Market Segmentation
Objectives:
• Describe the characteristics of
markets and market segments.
• Discuss criteria for successful market
segmentation.
• Discuss alternative strategies for
selecting target markets.
Market Segmentation
Market
People or organizations with
needs or wants and the ability and
willingness to buy
Market
Segment
A subgroup of people or
organizations sharing one or more
characteristics that cause them to
have similar product needs.
Market
Segmentation
The process of dividing a market
into meaningful, relatively similar,
identifiable segments or groups.
Reasons behind Segmentation• Segmentation enables the identification of groups of
customers with similar needs, and the analysis of the
buying behavior of these groups.
• Segmentation provides information for the specific
matching of the design of marketing mixes with the
characteristics of the segment.
• Segmentation helps marketers satisfy customers wants
and needs while meeting the organization’s objectives.
Criteria for Segmentation
•
Substantiality
– Segment must be large enough to warrant a special marketing mix.
•
Identifiability & Measurability
– Segments must be identifiable and their size measurable.
•
Accessibility
– Members of targeted segments must be reachable with marketing mix.
•
Responsiveness
– Unless segment responds to a marketing mix differently, no separate
treatment is needed.
•
Actionable
– Effective programs can be formulated for attracting and serving
segments
Steps in Segmentation,
Targeting, and Positioning
6. Develop Marketing
Mix for Each Target Segment
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
3. Develop Measures
of Segment Attractiveness
Market
Positioning
Market
Targeting
2. Develop Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market
Market Segmentation
Levels of Market Segmentation
Mass Marketing
Same product to all consumers
(no segmentation)
Segment Marketing
Different products to one or more segments
(some segmentation)
Niche Marketing Mahindra
Different products to subgroups within segments
(more segmentation)
Micro marketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Corporate
Local Marketing
Individual Marketing
Tailoring brands/ promotions
to local customer groups
Tailoring products/ programs
to individual customers
Market Segmentation Categories and
Selected Variables
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Geographic Segmentation ..ad clip\23309_201083_Print_inside_529x529.jpg
Region
North, East, West, South
City Size
Major metropolitan areas, small cities, towns
Density of area
Urban, suburban, exurban, rural
Climate
Temperate, hot, humid, rainy
Demographic Segmentation ..\ad clip\idbi_bank_03012007.jpg
Age
Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Sex
Male, female
Marital status
Single, married, divorced, living together, widowed
Income
Under Rs. 25,000, Rs.25,000-Rs. 34,999, Rs. 35,000Rs.49,999, Rs.50,000-Rs.74,999, Rs.75,000-Rs.99,000 etc
Education
Some high school, high school graduate, some college,
college graduate, postgraduate
Occupation
Professional, blue-collar, white-collar, agricultural,
continued
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Psychological Segmentation ..\ad clip\psychographic seg.jpg
Needs-motivation
Shelter, safety, security, affection, sense of self-worth
Personality
Extroverts, novelty seeker, aggressive, low dogmatic
Perception
Low-risk, moderate-risk, high-risk
Learning-involvement
Low-involvement, high-involvement
Attitudes
Positive attitude, negative attitude
(Lifestyle) Segmentation
..\ad clip\woodland.jpg
Economy-minded, couch potatoes, outdoors enthusiasts,
status seekers ad clip\ZOYA.jpg ..\ad clip\ALLEN SOLLY.jpg
Sociocultural Segmentation ad clip\incredible_india_28032006.jpg ad clip\TIMES OF INDIA.jpg
Cultures
Indian, Anglo-Indian
Religion
Hindu, Shikh, Jewish, Moslem, other
Subcultures (Race/ethnic)
Punjabi, South-Indian, Bengali, Marathi
Social class
Lower, middle, upper
Family life cycle
Bachelors, young married, full nesters, empty nesters
continued
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Use-Related Segmentation
Usage rate
Heavy users, medium users, light users, non users
Awareness status
Unaware, aware interested, enthusiastic
Brand loyalty
None, some, strong
Use-Situation Segmentation
Time
Leisure, work, rush, morning, night ..\ad clip\kurkure.jpg
Objective
Personal, gift, fun, achievement ..\ad clip\naukri.jpg
Location
Home, work, friend’s home, in-store
Person
Self, family members, friends, boss, peer
Benefit Segmentation
Convenience, social acceptance, long lasting, economy,
value-for-the-money
Bases for Segmenting Business Markets
Buyer
Characteristics
Situational
Factors
Geographic
Bases
for Segmenting
Business
Markets
Purchasing
Approaches
Operating
Characteristics
Developing Segment Profiles
• Need to develop a profile or description of the
“typical” customer in a segment.
• Segment profile might include demographics,
location, lifestyle, and product-usage
frequency.
Target Market
 Marketers evaluate the attractiveness of each potential
segment and decide in which they will invest resources to try
to turn them into customers

A group of people or organizations for which an organization
designs, implements, and maintains a marketing mix intended
to meet the needs of that group, resulting in mutually
satisfying exchanges.
Targeting
• To determine which, if any, of the segments uncovered should
be targeted
• Evaluation of Market Segments - DAMP
– Distinct – is each segment clearly different from other segments?
– Accessible – can buyers be reached through appropriate promotional
programmes and distribution channels?
– Measurable – is the segment easy to identify and measure?
– Profitable – is the segment sufficiently large to provide a stream of
constant future revenues and profits?
Market Targeting
Evaluating Market Segments
• Segment Size and Growth
– Analyze sales, growth rates and expected profitability for
various segments.
• Segment Structural Attractiveness
– Consider effects of: Competitors, Availability of Substitute
Products and, the Power of Buyers & Suppliers.
• Company Objectives and Resources
– Company skills & resources relative to the segment(s).
– Look for Competitive Advantages.
POSITIONING
Positioning: Al Ries & Jack Trout
• Positioning is owning a piece of consumer’s
mind
• Positioning is not what you do to a product; it’s
what you do to the mind of the prospect
• You position the product in the prospect’s mind
• You concentrate on the perceptions of the
prospect, not the reality of the product
Positioning
Developing a specific
marketing mix to
influence potential
customers’ overall
perception of a brand,
product line, or
organization in
general.
Positioning for Competitive
Advantage: Strategies
Product
Attributes
Product
Class ad clip\polo.jpg
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Away from
Competitors
G
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Against a
Competitor
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Benefits
Offered
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H
C
A
D
E
B
F
User Class
..\ad clip\Mahindra Quanto.jpg
Usage
Occasions
..\ad clip\scorpio.jpg
Positioning in B2B Market
• Product differentiation
– Feature, Conformance, Performance, Durability, Reliability, Style,
Design ad clip\Ozone Safe.jpg
• Service differentiation
– Delivery, Installation, Customer Training, Consulting services,
Repair, Replacement ..\ad clip\HCL.jpg
• Personnel differentiation
– Empathy, Competency, Credibility, Reliability, Responsiveness,
Communication ..\ad clip\MINT.jpg
• Image differentiation
– Symbol, People, Events, Media, Community ..\ad clip\dell.jpg
Point of Parity (POP)
&
Point of Difference (POD)
POP & POD
• Points-of-Parity-Shared brand
values
–Necessary
–Competitive
Identifying & Choosing POD
• Desirable ( Customer Perspectives)
– Personality Relevant
– Distinctive & Superior
– Believable & Credible
• Deliverable ( Firm Perspectives)
– Feasible
– Profitable
– Pre-emptive, defensive & Difficult to attack
• Differentiating ( Competitive Perspectives)
– Unique
Positioning Guidelines
• Get the key consumer Insight: Find the GAP to
occupy
• Main unique proposition/promise that the
brand is going to offer/fulfill
• Make it specific, short and tangible
• Keep the positioning up-to-date
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