Market Segmentation
Market Segmentation
What is a market segment?
Why is it important?
What is a “Market Segment”?




Set of potential customers
Who have similar needs
Who refer each other when buying
Are alike in the way they:
• Perceive value
• View products and services
• Purchase products and services
Why Define a Market Segment?
 Easier to understand customer needs
 Focus “whole solution” to a narrower set of
customer needs
 Easier to become a leader in a smaller market (Big
fish in small pond)
 More effective use of marketing Rupee
 Generally more profitable
Levels and Patterns of Market
Segmentation
 Levels of Market Segmentation
Mass
Micromarketing
Niche Marketing
Geographic Segmentation
Region
City or
metro size
Density
Climate
Pacific, Mountain, West North Central, West South
Central, East North Central, East South Central, South
Atlantic, Middle Atlantic, New England
Under 4,999; 5,000-19,999; 20,000-49,999 . . .
1,000,000-3,999,999; 4,000,000 and over
Urban, rural, suburban
•HLL – Lesancy (big soap), Philips introduced ‘Bahadur’
•in rural area
Northern, southern, tropical
Exporters segment the market as Western
countries , African Countries.
Geographic segmentation



Local Marketing : Target Marketing is leading to Marketing
Programs tailored to the needs and wants of local customer
groups.
Tang Launches Eid campaign , Baskin Robbins “Three Mile
Marketing”
Wal-Mart opening Market side grocery stores
McDonald's ties up with Chhota
Bheem to lift desi image
Demographic Variables
Income
Age
Gender
Occupation
Family size
Education
Nationality
Religion
COLGATE DENTAL CREAM -DOUBLE
PROTECTION






ADULTS
Packaging consist – Red
Color, Double Ring
Double ring signifies Double
Protection
Helps to fight more germs.
Unique super active foam
Colgate regular mint flavor
keeps your breath fresh.
COLGATE GEL (RED AND BLUE)
 YOUNGSTERS
 LAUNCHED IN TWO VARIABLE COLORS – Red
and Blue
 Same product line, same set of customers
 Highlights two aspects – Super Transparency and
Actrinse
Target – Kids ages 3 – 8
Featuring Fun Barbie Graphics
Fun bubble fruit flavor
Fights against bad breath and
cavities.
Behavioral Segmentation
Occasions
Regular occasion, special occasion
Benefits
Quality, service, economy, speed
User status
Nonuser, ex-user, potential, first-time, regular
Usage rate
Light user, medium user, heavy user
Loyalty status
None, medium, strong, absolute
Buyerreadiness stage
Attitude toward
product
Unaware, aware, informed, interested,
intends to buy
Enthusiastic, positive, indifferent,
negative, hostile
Psychographic Variables
Lifestyle
Hobbies
TV viewing habits
Social activities
Club memberships
Vacation preferences
Personality
Compulsive
Outgoing
Authoritarian
Ambitious
Requirements for Effective
Segmentation
Measurability – the size , purchasing power and profiles
Substantiality – Large and Profitable one to serve
Accessibility – Effectively reached and served
Actionability – Effective programs can be designed for
attracting and serving the segments.
 Differentiable – Conceptually differentiable




Segment Exercise
Segment the Market for the following categories:
 Shampoo
 Soap
 Toothpaste
 Mobile phones
 Hair Oil
 Pen
 Hair colours
 Laptops
 Camera
 Chocolates
Undifferentiated Targeting
 Mass market philosophy- 1 mix for entire market
(commodity products or brand new products)
• Advantage: Saves Rupees in production/marketing
expenses
• Usually a sort of lazy, unimaginative approach
• Problems: More exposed to competitive threats
• E.g Coca Cola ( Non- alcoholic beverage market , IBM
( computer market ) , General Motors ( Vehicle Market)
Concentrated Targeting (#2)
 Select a market niche (one segment of a market)
•
•
•
•
•

Be able to focus and specialize the marketing mix
Concentrate resources rather than spread too thinly
Better knowledge about segment
Operating economies thru specializing its Production, Distribution ,
and Promotion
If it captures segment leadership , a firm can earn higher profits
Recycled paper producer Wizard India focus on marketing for
Greeting And Wedding cards,
 Oshkosh Truck for Airport rescue trucks
 M&M on Tractors to Agriculture Markets
 Zodiac on formal shirts for executives and Professionals
Multisegment Targeting (#3)
 Strategy that chooses two or more well-defined market
segments and develops distinct marketing mix for each

Product same, different promotional appeal, rather than completely
different marketing mix , increases costs considerably.
Costs of Multisegment Targeting
$
$
$
$
$
$
$
Product design costs
Production costs
Promotion costs
Inventory costs
Marketing research costs
Management costs
Cannibalization
One-to-One Marketing
One-to-One Marketing
An individualized marketing method that
utilizes customer information to build longterm, personalized, and profitable
relationships with each customer.
One-to-One Marketing
Focuses on Share of Customer
One-to-One
Marketing
Develops Customers
Finds Products for Customers
Focuses on Share of Market
Mass
Marketing
Develops Products
Finds Customers for Products
Ethical choice of Market Targets
 Socially responsible Marketing calls for targeting that serves not
only the company’s interests , but also the interests of those
targeted
 Pizza hut reading programs and Nickelodeon magazines
 Did You Know
“To tackle Child Obesity in France , French Diet guru Pierre
Dukan has recommended giving kids extra marks in their
final year exams if they kept a body mass index between 18
and 25.
Differentiation and Positioning
Product position is the way the
product is defined by consumers on
important attributes—the place the
product occupies in consumers’ minds
relative to competing products
•
•
•
Perceptions
Impressions
Feelings
Toyota’s Land Cruiser
Differentiation and Positioning
Positioning maps show
consumer perceptions of
their brands versus
competing products on
important buying
dimensions
Differentiation and
Positioning
Choosing a Differentiation and Positioning
Strategy
 Identifying a set of possible competitive advantages to
build a position
 Choosing the right competitive advantages
 Selecting an overall positioning strategy
 Developing a positioning statement
Differentiation and
Positioning
Identifying Possible Value Differences and
Competitive Advantages
Competitive advantage is an
advantage over competitors
gained by offering consumers
greater value, either through
lower prices or by providing more
benefits that justify higher prices
Differentiation and Positioning
Choosing a Differentiation and Positioning
Strategy
Identifying a set of possible competitive
advantages to build a position by
providing superior value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
Differentiation and
Positioning
Choosing the Right Competitive Advantage:
How many differences to promote , Which differences to promote
.
Difference to promote should be:
Important
Distinctive
Superior
Communicable
Preemptive
Affordable
Profitable
Differentiation and Positioning
Selecting an Overall Positioning Strategy
Brand’s Value
proposition is the
full mix of benefits
upon which a brand
is positioned