The document discusses market segmentation, which is the process of dividing a market into subgroups of customers with distinct needs, characteristics, or behaviors. It outlines the key steps in segmentation as segmenting, targeting, and positioning. Some common bases for segmenting include demographics, psychographics, geographic location, needs, purchase patterns, and other behaviors. The goal of segmentation is to allow companies to better understand and target customer subgroups.

1. Unit 2 Principles of Marketing Market Segmentation Subhajit Sanyal

2. Outline - Segmenting the market Why segment? How to segment a market - the Process Criteria for forming Segments Bases for segmentation Some examples of segmentation STP and strategic marketing

3. MARKET SEGMENTATION Market segmentation is the process by which customers in markets with some heterogeneity can be grouped into smaller, more similar or homogeneous segments. Figure 7.A Definition of Marketing Segmentation

4. Targeting The decision about which segment(s) a business decides to prioritise for its sales and marketing efforts. Figure 7.B Definition of Targeting.

5. Positioning The process of creating an image for a product in the mind of target customers. Figure 7.C Definition of Positioning

6. TABLE 4.2 Socio-economic classification (JICNARS) Table 4.2 Socio-economic classification (JICNARS) SOURCE: From Peter M. Chisnall, Marketing: A Behavioural Analysis (Berkshire, England: McGraw-Hill Publishing Co. Ltd, 1976), pp. 114-115. Reprinted by permission. SOCIAL GRADE SOCIAL STATUS HEAD OF HOUSEHOLD’S OCCUPATION APPROXIMATE PERCENTAGE OF FAMILIES A Upper middle class Middle class Lower middle class Skilled working class Working class Those at lowest levels of subsistence Higher managerial, administrative or professional Intermediate managerial, administrative or professional Supervisory or clerical and junior managerial, administrative or professional Skilled manual workers Semi and unskilled manual workers State pensioners or widows (no other earner), casual or lowest grade workers 3 B 10 C1 24 C2 D 30 25 E 8

7. Product Price Distribution Promotion Segment I Segment II Target market Segment III Figure 7.1 Market Segmentation Approach

8. Types of segmentation approaches Mass (undifferentiated) Differentiated Multi-segment Niche Customised

9. Figure 7.4 Basic elements of segmentation Segmentation Consider variables for segmenting market. Look at profile of emerging segments. Validate segments emerging. Positioning Understand consumer perceptions. Position products in the mind of the consumer. Design appropriate marketing mix. Targeting Decide on targeting strategy. Decide which and how many segments should be targeted.

10. Segmentation Bases Demographic Psychographic Geographic Need/End use Size of purchase Pattern of purchase Other

11. Criteria for Segmentation Accessible Viable/sustainable Homogeneous within Heterogeneous without Communicable Fit with corporate and Marketing Objectives

12. The Process Segment Target Position Monitor

13. BASIC CUSTOMER CHARACTERISTICS DEMOGRAPHICS SOCIO-ECONOMICS GEOGRAPHIC LOCATION PERSONALITY, MOTIVES AND LIFESTYLE PRODUCT RELATED BEHAVIOURAL CHARACTERISTICS PURCHASE BEHAVIOUR PURCHASE OCCASION BENEFITS SOUGHT CONSUMPTION BEHAVIOUR AND USER STATUS ATTITUDE TO PRODUCT Variables for segmenting consumer markets

14. TABLE 7.3 Wells and Gubar life-cycle stages Bachelor stage (young single people not living with parents) Newly married couples without children Full nest I (youngest child under 6) Full nest II (youngest child 6 or over) Full nest III (older married couple with dependent children) Empty nest I (no children living at home, family head in work) Empty nest II (family head retired) Solitary survivor (in work) Solitary survivor (retired) SOURCE: From Consumer Market Research Handbook , 3rd ed., R. Worchester and J. Downham, eds. (ESOMAR) (England: McGraw-Hill Book Company (UK) Ltd, 1986), p. 394. Courtesy of the European Society for Opinion and Marketing Research, Amsterdam.

15. CATEGORIES %POP. GROUPS %POP. A Thriving 19.8 1. Wealthy Achievers, Suburban Areas 2. Affluent Greys, Rural Communities. 3. Prosperous Pensioners, Retirement Areas. 15.1 2.3 2.3 B Expanding 11.6 4. Affluent Executives, Family Areas 5. Well-off workers, Family Areas 3.7 7.8 Table 7.5 The ACORN consumer targeting markets SOURCE:  CACI Limited, 1993 (Source: OPCS and GRO(S)  Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.

16. CATEGORIES %POP. GROUPS %POP. C Rising 7.5 6. Affluent Urbanites, Town & City Areas. 7. Prosperous Professionals, Metropolitan Areas. 8. Better-Off Executives, Inner City Areas. 2.2 2.1 3.2 D Settling 24.1 9. Comfortable Middle Agers, Mature Home Owning Areas. 10. Skilled Workers, Home Owning Areas. 13.4 10.7 Table 7.5 The ACORN consumer targeting markets SOURCE:  CACI Limited, 1993 (Source: OPCS and GRO(S)  Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.

17. Table 7.5 The ACORN consumer targeting markets CATEGORIES %POP. GROUPS %POP. E Aspiring 13.7 11. New Home Owners, Mature Communities. 12. White Collar Workers, Better-Off Multi-Ethnic Areas 9.8 4.0 SOURCE:  CACI Limited, 1993 (Source: OPCS and GRO(S)  Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.

18. CATEGORIES %POP. GROUPS %POP. F Striving 22.8 13. Older People, Less Prosperous Areas 14. Council Estate Residents, Better-Off Homes. 15. Council Estate Residents, High Unemployment. 16. Council Estate Residents, Greatest Hardship. 17. People in Multi-Ethnic, Low-Income Areas. 3.6 11.6 2.7 2.8 2.1 Unclassified 0.5 0.5 Table 7.5 The ACORN consumer targeting markets SOURCE:  CACI Limited, 1993 (Source: OPCS and GRO(S)  Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.

19. Light user Moderate user Heavy user Urban Suburban Rural Less than £10,000 £10,000- £19,999 £20,000- £40,000 More than £40,000 Volume usage Population density Figure 7.9 Multivariable segmentation

20. Marketing mix I Marketing mix II Marketing mix III Organisation Segment I Segment II Segment III Target markets Figure 7.10 Multisegment strategy Product Price Promotion Distribution Product Price Promotion Distribution Product Price Promotion Distribution

21. Target market strategy Needs/wants of end users Product market size/structure Company/brand market share Resources/ capabilities of the company Intensity of competition Production/ marketing scale economies Figure 7.12 Factors affecting choice of target market strategy SOURCE: Data from D.Cravens, Strategic Marketing (Homewood, III.:Irwin, 1982).