This document discusses market segmentation, which is the process of dividing a market into distinct groups of consumers based on characteristics like needs, preferences, location, demographics, etc. It defines market segmentation and explains the key criteria for effective segmentation. It also outlines the different levels of segmentation from mass marketing to niche/micro marketing. Finally, it describes three patterns of segmentation - homogeneous preferences where all consumers have similar tastes, diffused preferences where tastes vary widely, and clustered preferences where natural segments emerge. The goal of segmentation is to better target specific groups and develop tailored marketing strategies.

1. Market Selection
Dr. Pooja
Assistant Professor
Dept. of Commerce
AMPGC, BHU
Market Segmentation
Levels and Pattern of Market Segmentation

2. Introduction
 Most organizations cannot target the total market for a specific product. For
each separate part of the market that an organization wants to target, a
marketing mix (a set of 5Ps) must be created. It would be very expensive to try
to create a marketing mix for every part of the target market. Instead, companies
cut up those targets into specific “segments” of the market that the organization
is more strategically positioned to be successful in targeting. Segmentation also
varies based on the target market being a consumer market or a business
market.
 The study of buyer behavior helps marketing managers better understand why
people make purchases. To identify the target markets that may be most
profitable for the firm, marketers use market segmentation, which is the
process of separating, identifying, and evaluating the layers of a market to
identify a target market.

3. Market Segmentation
 In order to be a true market segment, the people or organizations in each
segment must respond differently to variations in the marketing mix compared
with those in other segments. This implies that for any classification, scheme to
qualify as market segmentation, the segments must exhibit these behavioral
response differences.
 Paul Green and Donald Tull set four basic criteria for market segmentation:
1. The segments must exist in the environment (and not be a figment of the
researcher’s imagination)
2. The segments must be identifiable (repeatedly and consistently)
3. The segments must be reasonable stable over time, and
4. One must be able to efficiently reach segments (through specifically targeted
distribution and communication initiatives).

4. Market Segmentation – Definitions
 According to Schiffman and Kanuk, “Market Segmentation can be defined as
the process of dividing a market into distinct subsets of consumers with common
needs or characteristics and selecting one or more segments to target with a distinct
marketing mix”.
 Rajan Saxena defines, “Segmentation as the process of dividing heterogeneous
market into homogeneors sub units.”
 As per S J. Skinner, “Market segmentation is the process of dividing a total
market into groups of consumers who have relatively similar product needs.”

5. Why to Segment the Market?
Why
to
Segment
the
Market
Facilitates Proper Choice of Target Market
Facilitates Tapping of the Market, Adapting
the Offer to the Target
Helps to Divide the Markets and Conquer
Them
Make the Marketing Effort more Efficient
and Economic
Helps Identify Less Satisfied Segments
and Concentrate on Them
Benefits the Customer as well

6. Levels of Market Segmentation
 Marketers subdivide markets into segments, so they can do focus on
marketing plans. Each Level of market segmentation determines the
strategy a company will follow to promote, distribute and position its product
in the market and respectively target audience or its customers. Before
developing a marketing plan, one must know the what are the levels of
market segmentation.

7. Levels of Market Segmentation
Levels of
Market
Segmentation
Mass
Marketing
Segment
Marketing
Niche
Marketing
Micro
Marketing

8. 1. Mass Marketing
 In Segmentation, Mass marketing refers to the strategy of targeting the
entire potential customer market by means of a single marketing
message. The marketing strategy used in this segmentation does not
target the specific requirements or needs of customers. Mass marketing
strategy, instead of focusing on a subset of customers, focuses on the
entire market segment that can be a probable customer of a product.
 An example of mass marketing strategy is of Baygon cockroach spray or
Mortein mosquito repellent coils that target all its potential customers
through a single marketing message.

9. 2. Segment Marketing
 Segment marketing refers to a strategy where the company divides its
target audience into different segments based on their unique needs and
requirements. This way the company targets different messages to
different segments, appealing them towards the unique features the
product offers. This strategy creates product differentiation for customers
with similar needs and preferences, based on their gender, age, income
and location.
 The example of segment marketing within clothing industry may be
men, women, casual, fashionable and business clothing segments.

10. 3. Niche Marketing
 This strategy of marketing focuses on a narrower customer segmentation.
Customers may want or desire a product that is not met completely by the products
offered in a market. When companies move forward and develop highly specialized
products to offer these customers their specific needs, they offer distinct products in
a market that caters to specific customer segments only.
 Mountain bikes are an example of a niche marketing segment, where
the market segmentation will be individuals interested in mountain biking only.
Since not every bike manufacturing company caters to mountain bikers, it is a niche
segment. Companies that produce mountain bikes target the niche segment of
mountain bikers and cater to their specific needs, preferences and requirements.

11. 4. Micro Marketing
 Micro marketing follows an even narrower segmentation marketing strategy, catering
to the attribute of a much-defined subset of potential customers such as catering to
individuals of a specific geographical location or a very specific lifestyle.
 An example of micro marketing is luxury cars that are very high priced and offer
exceptional features such as high speed, customized look, etc. Micro marketing includes:
i. Local Marketing and
ii. Individual Marketing.
 Local marketing involves tailoring brands and promotions to the needs and wants of
local customer groups – cities, neighborhoods, and even specific stores.
 In the extreme, micro marketing becomes individual marketing – tailoring products
and marketing programs to the needs and preferences of individual customers. Individual
marketing has also been labeled “customized marketing,” and “one-to-one marketing”.

12. Patterns Of Market Segmentation
 Market segments can be build up in many ways, one way is to
identify preference segments.
 For example cookies buyers are asked how much they value
sweetness and saltiness in biscuits as two product attributes. Three
different patterns can emerge.

13. Patterns of
Market
Segmentation
Homogeneous
Preferences
Diffused
Preferences
Clustered
Preferences

14. 1. Homogeneous Preferences
 When the customers have relatively the same kind of preferences in
terms of their needs and wants, the market shows no natural segments.
 It shows a market where all the consumers have roughly the same
preferences. The market shows no natural segments. We would predict
that existing brands would be similar and cluster around the middle of
the scale in both sweetness & saltiness.

15. 2. Diffused Preferences
 It is the extreme of the homogeneous preferences; here the
customer’s preferences vary significantly. In such scenario, there are
several brands in the market that try to fill the space and show the real
differences to match the different customer’s preferences.
 At the other extreme, consumer preferences maybe scattered
throughout the space, indicating that customers vary greatly in their
preferences. The first brand to enter the market is likely to position in the
center to appeal to the most people.

16. 3. Clustered Preferences
 The market might reveal distinct preference clusters, called natural
market segments. The first firm in this market has three options. It
might position in the center, hoping to appeal to all groups. The
clustered preferences refer to the natural segments that get created due
to the shared preferences of a group of customers.
 It might position in the largest market segment (concentrated
marketing). It might develop several brands, each positioned in a
different segment. If the first firm developed only one brand, competitors
would enter and introduce brands in the other segments.