsBenefits:
The Organisation gets to know its customers better.
Provides guidelines for resource allocation.
It helps focus the strategy of the organisation.
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.
• To develop marketing activities
• Generate greater customer satisfaction
• Create savings
• 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
The following are some examples of geographic variables
often used in segmentation.
• Region: by continent, country, state, or even
• Size of metropolitan area: segmented according to size of
• Population density: often classified as urban, suburban, or
• Climate: according to weather patterns common to
certain geographic regions.
Life-cycle stage: Dividing a market into different groups based on which stage in the life-cycle,
presented in the table below, reflects the fact that people change the goods and services they
want and need over their lifetime.
Bachelor Stage young, single people not living at home
Newly Married Couples young, no children
Full Nest I youngest child under six
Full Nest II youngest child six or over
Full Nest III older married couples with dependent children
Empty Nest I
older married couples, no children living with
Empty Nest II
older married couples, retired, no children living at
Solitary Survivor I in labour force
Solitary Survivor II retired
people who seek
They spend a
of income on
ideals and who
value in products.
Customers can be
segmented on the basis
of usage status- heavy
users, light users & non-
users of a product
category. The profiling
of heavy users allows
this group to receive
promotion efforts) on
the assumption that
brand loyalty among
these people will pay
Attitude is defined as
a learned tendency to
response towards a
product may range
from – Enthusiastic,
Negative, Hostile .