The document discusses market segmentation, which involves dividing a market into distinct subgroups of customers with common needs, characteristics, or behaviors. It describes the STP process of segmentation, targeting, and positioning. Various bases for segmenting markets are outlined, including geographic, demographic, psychographic, and behavioral factors. The levels of segmentation from mass to niche marketing are defined. The key requirements, advantages, and limitations of market segmentation are also summarized.

1. Unit-2Unit-2
Market
Segmentation

2. The STP ProcessThe STP Process
• Segmentation is the process of classifying customers
into groups which share some common characteristic
• Targeting involves the process of evaluating each
segments attractiveness and selecting one or more
segments to enter
• Positioning is arranging for a product to occupy a
clear, distinctive and desirable place relative to
competing products in the mind of the consumer

3. Steps in Target MarketingSteps in Target Marketing
1. Identify Bases
for Segmenting the Market
2. Develop Profiles
of Resulting Segments
3. Develop Selection Criteria
4. Select Target
Segment(s)
5. Develop Positioning
for Each Target Segment
6. Develop Marketing
Mix for Each Target Segment Market
Positioning
Market
Targeting
Market Segmentation

4. Target MarketTarget Market
• A market is a set of all actual and potential buyers
• A target market is a group of people toward whom a
firm markets its goods, services, or ideas with a
strategy designed to satisfy their specific needs and
preferences.
• Any marketing strategy must include a detailed
(specific) description of this.

5. What is a Market Segment?What is a Market Segment?
According to Philip Kotler and
Armstrong , “Market segment is a
group of consumers who respond in a
similar way to a given set of marketing
stimuli”

6. What is a Market Segmentation?What is a Market Segmentation?
According to Philip Kotler , “ Market
segmentation is the process of
dividing a market into distinct
groups of buyers with different
needs, characteristics, or
behaviour who might require
separate products or marketing
mix.”

7. Market Segmentation Conti..Market Segmentation Conti..
Market Segmentation is a method of
“dividing a market (Large) into smaller
groupings of consumers or
organizations in which each segment
has a common characteristic such as
needs or behavior.”

8. Requirements for Effective SegmentationRequirements for Effective Segmentation
• Size, purchasing power, profiles
of segments can be measured.
• Segments can be effectively
reached and served.
• Segments are large or
profitable enough to serve.
MeasurableMeasurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
ActionableActionable
• Segments must respond
differently to different marketing
mix elements & programs.
• Effective programs can be
designed to attract and serve
the segments.

9. Levels of SegmentationLevels of Segmentation
1. Mass Marketing or Undifferentiated Marketing
2. Micro Marketing: Micro-Marketing is the practice
of tailoring products and marketing programs to
the needs and wants of specific individuals and
local customer groups. As it is difficult for many
companies to bear the high advertising cost to
reach mass media, they use micro marketing.
–It consists of:
–Segment Marketing or Differentiated marketing.
–Niche Marketing or Concentrated Marketing.
–Local Marketing.
–Individual Customer Marketing

10. Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Company
Marketing
Mix
Company
Marketing
Mix
Company
Marketing
Mix
Company
Marketing
Mix
Company
Marketing Mix 1
Company
Marketing Mix 1
Company
Marketing Mix 2
Company
Marketing Mix 2
Company
Marketing Mix 3
Company
Marketing Mix 3
MarketMarket
A. Undifferentiated or Mass Marketing
B. Differentiated Or Segmented Marketing
C. Concentrated Or Niche Marketing
Levels of Segmentation CONTI..Levels of Segmentation CONTI..

11. Henry Ford epitomized this strategy when he offered the Model-
T Ford in one colour , black.-1- Undifferentiated Marketing
Henry Ford epitomized this strategy when he offered the Model-
T Ford in one colour , black.-1- Undifferentiated Marketing

12. 2. SEGMENTED MARKETING2. SEGMENTED MARKETING
Consists of a group of customers
who share a similar set of needs
and wants.
Identifiable Group with in a
Market with Similar
•Wants
• Purchasing Power
• Geographical Location
• Buying Attitudes

13. FLEXIBLE MARKET OFFERINGFLEXIBLE MARKET OFFERING
• Even in segments 100 % needs are not same –
consists of two parts
1.Naked Solution :- products and services that all
members of the segment values.
2.Discretionary options :- that some segment
members value. Each option might carry an
additional charge.
 Example: Automobile industry – basic model is
same but for A.C , power steering, power window
buyer has to pay extra price.

14. SEGMENTED MARKETING CONTI..SEGMENTED MARKETING CONTI..
Delta Airlines offers all economy
passengers a seat and soft drinks. It
charges economy passengers extra for
alcoholic beverages.

15. 3. NICHE MARKETING CONTI..3. NICHE MARKETING CONTI..
 Group of customers seeking a distinctive mix of benefits who
are ready to pay extra premium.
 Niche = segment sub – segments
Eg. Washing detergents hard & gentle washes . Surf excel for
tough stains ( hard on clothes) & Ezee from Godrej for delicate
clothes.
--- Astha , Sanskar , Q TV – focus on religion & spiritualism.
 DISTINCT NEEDS
PAY PREMIUM
SPECIALIZATION
LESS COMPETITION
POTENTIAL

16. Gather.com: A Niche
Social Networking Site
Gather.com: A Niche
Social Networking Site

17. 4. LOCAL MARKETING4. LOCAL MARKETING
• Marketing programs tailored to the needs & wants of local
customer groups in trading areas, neighborhoods , etc.
• this trend is called grass roots marketing.
Ex. – Spiderman 3 was released in 5 different language in India
including Bhojpuri.
Pune sarees Kashmiri silk

18. Baskin Robbins Focuses on
Local Marketing
Baskin Robbins Focuses on
Local Marketing

19. 5. Individual Customer Marketing5. Individual Customer Marketing
• It refers to tailoring products and
marketing programs to the needs and
preferences of individual customers.
• The ultimate level of segmentation leads
to:
–“Segments of one”.
–“Customized marketing”.
–“One to one marketing”.

20. INDIVIDUAL MARKETING Conti..INDIVIDUAL MARKETING Conti..
• Ultimate segmentation – segments of 1 or
customized marketing or one to one marketing.
• Customerization – empower the consumers to
design the product or service offering of their
choice.
• Ex. Paint companies have started doing this-
Asian Paint , Nerolac , Berger Paints
• Arvind mills launched Ruff’n Tuff Jeans,
branded ready – to – stitch

21. Bases for Segmenting Consumer MarketsBases for Segmenting Consumer Markets
GeographicGeographic
DemographicDemographic
PsychographicPsychographic
BehavioralBehavioral

22. 1. GEOGRAPHIC SEGMENTATION1. GEOGRAPHIC SEGMENTATION
Divide the market into different group based on :
• Region – South India , North , Western Region, East
• City – metro cities, cities with population more than
1 million
• World
• Density
• Climate
• States
Ex.- Mcdonalds globally, sell burgers aimed at local
markets, for example, burgers are made from lamb
in India rather then beef because of religious issues.
In Mexico more chilli sauce is added and so on.

23. 2. Demographic Segmentation2. Demographic Segmentation
Age and Life CycleAge and Life Cycle
Life StageLife Stage
GenderGender
IncomeIncome
GenerationGeneration
Social ClassSocial Class

24. Age and Life CycleAge and Life Cycle
• For example, Hindustan
Unilever Limited introduced
pears soap in pink color,
specially targeted towards
children.
• For example, The magazine
Magic Pot published by the
Malayala Manorama Group
in India is targeted at
“nursery and primary school
children”.
• For example, Television
channels in India indicate
segmentation based on age
and life cycle.

25. Life StageLife Stage
• For example, Insurance
companies offer
schemes for people who
are planning their
retirement life.
• The Al Habib Bank of
Pakistan targets senior
citizens with special
savings schemes that
yield a higher interest
rate.

26. GenderGender
• For example, ‘Virginia Slims’ is
addressed to women and
accompanied by appropriate flavor,
packaging and advertising cues to
reinforce a female image
• ‘Nike’ is viewed as more masculine
than ‘Reebok’.
• For example, Emami launched a
new fairness cream, fair and
handsome, targeted exclusively at
men, and in the process created a
new product category.
• For example, Men prefer to drive
motorcycles whereas for women
there are specific brands of
scooters for example Bajaj Wave
and Scotty Pep.

27. IncomeIncome
• For example, ‘Blue-Collar
Workers’ were among the
first purchasers of color
television sets, it was
cheaper for them to buy
these sets than to go to
movies and restaurants.
• For example, Nirma washing
powder was launched as the
lowest priced detergent in
India primarily targeted at the
middle-income segment of
the market.

28. GenerationGeneration

29. Social ClassSocial Class

30. 3. Psychographic Segmentation3. Psychographic Segmentation
Divides Buyers Into Different Groups Based on:

31. 4. Behavioral Segmentation4. Behavioral Segmentation
• Dividing the market into
groups based on variables
such as:
–Occasions
–Benefits
–User Status
–Usage Rate
–Buyer-Readiness
–Loyalty Status
–Attitude

32. OccasionsOccasions
• For example, “Orange
Juice” is usually consumed
at breakfast. But orange
growers have promoted
drinking juice as a cool and
refreshing drink at other
times of the day.
• For example, Biscuits are
used as an accompaniment
with tea or coffee in the
evening.

33. BenefitsBenefits
• For example, Liril
offers the benefits
of “freshness”
Dettol soap offers
the benefits of
“total protection”.

34. User StatusUser Status
• For example, Blood
Banks cannot rely on
regular donors to
supply blood, they must
also recruit new first-
time donors and
contract ex-donors and
each will require a
different marketing
strategy.

35. Usage RateUsage Rate
• For example, Heavy beer
drinkers accounts for
87% of the beer
consumed-almost seven
times as much as the
light beer drinkers.
• For example, In the
mobile phone service
market, heavy users
account for a significant
proportion of the
revenue earned by the
service providers.

36. Loyalty StatusLoyalty Status
Switchers
Shifting loyals
Split loyals
Hard-core

37. Buyer-Readiness StageBuyer-Readiness Stage

38. AttitudeAttitude
• For, example, Door-to-Door
workers in a political
campaign us the voter’s
attitude to determine how
much time to spend with
that voter.
• They thank enthusiastic
voters and remind them to
vote.
• They reinforce those who
are positively disposed.
• They try to win the votes of
indifferent voters.
• They spend no time trying
to change the attitudes of
negative and hostile voters.

39. Segmenting for Business MarketsSegmenting for Business Markets
DemographicDemographic
Operating VariableOperating Variable
Purchasing ApproachesPurchasing Approaches
Situational FactorsSituational Factors
Personal
Characteristics
Personal
Characteristics

40. 40
Process Of Market SegmentationProcess Of Market Segmentation
Step 1. Identifying
Customer Segments
Step 2. Developing
Measures for Structural
Attractiveness
Step 3. Selecting Customer
Segments

41. Advantages of SegmentationAdvantages of Segmentation
 Facilitates Proper Choice of Target
Market
 Facilitates Tapping of the Market,
Adapting the Offer to the Target
 Helps “Divide the Markets and
Conquer Them
 Makes the Marketing efforts More
Efficient and Economic

42. Advantages of Segmentation Conti..Advantages of Segmentation Conti..
 Helps Identify Less Satisfied
Segments and Concentrate on Them
 Benefits the Customer as Well
 Helps Distinction one Customer
Group from another within a Given
Market
 Helps Spot the less Satisfied
Segments and Succeed by Satisfying
such Segments

43. Limitations of Market SegmentationLimitations of Market Segmentation
• Market segmentation can be expensive
proposition in both production and marketing
of products.
• Other expenses like keeping adequate
inventories of each style, colour, promotional
expenses also go up because different
promotional mixes have to the formulated for
different elements.
• Administrative expenses also go up because
marketer must plan an important several
different marketing programmes.