Market segmentation involves dividing a broad market into smaller, more homogeneous groups based on characteristics like customer needs, behaviors, or demographics. It is a two-step process that first identifies the broad product market and then segments it into smaller, more targeted markets. Proper market segmentation criteria include ensuring segments are homogenous internally but heterogeneous from each other, and that each segment is substantial enough to be profitable. Common ways to segment include behavioral, geographic, and demographic factors.

1. MARKET SEGMENTATION
Rimsha Kiran

2. It is a group of potential customer who have similar
needs who exchange something valuable with various
goods and services.
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MARKET
GENERIC MARKET
It is a market with similar need and seller offers various
ways to satisfy those needs
It is a market with similar need and seller offers close
substitute ways to satisfying those needs
PRODUCT MARKET

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Product Type
 What. Include good, services that the customer wants
Customer (user) needs
 To meet what
 It refers the product that satisfies the customer needs. Firstly focus on basic
needs, secondly focus on emotional needs
Customer type
 Who. Final user of the product
Geographical area
 Where. Place where marketers compete for customers

5. Segmentation is a part. Market segmentation is a two
step process
1. Naming the broad product market
2. Make segment of product market and then
select target market and develop suitable
marketing mix
In segment people are clustered with similar needs
Market segmentation is the homogenous group of
customer who respond to the marketing mix in a same
way
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MARKET SEGMENTATION

6. Types of segmentation
1. Behavioral Segmentation:
Dividing the total market into smaller homogenous groups
based on customer behaviors like need, social status,
personality, like, dislike, thinking patterns, kind of shopping,
rate of use, occasion.
It is known as psychological segmentation. Designing,
modification, introduce the thing in the market according to
the psyche of person.
Halal: these product show the sensitivity of customer regard
the food items
2. Geographic Segmentation
Divide the market on the base of geography like city, county,
state and region.
Banks do geographical segmentation
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7. Demographic Segmentation
Demographic , natural differences among individuals
Divide the market on the base of demographics like
age, sex, marital status, occupation, ethnicity, social
class, education, income and family life cycle.
• Focus on percentage of population diversity
• Cosmetic companies
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8. Good market segmentation criteria
Homogenous (within) similar:
The customer in the same market segment should be similar as possible with
respect to their marketing mix variable and their segment dimension. Segment
should be homogenous internally
Coca Cola: within city same
Heterogeneous (between) different:
The customer in different segment should be different with respect to marketing mix
variable and their segmenting dimension. One segment should be different from
another
Procter and Gamble: gender based segmentation: Male and Female
Coca Cola: international based segmentation. Within country homogenous
Cellular company: Geographical segmentation
Nestle: Time based segmentation.
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9. Substantial
Segment should be big enough to be profitable. Big
customer capital should be present in each segment
Operational
The segmenting dimension should be useful for
identifying customer and decide on marketing mix
variable. Segment should be practical
Fertilizer should be area based if other than this then
it is not practical
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10. Three basic ways to develop market oriented strategies
1. Single target market approach
It include one homogenous segment (sub market) and one business strategy. E.g. mental
health clinic for children
2. Multiple target market approach
it include two or more segment and different business strategies and different marketing mix.
Procter and Gamble: gender based segment. They make separate product for male and
female then independent promotion, independent advertisement. Coca cola: cross cultural
segmentation. Pricing, ad every thing different from county to country.
3. The combined target market approach
It combine two or more segment into larger target market and include one business strategy.
Same marketing mix Unilever: nationwide business. Advertisement same across nations.
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11. Continued…… 11
Best Practice Approach To Segmenting Product-Markets
1. Name the Broad Product-Market
 Firstly decide which broad product market would be launched then decide who will be the potential
customer. Survey can be done to get the idea about the customer.
 Example. If business about hotel, do survey to get idea about customer, how much customer visit the place.
Like in Malaysia, 80% people don’t have kitchen at home. Narrow view: Think about the market and
product. Bigger view: see market only as small part of larger. Take the bigger view, market should be
expanded to other areas. There should be balance between naming the product market too narrow (some
old product, some old market) and naming it too broadly (the whole world and all its needs)
2. List Potential Customers Needs
 List the relevant needs of potential customer.
 To see the possible needs, think about why people buy the present offers in the broad product market.
 Example. In broad motel guest market needs, security, privacy, comfort, space for activities

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……. Marketer also get the idea of needs by taking feedback from customers, by taking interviews about strengths
and deficiencies.
3. Form Homogenous Submarkets----Narrow Product Markets
 Some people have different needs than the others. Different submarkets are formed on the base of customers
needs. Make one submarket, aggregate the similar people into the segment as long they can be satisfied by
the same marketing mix. If not satisfied, make other submarket.
4. Identify The Determining Dimensions
 Review the list of need dimensions for each possible segment and identify the dimension.
 Qualifying dimensions are mostly important than the determining dimensions because it include the core
needs that should be satisfied. To identify the determining dimensions, focus on the needs and attitude of the
people in each segments.
 Dimension should have the capacity to satisfy the customer.
 Example: qualifying needs: needs of the customer, such as security, comfort etc. Determining dimension
needs, like restaurant; restaurant facilities. Services, recreation etc

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When the dimension is made. Two options are considered.
1. Uni-dimensional: only make one product
2. Multi-dimensional: make different products. They make dimensions and compare their buisness
5. Name The Possible Product Markets
Treat all the dimension independently. Treat the sub business as separate business
Review the dimensions, market by market and name the each market on the bases of its important
characters such as type of customers. Example: resort seekers, family vacationer.
6. Evaluate Why Product Market Segments behave As They Do
After naming the market think about why these market behave the way they do
Different segments may have similar but they have slight differences like needs.
It means split the segment and rename it.
Example: Resort seeker may have similarities with family vacationers but the difference here is that resort
seeker are mostly adults and family vacationers are also include children. So we don’t treat resort seeker
similar to family vacationers

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7. Make A Rough Estimate Of The Size Of Each Product Market-segment
 Each market segment should be substantial
 There should be a reasonable and sufficient number of customer and consumer
in all the segment or domains.
 Product market must tie to demographic data or customer related characteristics
 We are not trying to make the estimate of sale. Sales depend upon the
competition as well as the particulars of marketing mix.
 We can obtain a lot of data on the size of markets by the publishers who
published the details of the size of data on the base of demographics.
 By this we able to estimate the total number of customer present in each
product market segment.
 Then marketing mix are applied independently to each domain