The document discusses market segmentation, which involves dividing a heterogeneous market into distinct sub-markets of consumers with similar characteristics and needs. It outlines several approaches to segmentation, including mass marketing, target marketing, and micromarketing, as well as the criteria for effective segmentation. Benefits of segmentation include improved understanding of customers and resource allocation, while limitations involve increased marketing costs and potential product proliferation.

1. Market Segmentation
Presented By:- Harsh Inani
Roll No. :- 18014
G.H.P.I.B.M.

2. Flow of Presentation
 Concept and definition.
 Approaches to Market segmentation.
 Bases of Market segmentation.
 Effective Segmentation Criteria
 Benefits and limitations of Market segmentation.
 Conclusion.

3. CONCEPT AND DEFINITION
 The concept of market segment is based on the fact that the
market of commodities are not homogeneous but they are
heterogeneous. Market represent a group of customer having
common characteristics but two customer are never common in
their nature, habits, hobbies income and purchasing techniques.
 Market segmentation is the process of dividing a potential market
into distinct sub-markets of consumers with common needs and
characteristics.
 According to Philip Kotler , “ Market segmentation is subdividing a
market into distinct and homogeneous subgroups of customers,
where any group can conceivably be selected as a target market
to be met with distinct marketing mix.”

4. APPROACHES TO MARKET
SEGMENTATION

5. 1) Mass Marketing
 The term mass market refers to a large, undifferentiated
market of consumers with widely varied backgrounds. Products
and services needed by almost every member of society are
suited for the mass market. Such items as electric and gas
utilities, soap, paper towels and gasoline, for example, can be
advertised and sold to almost anyone, making them mass
market goods 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.
 The appeal of mass marketing is in the potential for higher
total profits. Companies that employ the system expect the
larger profit to result from (1) expanded volume through lower
prices and (2) reduced costs through economies of scale made
possible by the increased volume.

6. Henry Ford applied the concept in the automobile industry. His Model T
was conceived and marketed as a "universal" car— one that would meet
the needs of all buyers.

7. 2) Product Variety
 After the mass marketing strategy another strategy with similar
characteristics but overcoming its predecessor’s shortcomings came into
existence. That is product variety strategy.
 An attempt to appeal to the entire market with a huge variety of products
produced in mass is made. However, like Mass marketing in this case also the
customers needs & wants are not taken into account while developing the
product.
 When Maruti 800 was introduced into Indian roads, it was a variety product
because it used two version “Standard” and “Deluxe” with different colours.

8. 3) Target Marketing
 Target marketing is a market segmentation and market
coverage strategy 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 segment it serves without mass
production, mass distribution, or mass advertising. It
enables firms to capitalize on the respective serve
market share

9. 4) Micromarketing
 It is a form of target marketing in which companies fit their marketing mixes
to specific needs and wants of narrowly defined geographic, demographic,
psychographic or behavioral segments. E.g. Liberty shoes are available in
Delhi Metropolitan Area with different availability depending upon the types
of customer, status, and economic background. Segments, Niches, Local areas
and individuals are four levels of micro-marketing.

10. E.g. McDonald's Focuses on Local Marketing

11. 5) Customized Marketing
 With the advancement in manufacturing because of breakthrough in
information technology, for example, use of computer aided designs and
manufacturing, it has now become possible to manufacture a product as per
the individual customer needs or of a buying organization.
 E.g. boutiques for females and children.

12. 6) Personalised Marketing
 Mass production with product varieties, and target marketing for
segments, which are further divided into customers on a local basis or on
individual customer needs, the focus of the company is shifting more
minutely. Personalized marketing is to retain customer loyalty with the
company. It serves the personal customer need.
 Customization – empower the consumers to design the product or service
offering of their choice.
 E.g. Ferrari Tailor Made is the exclusive Ferrari programme for those
customers who want to customize each element of their car for a perfect
fit, creating an unmistakable, one-of-a-kind vehicle which reflects their
personality and tastes.*
• https://auto.ferrari.com/en_EN/sports-cars-models/personalization/tailor-made

13. Basis of Market Segmentation
Geographic Demographic Psychographic Behavioural Value Based

14. 1) Geographic Segmentation
 The region, the city, its density-urban/rural, climate etc. matters a lot in
segmenting the market on the basis of geographic segmentation.
 The following are some examples of geographic variables often used in
segmentation.
a) Region: by continent, country, state, or even neighbourhood. Ex. McDonalds
globally, sell burgers aimed at local markets, for example, burger patties are
made from potato in India rather then beef because of religious issues.
b) Size of metropolitan area: segmented according to size of population.
c) Population density: often classified as urban, suburban, or rural.
d) Climate: according to weather patterns common to certain geographic
regions.

15. Example of geographical market segmentation by Nike…

16. 2) Demographic Segmentation
 It divides the market on the basis of age, gender, marital status, income,
education, family-size, family life cycle, occupation, religion and nationality.

17. Some examples where in the market was segmented on the basis of gender of the
consumer

18. Kellogg's has bifurcated its products on the basis of age of the consumer

19. 3) Psychographic Segmentation
 This basis of segmentation is widely used by marketers. The important
aspects of psychographic segmentation include:
 Life-style: Conservative, liberal, health and fitness conscious,
adventuresome, status-seekers.
 Social Status: Lower class, lower-middle class, middle class, rich
class.
 Cultural: Continental, Mughlai, Chinese, Indian, Royal, Hindu
 Personality: Extroverts, Complaints, Introverts, Aggressive,
Complaints.

20. 4) Behavioural segmentation
 The consumers are segmented on the basis of their behavior through need
motivation, perception, learning involvement, attitude, occasions, benefits,
user-status, usage-rate, loyalty status, and buyer readiness stage. This is
based on consumer response to their requirements.
 E.g. Occasion : Cadbury Silk’s Valentine special pack…

21. Benefits : Head & Shoulders dandruff fighting capacity

22. 5) Value-Based Segmentation
 This concept prescribes that segmentation should
be the outcome of a match between the product
feature’s and customer’s needs. The marketers
must arm themselves with a new parameter for
apportioning their customers profitability.

23. Effective Segmentation Criteria
 Not all segmentation schemes are useful. We could divide buyers of table salt into
blond and brunette customers, but hair colours are undoubtedly irrelevant to the
purchase of salt. Furthermore, if all salt buyers buy the same amount of salt each
month, believe all salt is the same, and would pay only one price for salt, this market
is minimally segmentable from a marketing point of view.
 To be useful, market segments must rate favourrably on five key criteria:
1. Measurable :-The size, purchasing power, and characteristics of the segments can
be measured.
2. Substantial :-The segments are large and profitable enough to serve. A segment
should be the largest possible homogeneous group worth going after with a tailored
marketing program.
3. Accessible :-The segments can be effectively reached and served.
4. Differentiable :-The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs.
5. Actionable :-Effective programs can be formulated for attracting and serving the
segments.

24. Michael Porter has identified five forces that determine the intrinsic long-run
attractiveness of a market or market segment: industry competitors, potential
entrants, substitutes, buyers, and suppliers. The threats these forces pose are as
follows:
1. Threat of intense segment rivalry
A segment is unattractive if it already contains numerous, strong, or aggressive
competitors. It’s even more unattractive if it’s stable or declining, if plant capacity must
be added in large increments, if fixed costs or exit barriers are high, or if competitors have
high stakes in staying in the segment. These conditions will lead to frequent price wars,
advertising battles, and new-product introductions and will make it expensive to compete.
The mobile phone market has seen fierce competition due to segment rivalry.
2. Threat of new entrants
The most attractive segment is one in which entry barriers are high and exit barriers are
low. Few new firms can enter the industry, and poorly performing firms can easily exit.
When both entry and exit barriers are high, profit potential is high, but firms face more
risk because poorer-performing firms stay in and fight it out. When both entry and exit
barriers are low, firms easily enter and leave the industry, and returns are stable but low.
The worst case occurs when entry barriers are low and exit barriers are high: Here firms
enter during good times but find it hard to leave during bad times. The result is chronic
overcapacity and depressed earnings for all. The airline industry has low entry barriers but
high exit barriers, leaving all carriers struggling during economic downturns.

25. 3. Threat of substitute products
A segment is unattractive when there are actual or potential substitutes for the
product. Substitutes place a limit on prices and on profits. If technology advances
or competition increases in these substitute industries, prices and profits are likely to
fall. Air travel has severely challenged profitability for Greyhound and Amtrak.
4. Threat of buyers’ growing bargaining power
A segment is unattractive if buyers possess strong or growing bargaining power. The
rise of retail giants such as Walmart has led some analysts to conclude that the
potential profitability of packaged-goods companies will become curtailed. Buyers’
bargaining power grows when they become more concentrated or organized, when the
product represents a significant fraction of their costs, when the product is
undifferentiated, when buyers’ switching costs are low, or when they can integrate
upstream. To protect themselves, sellers might select buyers who have the least
power to negotiate or switch suppliers. A better defense is developing superior offers
that strong buyers cannot refuse.
5. Threat of suppliers’ growing bargaining power
A segment is unattractive if the company’s suppliers are able to raise prices or reduce
quantity supplied. Suppliers tend to be powerful when they are concentrated or
organized, when they can integrate downstream, when there are few substitutes,
when the supplied product is an important input, and when the costs of switching
suppliers are high. The best defenses are to build win-win relationships with
suppliers or use multiple supply sources.

27. BENEFITS OF MARKET SEGMENTATION
1. The organization gets to know its customers
better.
2. Provides guidelines for resource allocation.
3. It helps focus the strategy of the organization.
4. Minimizes aggregation of risk.
5. Provides opportunities to expand market.
6. Helps create innovation.

28. LIMITATIONS OF MARKET SEGMENTATION
1. Targeting multiple segments increases marketing
costs.
2. Segmentation can lead to proliferation of
products.
3. Narrowly segmenting a market can hamper the
development of broad-brand equity.

29. Conclusion
 The two main goals that any segmentation methodology should be able to
address are:
1) At a strategic level, segmentation should be able to help an organization
rapidly evaluate new business opportunities
Geographical expansion: Should the retail chain expand to north east?
Product expansion: Should the electronic manufacturer launch a smartphone?
2) At an operational level segmentation should yield information to help craft
successful marketing offers for specific prospects.
Product: What product features are must haves vs. nice to haves?
Price: What is the price point that customers are willing to pay?
Communication: How to message to the target customers?
Distribution: Where do the target customers live?

30. THANK YOU…