Market segmentation involves dividing a market into groups of customers with distinct needs and behaviors who may require separate products or marketing mixes. The document discusses the 5 steps of market segmentation: 1) grouping potential buyers into segments based on characteristics, 2) grouping products into categories, 3) developing a market-product grid to estimate segment sizes, 4) selecting target segments based on criteria like size and costs, and 5) taking marketing action such as with pricing, advertising, and promotions to effectively reach the target segments. Segmentation allows companies to better satisfy customer needs and increase profits by developing tailored marketing strategies for different consumer groups.

1. Market Segmentation
C. VIGNESH
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2. Agenda
 What is market segmentation?
 Why is segmentation necessary?
 How to segment the market?
 Developing market-product grids.
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3. Segmentation examples
 How does DELL computers segment the market for
PCs?
http://www.dell.com
 How does T-Mobile segment the market to meet
various consumer needs?
http://tmobile.com
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4. Where does segmentation fit in?
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5. What is Market Segmentation?
 Market segmentation involves aggregating
prospective buyers into groups that have two key
characteristics.
o have common needs and
o respond similarly to a marketing
action.
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6. Why Segment Markets?
 Satisfy diverse needs by developing different
products to suit various consumer needs.
 One Product and Multiple Market Segments
 Multiple Product and Multiple Market
Segments
 Segments of One: Mass Customization
• Build-to-Order (BTO)
• Synergy
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7. 5 Step Segmentation Process
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8. Step 1: Grouping Potential Buyers into
Segments
 Criteria to Use in Forming the Segments
• Potential for Increased Profit
• Similarity of Needs of Buyers within a Segment
• Difference of Needs of Buyers Among Segments
• Potential of a Marketing Action to Reach a Segment
• Simplicity and Cost of Assigning Buyers to Segments
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9. Two Ways to Segment markets
• Customer Characteristics
 Geographic: Region
 Demographic: Household
 Psychographic: Lifestyle
• Buying Situations
 Benefits Sought: Product Features
 Patronage: Usage Rate
• Frequency Marketing
• 80/20 Rule
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10. SE
G V
M A
E R
N I
T A
A B
TI L
O E
N S
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11. Procedures for Segmentation
 Cross-Tabulations
o usage x age, income x age
 Statistical Methods
o Cluster Analysis
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12. Step 2: Group Products to be Sold into
Categories
Step 3: Develop a Market-Product Grid and
Estimate Size of Markets
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13. Market-Product Grid
E.g. Apple Computers
Product Synergies
Marketing Synergies
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14. Step 4: Select Target Markets
 Criteria to Use in Picking the Target Segments
• Market Size • Cost of Reaching Segment
• Expected Growth • Compatibility with the
Organization’s Objectives
• Competitive Position and Resources
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15. Step 5: Marketing Action
 Take Marketing Action to reach Target Markets
effectively
o Price Strategy
o Advertising Strategy
o Promotional Strategy.
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16. Questions / Comments?
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