By: Sayan Chakraborty1

What is Market Segmentation?

• The Process of defining and

subdividing a large homogenous

market into clearly identifiable

segments having similar need,

wants or demand characteristics.

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Objective of segmentation:

To design a marketing mix

that precisely matches the

expectation of customers

in the target segment.

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GEOGRAPHIC SEGMENTATION

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Division of the market into

geographical units such as

nations, states, regions,

countries, cities or neighborhood.

The company can operate in one

or few areas or it can operate in

all but pay attention to local

variation.

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Activity that are concentrating

on getting as close and

personally relevant to individual

customers as possible is called

GRASSROOT MARKETING.

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Example:

In the southern

sates like Tamil

Nadu, people

prefer to drink

coffee and seem

to be inclined

about the drink.

But in the

other states

People seem to

enjoy Tea as

Drink.11

Geographic segmentation of

markets into urban and rural as

these markets differ on a

variety of important parameters

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DEMOGRAPHIC

SEGMENTATION

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Division of the market on

variables such as age, family life

cycle, family size, gender, income

is Demographic Segmentation of

marketing.

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Advantage of demographic

segmentation is that they are

often associated with consumers

needs and wants.

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DEMOGRAPHIC->AGE and LIFE CYCLE STAGE:

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DEMOGRAPHIC-> GENDER

Differentiation of products by

segmenting the population on

the basis of gender, more

precisely Men and Women.

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Suzuki..

1.Inazuma-

Male

2.Gearless

scooters-

Female

Emami

1.Fair and

Lovely-Female

2.Fair and

handsome-

Male19

DEMOGRAPHIC-> INCOME

Basically, Segmenting the market

on the basis of Income, and

considering income as an variable.

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ADVANTAGE:

Differentiating on income would

lead to the knowledge about the

ability of consumers to

participate in the market

exchange.

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DISADVANTAGE:

Income does not always predict the

best consumers for a given

product.**

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DEMOGRAPHIC-> SOCIO-ECONOMIC CLASSIFICATION

What is it?

Answer: this is mainly done to classify

urban households in INDIA.

The classification is based on two

factors.

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the factors are:

1>the education level of the

head of the household.

And

2>the occupation level of the

head of the household

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DEMOGRAPHIC->GENERATION

Segmenting the market on the

basis of generation as an acting

variable.

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Psychographics is

Demographic

Psychology

Psychographics

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Psycho-Graphic

segmentation

Lifestyle

Personality

traits

Values

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TM

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Marketers divide buyers into groups

on the basis of:-

1.Knowledge

2.Attitude

3.Use

4.Response

to a Particular product and

commodity.

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Needs andBenefits

• Need Based

• Benefit Based

Decision Roles

• Initiator

• Influence

• Decider

• Buyer

• User

User and User Related variables

• Occasion

• User Status

• User Rate

• Buyer Readiness Stage

• Loyalty Status

• Attitude

• Multiple bases

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INFLUENCE:

DOCTORS PRESCRIBE MEDICINES, SO

PHARMACEUTICAL COMPANIES INFLUENCE

THE DOCTORS BY PROVIDING TECHNICAL

SPECIFICATIONS OF A PARTICULAR BRAND

OF DRUG FOR SELLING OF IT.

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Decider

women play a significant role on

deciding of kitchen appliances and

also initiating purchase of

different household products.

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Real user related variables

Multiple Bases

AttitudeLoyalty

Hardcore Loyal

Split Loyal

Shifting Loyal

Switchers

Buyer readiness

User Rates

User status

Occasions

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Business market can be

segmented on the bases

consumer market variables

but because of many inherent

differences like

1.Businesses are few but

purchase in bulk

2.Evaluate in depth

3.Joint decisions are made41

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Variables

DemographicOperatingVariables

PurchasingApproaches

Situational factors

Personal characteristics

Demographic:

Industry: which industry should we

serve?

Company Size: What size companies

should we serve?

Location: What geographical areas

should we serve?

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Operating Variable:

Technology: What consumer

technologies should we focus on?

User or Non User status:

Should we serve heavy users, medium

users, light users or non users?

Customer Capabilities: should we serve

customers needing many or few

services?

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Purchasing Approaches:

Purchasing function organization:

should we serve companies with a highly

centralized or decentralized purchasing

organization?

Power structure: Should we serve companies

which are Engineering oriented or financially

oriented so on?

Nature of existing relationship:

Should we serve companies with which we

share strong relationship or go for the

companies we desire?

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General Purchasing policies:

Should we serve those companies that

prefer leasing? Or Service contract

Purchasing Criteria:

Should we serve companies that are

seeking

1> quality?

2>Price?

Or

3> service?

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Situational Factors:

Urgency:

Should we select those companies which

need quick and sudden service and

delivery?

Specific Application:

Should we focus on certain applications

or all applications?

Size or order:

Should we focus on Large orders or

small orders?

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Personal characteristics:

Loyalty:

Should we serve those companies which

show high loyalty to their suppliers?

Attitude towards risk:

Should we serve risk taking or risk

avoiding customers?

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Measurable Substantial

Accessible Differentiable

Actionable

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What is Market targeting?

Market targeting refers to picking a

specific group or small set of

groups to which a business will

advertise.

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Idea behind the concept of Market

Targeting

It is based on the idea that, because

it's not really possible to make or

do something that will please

everyone, a business has to

specialize.

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Segmentation VS Targeting

Segmentation breaks up an entire market into different groups, targeting

is the process of selecting exactly

which one of the groups will be the

focus of advertising efforts.

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Main Principle of Target Marketing:A company can never sell to

everyone successfully. The needs,

wants, beliefs and habits of

people around the world are so

varied that it is virtually

impossible to make a product or

service that is truly universal to

everybody.

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Purpose of Market Targeting:

The main reason an organization uses market

targeting is to give more power to its

brand.*

Organizations also use these methods when

they want to get an idea of how much of

something they will sell.**

Estimates related to sales sometimes are

necessary in order for a business to get

initial financing from banks or investors .***

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Approaches Of Market Targeting

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Undifferentiated Approach

Differentiated Approach

Concentrated Approach

Undifferentiated Approach

Sales-growth strategy that ignores

market segment differences and

attempts to appeal to all

prospective customers with a

single, basic product line through

mass advertising and distribution.

Also called mass marketing.

Example:

Gasoline, white Bread, Soft drinks

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Advantage of Undifferentiated

Approach

• Wide audience: Since the target audience is

broad, the number of successful hits is high

despite of the low probability of a single

person turning up.

• Less risky: If all the efforts in one particular

area goes in vain, still the eventual loss is

less compared to a loss in the narrowly

focused area.

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• Production cost per unit are low on

account of having one production run

for homogeneous product.

• Higher potentials of sales volume and

efficiency of scale in a much larger

market.

• Marketing research cost and advertising

cost are relatively low.

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Differentiated Approach

A sales growth strategy in which

several market niches* or

population segments are targeted

with different products for each

niche* or segment.

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Concentrated Approach

Growth strategy in which resources

of a firm are focused on a well-

defined market niche or population

segment.

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