PRESENTATION

ON
MARKET SEGMENTATION


Submitted to: Submitted by:
Miss. Surbhi mam Ritu
MBE 1
st
SEM.
Roll. No- 8122

What is MARKET?
A market is a place which allows the purchaser and the seller to invent and gather
informations and lets them carry out exchange of various products and services. In
other words the Meaning of Market refers to a place where the trading of goods takes
place. The place can be a market place or a street market. A market is thus by
definition comprises people or business with potential interest, purchasing power and
willingness to spend the money to buy a product or service that satisfies need. The
following diagram illustrates this concept.



Example: Tatas have started producing a Mercedes Benz car here in India. Many
individuals have a need for car but they may not need a luxury car like Mercedes.
They are happy with a santro or Chevy spark or Maruti. Some might be interested in
a luxury car, but may not be interested in Mercedes as it may attract the attention of
tax authorities. They may prefer luxury cars like Honda city, Ford Fiesta, Octavia and
so on. Some may be interested in Mercedes but they are not able to afford a price of
Rs.32lakh. Thus, the market for Mercedes is a very small portion of luxury car
markets, which is a small portion of the total car markets



MARKET SEGMENTATION-

Market segmentation can be defined as the process of dividing a market into different
homogeneous groups of consumers.

According to Philip kotler market segmentation is the subdividing of market
into homogenous sub set of customers, where any subset may conceivably be selected
as market target to be reached with distinct marketing mix.

Benefits of Market segmentation-

Market segmentation offers the following potential benefits to a business:
Better matching of customer needs: Customer needs differ. Creating separate products
for each segment makes sense.
Enhanced profits for business: Customers have different disposable incomes and vary
in how sensitive they are to price. By segmenting markets, businesses can raise
average prices and subsequently enhance profits
Better opportunities for growth: Market segmentation can build sales. For example,
customers can be encouraged to trade-up after being sold an introductory, lower-
priced product
Retain more customers: By marketing products that appeal to customers at different
stages of their life, a business can retain customers who might otherwise switch to
competing products and brands.

Target marketing communications: Businesses need to deliver their marketing message
to a relevant customer audience. By segmenting markets, the target customer can be
reached more often and at lower cost.

Bases for segmentation-
Geographical bases.
Demographic bases.
Psychographic bases.
Behaviour bases




Geographical segmentation-


This is the most common form of market segmentation, wherein companies segment
the market by attacking a restricted
Geographic area. Potential customers are in a local, state,
Regional or national market place segment. If a firm selling a product such as farm
equipment, geographic location will remain a major factor in segmenting your target
markets since their customers are located in particular rural areas.

Example: Geographic decides the product consumption pattern. Southern are found of
coffee and north Indians like Tea. People down south use talc excessively, and apply it
even on face, perhaps aspiring to fairer like their counter part in the north. When we
sale our product to international market. Products are made according to their need.
Rasna international gives instant syrup when dissolves in glass of water, and does not
contain a lot of sugar. Complexion creams like fair and lovely sells only in India.


Segmentation of customers based on geographic factors
are:

1. Region-
Segmentation by continent / country / state / district / city.

2. Size-
Segmentation on the basis of size of a metropolitan area as per its population size.

3. Population density-
Segmentation on the basis of population density such as urban / sub-urban / rural
etc.

4. Climate-
Segmentation as per climatic condition or weather.




Demographic Segmentation-


Demographic segmentation uses various population measures including age, sex,
income, nationality, education, and occupation as the basis for dividing people into
specific markets. Demographic segmentation is easy to measure and is widely used.



The following four variables are examples of demographic factors used in market
segmentation:





Age- This demographic variable is often used to divide markets. For clothing
department store, demographic segmentation based on age works well.
E.g. - Amul has segmented his product in different age group.


For kids: Amul kool, chocolate milk, Nutramul energy drink.
For Youth: Amul cool kafe.
For womens and older people: Amul calci+, Amul Shakti energy drink


Gender- Dividing a market into different groups based on sex, has long been
common for many products including cosmetics, clothing and magazines.

Example: Emami segmented its product in gender. ,

Womens: Naturally fair



Men: Fair and handsome



Occupation- Market segmentation by occupations is also effective because of
associated lifestyles.

For example, business people are targeted by the travel and clothing industries
since they do more traveling and purchase more business clothing.


Life cycle stage- Dividing a market into different groups based on which stage
in the life cycle, presented in the table below, reflects the fact that people
change the goods and services they want and need over their lifetime.



Life-cycle stages

Bachelor Stage young, single people not living at home
Newly Married Couples young, no children
Full Nest I youngest child under six
Full Nest II youngest child six or over
Full Nest III older married couples with dependent children
Empty Nest I
older married couples, no children living with
them
Empty Nest II
older married couples, retired, no children living
at home
Solitary Survivor I in labour force
Solitary Survivor II Retired




Psychographic segmentation-

Psychographic segmentation divides the market into groups based on social class,
lifestyle and personality characteristics. It is based on the assumption that the types of
products and brands an individual purchases will reflect that persons characteristics
and patterns of living.

Example-

Consider a company that manufactures high end luxury cars. This is a product that
cannot be afforded by people from every income group. Only individuals falling in
high income groups are realistic customers of this specific product. That is the
primary basis of segmentation for the car manufacturer, that forms the basis of their
marketing plan.

Within the high income bracket, the car manufacturer must now decide how he
should go about the segmentation process. He will analyze the habits and lifestyles of
his existing customers, and even those of the customers of his direct rivals. Soon he
will see that some customers use these luxury cars as status symbols, some use them
as utility vehicles, and some use them for long distance drives. Understanding the
usage of a particular vehicle will provide the basis for the marketing of a product.
Users who prefer long drives will be shown the highlighted fuel efficiency of the
vehicle, people who use the car sparingly just for prestige purposes will be told about
the excellent looks and prestige of the car model and the brand, and people who use
them for other purposes will be informed about the interior space, the handling, the
braking system etc.

The art of marketing is such that the marketer needs to highlight that part of the
commodity that appeals most to a particular customer, and tell him the features of
the product and how it will benefit him, as a part of the advertising process.

Social class- Social class is a strong determinant of individual purchasing
preferences in consumer goods as well as in services such as education, travel
and tourism. Social class ranges from the lower class, to middle to the upper
class. The classes can be further stratified into upper lower, upper middle and
upper.

Personality traits- This is a method of segmenting markets based on a
perception of how differences in consumer personalities affect buying behavior.
Products and services will be marketed in a manner which will appeal to these
personality traits. For example, those who are considered more conservative are
perceived as desiring products having darker colours and more reserved styles
of dress.

Lifestyle- A person`s lifestyle can best be defined as how that person adapts to
and interacts with the environment. Some people may be more artistic or
entrepreneurial than others.
Example:
Caf Coffee Day
CCD has estimated that presently 60% of the footfalls in its 300 outlets
belong to students between the ages of 15 to 24 years. The CCD are targeting
students and trying to establish a space in their lives.


Behavioural segmentation-

Behavioural segmentation is possibly the most useful way to segment the market as it
is based on consumers' knowledge of, attitude towards, uses for, and response to a
product (Kotler). After all, marketing is about finding out what people need and want
and then developing a product that satisfies those needs.

Behavioural bases for segmentation include:
Purchase occasion- Markets can be segmented on the basis of when and why people
buy.
For example, you might purchase a bottle of wine for an evening meal at home, for a
dinner party, to take to a BYO restaurant, for cooking, for cellaring, or for a gift. No
doubt you would buy a different type and quality of wine for each occasion or
purpose.

Benefits sought- Benefit segmentation as 'the process of grouping customers into
market segments according to the benefits they seek from the product'.
Example- Nestle has found a separate segment Atta noodles as distinct from the
Maida noodles.

Usage rate and user status- Usage-rate segmentation as 'dividing a market by the
amount of product bought or consumed'.
Example- newer products such as light beers and premium beers are targeted at non-
traditional markets, such as younger people and females.

Loyalty status- Completely loyal consumers are those that would not consider buying
another brand or visiting a different outlet.
Example- I tend to be more loyal for service products, such as my hairdresser and my
doctor.

Attitude- An attitude as a 'learned tendency to respond consistently towards a given
object'. People's attitude toward the product can be 'enthusiastic, positive, indifferent,
and negative. Frankly, it is a waste of time trying to convince people with a negative
attitude toward the product to buy it.
Example- Shampoos, soap and all FMCG products buying behavior segmentation is
used.

Advantages of market segmentation-

Various advantages of market segmentation are:-

Helps distinguish one customer group from another within a given market.

Facilitates proper choice of target market.

Facilitates effective tapping of the market.

Helps divide the markets and conquer them.


Helps crystallize the needs of the target buyers and elicit more predictable
responses from them ; helps develop marketing programmers on a more
predictable base; helps develop market offer that are most suited to each
group.

Helps achieve the specialization required in product; distribution, promotion,
and pricing for matching the customer group and develop marketing offers and
appeal that match the need of each group.

Makes the marketing effort more efficient and economic.
Helps concentrate efforts on the most productive and profitable segment,
instead of frittering them over irrelevant, or unproductive, or unprofitable
segment.

Helps spot the less satisfied segments and succeed by satisfying such segments.

Brings benefits not only to the marketer but also to the customer as well.

When segmentation attains high sophistication, customers and companies can
choose each other and stay together.

Disadvantages

- Costs in actually finding out who to target.

- Increased costs to develop variations of the product.

- Higher stock holding costs.

- Higher advertising and other costs.
- increase market segmentation.
- Consumer backlash
- Limits general popularity anonymous.
References

From book of Marketing management by
Philip kotler,
Mithileshwar jha
From internet-
Slideshare.com
Wikipedia.