IMTIAZ ALI Bsf1903384 M.USAMA Bsf1903379 Represent By M. ABDULLAH Bsf1903419 SYED FURQAN Bsf1903381 AZMAT MUMTAZ Bsf1903322 ABDUL REHMAN INTRODUCTION Market segmentation was first introduced by Smith (1956), who defined it as “Market segmentation consists of viewing a heterogeneous market as a number of smaller homogeneous markets, in response to differing preferences, attributable to the desires of consumers for more precise satisfaction of their varying wants”. Marketing segmentation is a process of grouping the customers into number of different divisions on the bases of similar characteristics. It is a customer oriented philosophy. A market segment consists of a identifiable group with in a market. Every product is not required by everybody. Therefore marketer must group the customers on the basis of similar characteristics or uniform response to a concentrate either on one or more groups depending upon his capability instead of launching his product in the open market. Market segmentation ● Market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers based on some type of shared characteristics. Market Segmentation Definitions ● According to Philip Kotler: “Market Segmentation is the sub-dividing of a market into homogeneous subsets of customers, where any subset may conceivably be selected on a market target to be reached with a distinct marketing mix.” ● William J. Stanton: “Market Segmentation consists of taking the total heterogeneous market for a product and dividing into several sub-markets or segments, each of which tends to be homogeneous in all significant aspects.” BENEFITS OF MARKET SEGMENTATION ● ● ● ● ● ● ● PROPER CHOICE OF TARGET MARKET HELPS DISTINGUISH ONE CUSTOMER FROM THE OTHER EFFECTIVE TAPPING OF MARKET HELPS CRYSTALISE THE NEED OF TARGET AUDIENCE BECOMES PRODUCTIVE AND PROFITABLE BRINGS BENEFITS TO CUSTOMER AS WELL WHEN SEGMENTATION ATTAINS HIGH SOPHISTICATION, CUSTOMERS AND COMPANIES STAY TOGETHER Diversity In Marketing Segmentation ● Consumer diversity is growing quickly and organizations have prolonged how to make a distinction between their products and services and that of the competition. This is where marketing segmentation plays a key role. The United States will undergo a major transformation in its cultural and ethnic composition over the next 20 years. ● Economic factors will be the cause of these changes. Today’s shrinking labor market is mostly comprised of low to middle class citizens. This creates a slower-responding consumer market than if it was made up of upper class workers. However, the organization that is willing to begin segmenting and targeting the right products and services to match all of today’s diverse cultures will create a competitive edge over their competitors. Types Of Market Segmentation Geographical Segmentation ● The geographic segmentation signifies a market divided by location. Geographic segmentation is based on the belief that consumers who live in the same region share some related wants and needs and those wants and needs could be very different from the consumers who are living in other regions of the world. ● For example, some products and services have high demand in one region but not demanded in other regions. Despite its meaning, geographic segmentation may differ from area to area. Geographic biases may depend on the different brands available. In a number of areas, one brand may be very well liked and accepted but it may not be known by a majority of the consumers. Demographical Segmentation ● Demographic segmentation consists of demographic factors such as age, ethnicity, nationality, occupation, etc. ● Therefore, with these variables in mind, an organization can choose which consumer they will accommodate. ● For example, an organization dealing with the younger generation will have to target the consumers between the ages of 18 and 45 years, while an organization dealing the older generation will have to concentrate on consumers between 46 and up. ● Demographic segmentation aids an organization in understanding its consumers and satisfying their wants and needs. In today‟s global market, competition is driven by a strong competition causing demographic marketing analysis to be a great advantage to any organization. Behavior Segmentation ● A variety of strategies for segmentation is available. However, previous studies show recommendations that behavior-based strategies work well for most organizations. ● Segmentation based on consumer behavior variables normally included a sub-segment of consumer segmentation. ● Organizations often collect this data to see the segment that best fits their consumer behavior. Behavioral segmentation can be the answer for a great deal of organizations on where to lavish their next marketing dollar. Psychographic Segmentation ● Psychographic segmentation was developed by marketing researchers to correlate personality with brands. Psychographics is classified as “the study of personality, values, attitudes, interests, and lifestyles.” ● Organizations need to know their consumers‟ habits to effectively connect with them and for the consumer to identify the organization‟s products or services. ● Psychographic segmentation acts on the psychology of the prospective consumer and helps the merchant decide how he or she must manage their consumer that belongs to any specific segment. VALS Model VALS Model Innovators Innovators are successful, sophisticated, take-charge people with high self-esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Their purchases reflect cultivated tastes for upscale, niche products and services. VALS Model Thinkers (Motivated by ideals; high resources) Thinkers are mature, satisfied, comfortable, and reflective. They tend to be well educated and actively seek out information in the decision-making process. They favor durability, functionality, and value in products. Believers (Motivated by ideals; low resources) Believers are strongly traditional and respect rules and authority. Because they are fundamentally conservative, they are slow to change and technology averse. They choose familiar products and established brands. VALS Model Achievers (Motivated by achievement; high resources) Achievers have goal-oriented lifestyles that center on family and career. They avoid situations that encourage a high degree of stimulation or change. They prefer premium products that demonstrate success to their peers. Strivers (Motivated by achievement; low resources) Strivers are trendy and fun loving. They have little discretionary income and tend to have narrow interests. They favor stylish products that emulate the purchases of people with greater material wealth. VALS Model Experiencers(Motivated by self-expression;high resources) Experiencers appreciate the unconventional. They are active and impulsive,seeking stimulation from the new, offbeat, and risky. They spend a comparatively high proportion of their income on fashion, socializing, and entertainment. Makers (Motivated by self-expression; low resources) Makers value practicality and self-sufficiency. They choose hands-on constructive activities and spend leisure time with family and close friends. Because they prefer value to luxury, they buy basic products. VALS Model Survivors Survivors lead narrowly focused lives. Because they have the fewest resources, they do not exhibit a primary motivation and often feel powerless. They are primarily concerned about safety and security, so they tend to be brand loyal and buy discounted merchandise. Decision Role of Market Segmentation ● Market segmentation is the act of identifying and profiling distinct groups of buyers who might prefer or require varying products and marketing mixes. It is a process of dividing the total market for a good or service into several groups, such that the members of each group are similar with respect to the factors that influence demand. It plays a vital role in marketing decision-making. Market segmentation plays the following roles in marketing decision making. They are: Decision Role of Market Segmentation Identification of market opportunities Without segmentation organization cannot find the needs of customer easily. Organization can identify the market opportunities like most profitable sectors, through well segment Understanding of the customer A segmentation perspective leads to more precise definition of the market in terms of consumer needs. Segmentation thus improves management’s understanding of the customer and more importantly, why he/she buys Decision Role of Market Segmentation To direct marketing programs Management, once it understands consumer needs, is in a much better position to direct marketing programs that will satisfy these needs and hence parallel the demands of the market. Strengthen management capabilities A continuous program of market segmentation strengthens management capabilities in meeting changing market demands. Decision Role of Market Segmentation To assess competitive strengths and weakness Management is better able to assess competitive strengths and weakness of greatest importance; it can identify those segments where competition is thoroughly entered. This will save company resources by forgoing a pitched battle of locked-in competition, where there is little real hope of market gain. Systematic planning It is possible to assess a firm’s strengths and weakness through identifying market segments. Systematic planning for future markets is thus encourages. Decision Role of Market Segmentation Efficient Allocation of Market Segmentation Segmentation leads to a more efficient allocation of marketing resources. For example, product and advertising appeals can be more easily coordinated. Media plans can be developed to minimize waste through excess exposure. This can result in a sharper brand image, and target consumers will recognize and distinguish products and promotional appeals directed at them. Market objectives Segmentation leads to a more precise setting of market objectives. Targets are defined operationally, and performance can later be evaluated against these standards. Criteria for Effective Market Segmentation Effective segmentation should be: ● Measurable ● Accessible ● Substantial ● Differentiable ● Actionable. When a company has segmented their market accordingly, there is a higher chance that it will become more profitable and successful in the long run.
