Market segmentation & Bases for market segmentation

1. Market Segmentation
III B.com- A Batch
S.V.S College, Bantwal

2. Introduction:
Market for most of the goods are
heterogeneous, & not homogeneous,
because buyers differ from one another in
their wants, purchasing power, geographical
location, buying habits & buying practices.
So, there arises a need for sub-dividing the
total market for a product into a number of
sub-markets or segments to capture a wide
market.

3. The process of dividing a market into smaller
homogeneous markets with similar
characteristics is called market segmentation.

4. Definition & Meaning
In the words of William J.
Stanton,” Market segmentation
consists of taking the total
heterogeneous market for a
product & dividing it into several
sub-markets or segments each of
which tends to be homogeneous in
all significant aspects”.
In the words of S.R. Davar, “

5. From these definitions, it is quite
clear that market segmentation
means dividing the total
heterogeneous market into
several segments or sub-markets,
each of which has one or more
homogeneous characteristics. In
short, market segmentation
means grouping of buyers who

6. 1. Understanding the needs of the consumers.
2. Better Position to spot marketing
opportunities.
3. Allocation of marketing budget.
4. Meeting the competition effectively .
5. Effective marketing programs.
6. Choosing of advertising media.
7. Increasing sales volume.
8. Benefits the customers.

7. 9. Better utilisation of marketing resources.
10. Discovering Marketing opportunities.
11. Specialised marketing.
12. Provision of information.
13. Evaluation of marketing activities.
14. Marketing efficiency.
15 Formulation of marketing mix.
16. Making of suitable adjustments.

8. Disadvantages
 If all the sub-markets are not served well, the total
volume of sales will be less.
 It is very difficult to sell highly specialised products
outside their own market segments under market
segmentation.
 Under market segmentation, a firm has to offer a
large variety of goods.
 Logistics become more complex with a greater
variety of distribution channels & higher inventory
requirements.
 Market segmentation is a costly process.

9. It is true that market segmentation
suffers from certain drawbacks, but in
spite of these drawbacks, today the
trend in marketing is towards market
segmentation, which is becoming
popular day-by-day & is considered
necessary for successful marketing
strategy.

10. Bases for market segmentation
There are several bases for market segmentation. The
bases for market segmentation may differ from
product to product & from firm to firm. The main
bases for market segmentation are:
A) Segmenting the market for Consumer products,
B) Segmenting the market for Industrial products

11. A) Segmenting the market for Consumer products.
The bases for segmenting the markets for
consumers products can be divided as follows:
 Geographic Segmentation
 Demographic Segmentation
 Psychographic Segmentation
 Behavioural Segmentation

12. I. Geographical Segmentation:
On the basis of geographical factors market can be
segmented as follows:
 Region: North, East, West, South,
Central, Coastal, Hilly.
 City Size: Metropolitan cities,
Small cities, Towns.
 Density of Area: Urban,
Semi-urban, Rural
 Climate: Hot, Humid, Cold, Rainy

13. II. Demographic Segmentation:
On the basis of demographic factors market can be
segmented as follows:
 Sex or Gender,
 Age,
 Income,
 Educational attainment
& Standard,
 Size of the family,
 Caste & Religion,
 Business or profession

14. III. Psychographic or personality Segmentation:
On the basis of psychographic factors market can be
segmented as follows:
 Life-style: Conservative, Liberal, Health & Fitness
Conscious, Adventuresome
 Social-Class: Lower class, Lower-middle class, Middle
class, Rich class.
 Cultural: Royal, South-Indian, Indian culture.
 Personality: Extroverts, Introverts, Aggressive,
Complainants.

15. IV. Behavioural Segmentation:
On the basis of behavioural factors market can be segmented
as follows:
a) Behaviour Segmentation:
 Needs-Motivation: Shelter, Security, Affection, Self-worth.
 Perception: Low risk, Moderate risk, High risk.
 Learning Involvement: Low involvement, High
involvement.
 Attitudes: Positive, Neutral, Negative.
 Occasions: Regular, Special.
 Benefits: Convenience, Prestige, Economy, Value, Quality,
Service.
 Readiness Stage: Unaware, Aware, Informed, Interested,
Desirous, Intending to buy, Enthusiastic.

16. b) Use-Situational Segmentation:
 Time: Leisure, Work, Rush, Morning, Night.
 Objective: Personal use, Gift, Fun, Achievement.
 Location: Home, Office, Friend’s Home, In-store.
 Person: Self, Friends, Boss, Relatives.
 Occasions: Regular, Special.
 Place: New, Old.

17. c) Use-Related Segmentation:
 Usage Rate: Heavy user, Medium user, Light user.
 Loyalty Status: None, Medium, Strong, Absolute.
 User Status: Non-user, Co-user, Potential user, First-
time user, Regular user.

18. A) SEGMENTING THE MARKET FOR
INDUSTRIAL PRODUCTS.
The bases for segmenting the markets for industrial products can be divided as
follows:
• Kinds of business: Example – Insurance co. Business can be divided
into fire insurance, life insurance, accident insurance, etc.
• Size of buyer: Large buyers & Small buyers
• Geographical location of buyers
• Purchasing procedure of buyer.

19. THANK YOU