2. What is Marketing Segmentation?
“ Market segmentation is the process of dividing a market into distinct
subgroup of consumers with distinct needs, characteristics, or
behavior, who might require separate products or marketing mixes.”
- Philip Kotler.
A true market segment meets all of the following criteria:
a. It is distinct from other segments (different segments have
different needs).
b. It is homogeneous within the segment (exhibits common needs).
c. It responds similarly to a market stimulus, and it can be reached
by a market intervention.
3. Need for Segmentation
If all consumers were alike and had the same background, education
and experience, mass marketing or undifferentiated marketing would
be logical strategy. But companies today understand that they cannot
appeal to all buyers in the market or at least not to all buyers in the
same way. Moreover companies themselves vary widely in their
abilities to serve different segments of the market.
4. Requirements For Effective Segmentation
To be maximally useful market segments must exhibit the following
characteristics:
a) Measurability – The degree to which the size and the purchasing power
of the segments can be measured.
b) Accessibility – The degree to which the segments can be effectively
reached and served.
c) Sustainability – The degree to which the segments can survive in the
market.
d) Action ability – The degree to which effective
programs can be formulated
for attracting & serving the
segments.
5. What is Market Aggregation ?
Well market aggregation also known as mass marketing or undifferentiated
marketing, is simply marketing a product to the largest audience possible this
leads to heavy exposure of the brand and product. This also leads to reduced
cost in marketing the product. Usually undifferentiated marketed products are
simple and seen as necessities such as toothpaste.
6. Bases for segmenting.
The first step in developing a market segmentation strategy is to select the
most appropriate bases on which to segment the market. The marketer will
have to try different segmentation bases or segmentation variables, alone or in
combination, to find the best way to view the market structure.
a) Segmenting Consumer Markets.
b) Segmenting Business Markets.
8. Geographic segmentation
The market is segmented according to geographic criteria- nations,
states, regions, counties, cities, neighborhoods, or zip codes. A
company may decide to operate in one or few geographical areas,
or to operate in all areas but pay more attention to geographical
differences in needs and wants.
E.g.: Woolens sold in North India and limited segments in the south
like Bangalore, Ooty & others cold places.
Tractors and fertilizers sold in rural areas while PCs/laptops sold in
cities.
9. Demographic segmentation.
It divides the market into groups based on variables such as age, gender,
family size, family life cycle, income, occupation, education, race, generation
and nationality. Demographic factors are the most popular bases of
segmenting customer groups. One reason is that consumer needs, wants
and usage rates vary closely with demographic variables. Another is that
demographic variables are easier to measure than most other types of
variables.
E.g.: Garments – children’s clothing, women's wear, men’s wear.
Airlines – Economy Class & Business class.
Fridge – Different size are 180, 230 litres for different family sizes.
10. Psychographic Segmentation
This divides buyers into different groups based on social class, life styles, or
personality characteristics. People in the same demographic group can have
very different psychographic make-up. In psychographics, lifestyle and
attitude are core bases from the segmentation angle, since buyer behavior
predominantly depends on them in the case of certain products.
E.g.: Raymonds, Reid & Taylor –
suiting for the elite class.
Titan watches – fast track
watches meant for teenagers for
casual and stylish look.
11. Behavioral Segmentation
In behavioral segmentation, consumers are divided into groups according
to their knowledge of, attitude towards, use of or response to a product.
Occasions
Segmentation according to occasions. We segment the market according to
the occasions.
Benefits
A powerful form of segmentation is to group buyers according to the
different benefit that they seek from the product.
Users status
Nonusers, ex-users, first time users, etc.
12. User Rate
Markets can also be segmented into light, medium and heavy users. Heavy
users are often a small percentage of the market but account for a high
percentage of total consumption.
Loyalty status
A market can also be segmented by consumer loyalty. Consumers can be
loyal to brands, stores and companies. Buyers can be divided into groups
according to their degree of loyalty.
13. Multiple/ Hybrid marketing
Marketers increasingly use segmentation bases to indentify smaller, better
defined target groups. Companies often begin by segmenting their
markets using a single base, then expand using other bases.
One good example of multiple or hybrid segmentation is ‘geo-
demographic segmentation’, which uses both geographic and
demographic bases.
14. Segmenting Business Markets
Industrial markets can be segmented with many of the same variables used in the
consumer market segmentation. Business buyers can be segmented geographically,
demographically or by benefits sought, user status, usage rate, loyalty status.
Business marketers also use some additional variables such as:
Operating Variables – Technology.
User-non-user-status.
Purchasing approaches – Centralized/ Decentralized.
Purchasing power structure.
Purchasing Policies, criteria.
Situational factors – Urgency.
Specific application.
Size of order.
Personal characteristics – Buyer seller similarity.
Attitude towards risk.
Loyalty.
15. Benefits Of Market Segments
• Adjustment of activity • Standardization
• Allocation of resources • Market Share
• Better Positioning • Innovation
• Marketing Programs • Risk production
• Better evaluation. • Sales Value
• Early Decisions.
• Saves volume.
• Profits
