The document discusses market segmentation and target marketing. It describes the segmentation process as identifying segments, selecting target segments, and creating tailored marketing mixes. Segments should be clearly defined, substantial, measurable, accessible, and stable. Common types of segmentation include geographic, demographic, geo-demographic, psychological, socio-cultural, user behavior, and niche marketing. Benefits of segmentation include the ability to divide the market, provide tailored solutions, avoid unprofitable markets, reduce costs, focus resources equitably, and increase campaign effectiveness.

1. Aijaz Shahid
aijazshahid@gmail.com
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03315575501

2. Chapter-3
SEGMENTATION
AND
TARGET MARKETING

3. What is SEGMENTATION

4. WHY WE NEED A NICHE
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Video
Source: Youtube

5. SEGMENTATION
PROCESS
Applying market segmentation involves a three-stage process:
Identifying Segments
» The first and foremost step is to identify the target
market. The marketers must be very clear about who
all should be included in a common segment. Make
sure the individuals/business in a group have similar
characteristics and needs.
Selecting Target Segments
» Individual target markets are selected based on the
expectation of obtaining a differential response. Once
the target market is decided, it is essential to find out
the needs of the target audience. The product must
meet the expectations of the individuals. The marketer
must interact with the target audience to know more
about their interests and demands.

6. Creating Marketing Mix for each Segment
» Devise relevant strategies to promote brands
amongst each segment. Remember you can’t afford
to have same strategies for all the segments. Make
sure there is a connect between the product and the
target audience. Advertisements promoting female
toiletries can’t afford to have a male model, else the
purpose gets nullified.

7. Targeting Individuals
» Unlike general advertising or sales promotion DM frequently
targets specific individuals
» Personalized letters containing names and addresses are sent,
» Changes in communication technology ll allow marketeers to
reach more specific segments.
» Communications targeted at individuals must be managed by
using computerized records of what is mailed or who is called
and what responses are received.
» Database technology allow DM to utilize lists with
demographics and purchase histories
Targeting Businesses
» In b2b DM demographic variables such as income and
locations have different meanings.
» Consumption patterns are altogether different so the buying
patterns are
» Direct Marketeers targeting individuals use segmentation
based on cultural background, social class, and family life-
cycle stage, but those targeting industries do not.

8. REQUIRMENTS FOR
SEGMENTATION
Clearly Defined and Distinguishable
» The chosen segments should be clearly defined to avoid
doubt about which part of the market, the firm's marketing
activities are aimed at. Otherwise there is a risk that market
activities will "spill over" into different segments. If there is
more than one segment, each one should be made up of
target markets which require specific marketing, due to
differences in buying behavior.
» Example: If married and unmarried men behave similarly
when purchasing shoes, there is little value in placing them
in different segments.
Substantiality/Suitability
» Firms need to ensure that the segment is suitable. The
characteristics of the people making up the segment,
suggest the segment are likely to buy the product and have
the spending power to buy the product. Segment suitability
also includes the size of the segment. If the segment is too
small, potential for sales growth will be limited. If it is too
large, it will be difficult to create marketing activities to suit
all of the groups included in the segment.

9. Measurability
» Before embarking on a sales strategy it is important to know
the size of existing sales in that segment. A firm also needs
to know how product sales are growing in the chosen
segment. If you can not measure the growth rate, it will be
difficult to assess whether your chosen segment is
profitable.
» For example smart phone sales are growing rapidly but which
segments of the market are they growing in? and in which segments
is growth stagnant?
Accessibility
» Accessibility is about communicating with your customers
and being able to get things to them. The segments must be
reachable through communication and distribution channels.
Stability
» The segments should be relatively stable to minimize the
cost of frequent changes

10. TYPES OF
SEGMENTATION
Geographic Segmentation
» The market is segmented according to geographic
criteria—nations, states, regions, countries, cities, city
size, density of area, neighborhoods, zip codes or
climates etc
» Example: People in a country, they show some similar
characteristics, they speak same language, the religion might
be similar, they might wear specific design and quality of cloths,
they might have similar likes and dislikes
Demographic Segmentation
» Demographic segmentation divides the market into
groups based on demographic variables including age,
gender, family size, structure and life cycle, income and
education level etc.
Source: answers.com*

11. Geo-Demographic Segmentation
» Attribution of demographic characteristics to a group of
individuals residing in the same geographic area based on an
overlay of demographic survey data against a geographically
segmented list. This approach aims to identify groups of
small geographic areas that have similar demographic
profiles.
» Example: Geo-demography might determine that F-10, Islamabad,
comprises a high proportion of well off married people with young
children. It would thus be appropriate to target F-10 for children's
furniture promotions and so forth.*
Psychological Segmentation
» Psychographic segmentation is the practice of dividing
groups via particular psychological traits for the purpose of
marketing to these markets. Segmentation takes place via
consumer personality, values, attitudes, interests, lifestyle,
and social class.
» Example : A company needing to market gold golf clubs to a specific
golfer belonging to an expensive membership based country club.
Source:
Wiki.answers.com

12. Socio-Cultural Segmentation
» Sociocultural factors are those which include the social and
cultural environment and attitudes of a society. These factors
would include societal trends,
» Such as the lifestyle of families and how often they eat out
and or shop. It also includes how different demographic
segments act.
User Behavior Segmentation
» Behavioral Segmentation is market segmentation based on
certain consumer behavior characteristics, such as benefits
sought by the consumer, the extent to which the product is
consumed, brand loyalty, price sensitivity, and the ways in
which the product is used.
Example: If a customer has been using the same brand of toothpaste
for 12 years and has had no cavities in that time period, a small price
increase will most likely mot be an issue to that customer.

13. BENIFITS OF
SEGMENTATION
ö Divide and Conquer
ö To provide tailored solutions
ö Help you avoid unprofitable markets
ö To Reduce Marketing Costs
ö It allows companies to focus on equitable distribution of resources
ö To Increased effectiveness in marketing campaign
ö To collect a higher markup from customers who can afford higher
prices

14. Thank You