Market Segmentation

Discover needs/wants of consumer groups to develop specialized products to satisfy group needs  Identify the best media for advertising  Related concepts (STP) -Segmentation (subsets with similar needs) -Targeting (which segment to aim for) -Positioning (the product in the mind of the customer) 

The Classic Segmentation Variables for Consumer Markets


Hindustan Unilever Ltd (HUL)

Company Overview 

HUL, the largest FMCG Company in India by revenues was formed by merging three subsidiaries of Unilever in 1956. At present, Unilever Plc holds a 51.6% stake in the company. HUL¶s portfolio of products covers a wide spectrum including soaps, detergents, skin creams, shampoos, toothpastes, tea, coffee and branded flour. HUL's brands, spread across 20 distinct consumer categories. It owns 35 major Indian brands. HUL has consistently had the most number of brands in the Top 10 list for the most trusted brands in India from 2003 to 2009.  

Business Segments 

Soaps and Detergents. Personal Care Products. Beverages. Foods. Ice Cream. Others.     

Sub Segments on Oral Care 



Powders Mouth Cleansers 


Trends and Forces 

Increasing raw material prices drives HUL to raise its prices Increasing per capita income drives FMCG sector growth Per Capita consumption of personal care products in India is one of the lowest among developing economies of the world. Highly Competitive FMCG Sector limits profit margins of HUL.   


and Gamble (P&G) India Consumer Products Ltd. GCPL) 



India Limited (India) Limited 

Colgate-Palmolive Colgate- 



How Does HUL Practice Market Segmentation & Positioning? 

essentially same  Promotion (specific promotion campaigns aimed at the Indian market  Place (urban stores, suburban stores, express stores, etc.)  Price (junior discounts)

Market Segmentation Decision Process

Stage I - Identify Market Segmentation Bases 

The process starts when a company looks at the potential customers and identifies those customers as having particular characteristics - these characteristics will allow the marketing company to classify them into market segments. The segments should be selected so that you can group together customers who have similar needs. 

Stage II - Develop Relevant Profiles for each Segment
Once the segments have been identified should develop a profile of the relevant customer needs and behaviors in each segment. What does your customer look like (profile) !! What do they like !! What do they do !!  You need this description to be very precise in order to make your marketing ³match´ the needs of the customer 

Stage III - Forecast Market Potentials 

You create a ³Forecast´ of the market potential within each segment. This is the ³go, no-go´ stage. When you noare at this stage you gather the information on sales potential to determine whether you can go further ahead and justify further analysis. Forecast - ³what if´ - an expectation of future action.  

Stage IV - Forecast Probably Market Share 

Once the market potential has been estimated, you have to determine how much of that market you can obtain (what ³market share´ can you capture. Then you develop specific marketing strategy for the segments you are trying to develop. (text eg. P&G outselling Colgate, therefore eg. Colgate strategy changes so it doesn¶t compete directly)  

Stage V - Select Specific Market Segments 

you take all this information, and identify specific target markets. 

ie. ie.

University students who have partparttime jobs, and do not have credit cards

Product Positioning 

a marketing program in such a way that the product is perceived to be very different from competitors products

Levels of Market Segmentation
Through Market Segmentation, Companies Divide Large, Heterogeneous Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs

Mass Marketing
Same marketing mix (mm) directed at all consumers (no segmentation, i.e.,Ford Model T )

Segment Marketing
Different marketing mix (mm) to one or more segments (some segmentation, i.e. GM)

It is Critical to understand that.. 

marketers do not often practice mass marketing today  They practice differentiated marketing  Often they do not change the product to appeal to different segments  They change price, place, and promotion

Having ID¶ed the Targeting Strategy and Determined Segmentation Variables 

We develop different segment profiles Evaluate these for profitability And select the target markets we want to enter

Finally We Position
Market Segmentation (ID) 2. Determine which segmentation variables to use 3. Develop market segment profiles Market Targeting (Evaluate) 4. Evaluate relevant market segments 5. Select target markets Market Positioning (Enter) ‡ Develop positioning for target segments ‡ Develop a marketing mix for each segment

Having Finished the Target Market Selection Process We Act!

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