Marketing Management

WHAT ARE THE DIFFERENT
LEVELS OF MARKET
SEGMENTATION

POSSIBLE LEVELS OF
SEGMENTATION
Full Market Coverage Multiple Segments Single Segments Individuals as
Segments
Shivam Verma || IIT Delhi

FULL MARKET COVERAGE

A firm attempts to serve all customer groups with all the products
they might need.
Only large firms can undertake a full market coverage strategy
Cam cover a whole market in 2 broad ways
 Differentiated marketing
 Undifferentiated marketing

Undifferentiated Marketing or Mass marketing
 The firm goes after the whole market with one offer to the
bradest number of buyers
 Mass distribution mass communication
 Appropriate when all consumers have same preferences and
market has no natural segments
 Henry Ford, Model-T ford in one colour, black
 Lowest cost lower prices higher margins
 Increasing Splintering of market, proliferation of channels &
communication is making difficult and expensive to reach mass
audience

Differentiated Marketing
 The firm sell different products to all the different segments of
the market
 Creates more total sales
 Increase cost of doing business
 No generalizations about its profitability are valid

MULTIPLE SEGMENTS

MULTIPLE SEGMENTS
Selective Specialization.
A firm selects subset of possible segments(suprasegments), each
attractive and appropriate
May or may not be synergy among the segments
Diversifies the firm’s risk
Example: symphony orchestras

MULTIPLE SEGMENTS
Synergy can be achieved with-
 Product specialization-
 Sells a certain product to several different market segments
 Building strong reputation on specific product area
 Product maybe supplanted by entirely new technology
 Market specialization-
 Firm concentrates on serving many needs of a particular customer group
 Building strong reputation among this customer group
 Customer group may suffer budgt cuts or shrink in size

SINGLE SEGMENTS

SINGLE SEGMENTS
Markets to only one segment
Example: Porsche on sports cars and Volkswagen on small cars
Deep knowlegde on segment’s need
Strong market presence
Operating economies by specializing its production, distribution and
promotion

NICHE MARKETING

NICHE MARKETING
Niche- narrowly defined customer group seeking distinctive mix of
benefits within a segment.
Marketers aim to understand customers’s needs so well that hey
willingly pay a premium
Example: Revolution plus sized apparel for women.
Niche is fairly small but has size, profit and growth potential
(‘chasing the long tail’)
Unlikely to attract competition

INDIVIDUAL MARKETING

INDIVIDUAL MARKETING
Segments of one
One to one marketing
Major source- Internet
Customerization mass customization that empowers consumers to
design products and services according to their needs
Firms provide platform and tools and rents to customers the means
to design their own product
Raises costs

CREDITS
All Photos are taken from google images

IN WHAT WAYS CAN A
COMPANY DIVIDE A
MARKET INTO SEGMENTS?

BASES FOR SEGMENTING
CONSUMER MARKETS
•Geographic
Segmentation
•Demographic
Segmentation
•Psychographic
Segmentation
•Behavioural
•Segmentation

GEOGRAPHIC SEGMENTATION
Divides into geographical units
such as nations, states, regions,
countries, cities or
neighbourhood
There are differences in
consumer preferences, purchase
patterns, and behaviours across
regions
Hence different market efforts

DEMOGRAPHIC SEGMENTATION
Age and life
cycle stage
Lifestage Gender
Income
Socio-
Economic
Classification
Generation

AGE AND LIFE CYCLE STAGE
Titan’s Zoop targets 6-14 year-old-children by using
design elements that reflect the preferences of the target
segment

LIFE STAGE
iBall Aasaan, targeted at citizens, has features that are
compatible with the needs of the segment

GENDER
Today, many companies are targeting
women, and not just men, for their two-
wheeler brands. Mahindra Rodeo, for
example, uses Kareena Kapoor as its
brand ambassador, suggesting the
brand’s qualities of power and style

INCOME
With the increase in income, luxury
wristwatch brands such as TAG Heuer are
increasing their visibility and presence in
the Indian market

SOCIO-ECONOMIC
CLASSIFICATION
Rural areas are emerging as important
markets for many products and services.

PSYCHOGRAPHIC SEGMENTATION
Psychographics is the science of using
psychology and demographics to better
understand consumers
Buyers are divided into different groups on the
basis of psychological/personality traits, lifestyle,
or values
Popular and commercially available classification
system is Strategic Business Insight’s (SBI) VALS
framework.

BEHAVIOURAL SEGMENTATION

BEHAVIOURAL SEGMENTATION
Marketers divide buyers into groups on the
basis of their knowledge of, attitude toward,
use of, or response to a product.
•Occassions
•User Status
•Usage Rate
•Buyer Readiness Stage
•Loyalty Status
•Attitude
•Multiple Bases
Needs and Benefits
Decision Roles
User and Usage- Real
user and Usage-Related
Variables

BUYER-READINESS STAGE
LifeCell uses celebrity endorsements to
introduce umbilical cord stem cell
banking in India.

BUYER-READINESS STAGE
Example of Marketing Funnel

LOYALTY STATUS
Hard-core loyals- Consumers who buy only one brand all the time
Split loyals- Consumers who are loyal to two or three brands
Shifting loyals- Consumers who shift loyalty from one brand to
another
Switchers- Consumers who show no loyalty to any brand

CREDITS
All Photos are taken from google images and Book on ‘Marketing
Management’ by Kotler

WHAT ARE THE
REQUIREMENTS FOR
EFFECTIVE SEGMENTATION ?

STEPS IN SEGMENTATION
PROCESS
Needs-Based Segmentation
Segment Identification
Segment Attractiveness
Segment Profitability
Segment Positioning
Segment Acid Test
Marketing-Mix Strategy

BUT NOT ALL SEGMENTATION
SCHEMES ARE USEFUL
We need an effective segmentation criteria

EFFECTIVE SEGMENTATION
CRITERIA
Market segments must rate favourably on five key criteria:
Measurable
Substantial
Accessible
Differentiable
Actionable

MARKET SEGMENTS SHOULD ALSO
BE ATTRACTIVE IN THE LONG RUN
Michael Porter’s five forces can determine the intrinsic long-run
attractiveness of a market segment

MARKET SEGMENTS SHOULD ALSO
BE ATTRACTIVE IN THE LONG RUN
Threat of intense
segment rivalry
Threat of suppliers’
growing bargaining
power
Threat of substitute
products
Threat of new
entrants
Threat of buyers’
growing bargaining
power

HOW SHOULD BUSINESS
MARKETS BE SEGMENTED?

SEGMENTING BUSINESS MARKETS
Business markets can be segmented using same variables to segment
consumer markets
 Ex- geography, benefits sought, usage rate etc.
But other variables can also be used for business markets
 Ex- operating variables, situation factors, personal characteristics etc.

MAJOR SEGMENTATION VARIABLES
FOR BUSINESS MARKETS
Demographic
Operating Variables
Purchasing Approaches
Situation Factors
Personal Characteristics

SEQUENTIAL PROCESS OF
SEGMENT IDENTIFICATION
Example-
1. Macrosegmentation
1. End use market to serve- Automobile,
Residential, Beverage containers
2. Product application- semifinished
material, building components,
aluminium mobile homes
3. Customer size- large customers
2. Microsegmentation
1. Distinguished among customers buying
on price, service, quality

FLEXIBLE MARKET OFFERINGNAKEDSOLUTION
Product and
service elements
that all segment
members value
DISCRETIONARY
OPTIONS
Some segment
members value
options but not
all.
Buyer has to pay
moreShivam Verma || IIT Delhi

HOW SHOULD A COMPANY
CHOOSE THE MOST
ATTRACTIVE TARGET
MARKETS?

EVALUATING DIFFERENT MARKET
SEGMENTS
The firm must look at 2 factors:
 Overall attractiveness of the segment
 Company’s objectives and resources

THE MARKET MUST HAVE
ATTRACTIVE CHARACTERISTICS
Size
Growth
Profitability
Scale Economies
Low Risk

SOME QUESTIONS THAT SHOULD
BE ANSWERED
oHow well does a potential segment score on the effective
segmentation five criteria?
oDoes investing in the segment make sense given the company’s long
run objectives?
oDoes the company lack one or more necessary competencies to offer
superior value?
oWhich level of segmentation is required?

ETHICAL CHOICE OF MARKET
TARGETS
oAvoid consumer backlash
oPublic controversy due to unfair advantage of vulnerable groups
oFaulty products

DISCLAIMER
Created by Shivam Verma, IIT Delhi, during an internship with Prof.
Sameer Mathur,
IIM Lucknow,www.IIMInternship.com ”

Marketing Management

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