A marketing segment is a meaningful buyer group having similar wants. Market segment is the portion of the market defined on the basis of the shared characteristics of people it covers. It the process of grouping buyers into different categories having common desires or needs. It is the strategy that subdivides the target market into sub-groups of consumers with definable, distinct and homogeneous characteristics with a view to develop marketing programmes for each sub-group in order to enhance satisfaction to consumers and profit to the marketer.

1. Market Segmentation
Kulbir Singh

2. Introduction
A market consists of people or organizations with wants,
money to spend, and the willingness to spend it.
However, most markets the buyers' needs are not
identical. Therefore, a single marketing program for the
entire market is unlikely to be successful. A sound
marketing program starts with identifying the differences
that exist within a market, a process called, market
segmentation, and deciding which segments will be
treated as target markets. Market segmentation is
customer oriented and consistent with the marketing
concept.

3. Meaning
A marketing segment is a meaningful buyer group
having similar wants. Market segment is the portion of
the market defined on the basis of the shared
characteristics of people it covers. It the process of
grouping buyers into different categories having
common desires or needs. It is the strategy that
subdivides the target market into sub-groups of
consumers with definable, distinct and homogeneous
characteristics with a view to develop marketing
programmes for each sub-group in order to enhance
satisfaction to consumers and profit to the marketer.

4. Definition
According to William Stanton, “Market
segmentation is defined as "the process of
taking the total, heterogeneous market for a
product and dividing it into several sub markets
or segments, each of which tends to be
homogeneous in all significance aspects.

5. Reason /Objectives of Segmentation
• To identify groups of customers with similar
requirements.
• To identify the tastes, preferences, needs and
buying motives
• To increase marketing efficiency
• To identify the areas where the customers
may be created
• Facilitates proper understanding of the
customer

6. • Increased market share
• Technology up-gradation
• Increase in purchasing power
• Increase in competition
• Customer retention

7. Basis for segmenting markets
Geographic segmentation: Geographic location is one of the
simplest methods of segmenting the market. People living in
one region of the country have purchasing and consuming
habit which differs from those living in other regions.
Demographic segmentation: Demographic variables such as
age, occupation, education, sex and income are commonly
used for segmenting markets.
Socio-psychological segmentation: Under this method
consumers are classified into market segments on the basis of
their psychological make-up, i.e., personality, attitude and
lifestyle. According to attitude towards life, people may be
classified as traditionalists, achievers, etc.

8. Product segmentation: When the segmentation of markets is
done on the basis of product characteristics that are capable
of satisfying certain special needs of customers, such a
method is known as product segmentation.
Benefit segmentation: Consumer behaviour depends more
on the benefit sought in product/service than on
demographic factors. Each market segment is identified by
the major benefits it is seeking. Most buyers seek as many
benefits as possible. However, the relative importance
attached to individual benefits differs from one group to
another
Volume segmentation: Another way of segmenting the
market is on the basis of volume of purchases. Under this
method the buyers are purchasers, and single unit
purchasers. This analysis is also capable of showing the
buying behavior of different groups.

9. Marketing-factor segmentation: The responsiveness of
buyers to different marketing activities is the basis for these
types of segmentation. The price, quality, advertising,
promotional devices, etc., are some of the activities involved
under this method.
Behavioural Segmentation: Behaviour segmentation refers
to why people purchase a product and service. It divides
buyers into groups based on their attitude, knowledge, uses
or responses to a product.

10. Benefits Of Market Segmentation
Better Matching Of Customer Needs: Different
customers have different needs. By segmenting the
target market and developing homogeneous groups,
it becomes easier for the marketer to cater to the
customer needs better.
Identification Of Gaps In The Market: Market
segmentation also results in the identification of
target groups that are not targeted well in the market.
This opens up opportunities for the business to
exploit and make profits from.

11. Increased ROI: Since market segmentation helps
serve the customer needs better, it not only decreases
spending unnecessarily but it increases repeated
sales, and customers also return the favour in the
form of referrals, word of mouth, etc.
Customer Retention: Customers retain with a
business which understands their needs and fulfils
them as they require. Segmentation helps in this.
Increased Market Share: Through market
segmentation and targeted communication, a
competitive advantage can be built which results in
increased market share.

12. • Proper allocation of resources
• Better assessment of the competition
• Knowledge of customers needs
• Adjustments in products
• Effective advertisement appeal
• Enhance marketing efficiency
• Increase In sales volume
• Benefits to customers

13. Market segmentation strategies
Undifferentiated marketing: When the
economies of organization do not permit the
division of market into segments, they conceive
of the total market concept. In the case of fully
standardized products and where substitutes
are not available, differentiation need not be
undertaken. Under such circumstances firms
may adopt mass advertising and other mass
methods in marketing, e.g., Coca Cola.

14. Differentiated marketing: A firm may decide to operate in
several or all segments of the market and devise separate
product-marketing programmes. This also helps in developing
intimacy between the producer and the consumer. In recent
years most firms have preferred a strategy of differentiated
marketing, mainly because consumer demand is quite
diversified.
Concentrated marketing: Put in another way, 'instead of
spreading itself thin in many parts of the market, it
concentrates its forces to gain a good market position in a few
areas. Then new products are introduced and test marketing
is conducted, and this method is adopted. For a consumer
product 'Boost' produced by the manufacturers of Horlicks,
this method was adopted.

15. Target Marketing
It 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. It
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.

16. Target Marketing Strategies
• Single-market strategy
• Selective specialization
• Product specialization
• Market specialization
• Full market coverage

17. Single-market strategy: In the simplest case, the company
selects a single segment. This company may have limited
funds and may want to operate only in one segment, it might
be a segment with no competitor, and it might be a segment
that is a logical launching pad for further segment expansion.
Selective specialization: This strategy of 'multi-segment
coverage' has the advantage over 'single-segment coverage' in
terms of diversifying the firm’s risk i.e. even if one segment
becomes unattractive, the firm can continue to earn money in
other segments.

18. Product specialization: Here the firm concentrates on
marketing a certain product that it sells to several segments.
Through this strategy, the firm builds a strong reputation in
the specific product area.
Market specialization: Here the firm concentrates on serving
many needs of a particular customer group. The firm gains a
strong reputation for specializing in serving this customer
group and becomes a channel agent for all new products that
this customer group could feasibly use.
Full market coverage: Here the firm attempts to serve all
customer groups with all the products that they might need.
Only large firms can undertake a full market coverage
strategy. e.g.Philips (Electronics), HLL (Consumer non-
durables).

19. Niche Market or concentrate market: A firm is
focusing on a single segment so it can concentrate on
understanding the needs and wants of that particular
market. A niche market is a small part of a larger
market that has its own specific needs, which are
different from the larger market in some way.
Niche marketing is defined as channeling all
marketing efforts towards one well-defined segment
of the population. There is one important thing to
understand that ‘niche’ does not exist, but is created
by smart marketing techniques and identifying what
the customer wants.