Module 8

Segmentation
Segments

Mass Marketing Customisation

Segmentation

IIM Ranchi PGP 2019-21

Segmentation
 Division of markets into meaningful and distinct
customer groups
 Allows businesses to look at several different
groups instead of one mass market
 Identifies groups that have similar needs and
market responses
 Target the marketing resources effectively

IIM Ranchi PGP 2019-21

Advantages
 Facilitates right choice of target market
 Higher market share
 Price discrimination based on segments
 Effective and efficient marketing plan
 Stimulates innovative/new products
 Guided by precise customer information
 Comfort factor to the customer – aware of firm
capabilities
 Sustainable customer relationship at all stages of
customer lifetime

IIM Ranchi PGP 2019-21

Segmentation Criteria
Measurability

Substantiality Homogeneity

Accessibility Heterogeneity

Actionability

IIM Ranchi PGP 2019-21

Features of a Segment
 Having core similarities of
attitude, behaviour, and
economics
 Robust and replicable

IIM Ranchi PGP 2019-21

Segmentation Base
 Group of characteristics used to demarcate
segments
 Bases
 Demographic
 Psychographic
 Values
 Behavioural

IIM Ranchi PGP 2019-21

 Considerations for Use
Difficult &
high
Behavioural
Ease & cost of measurement

Psychographic

Geo-demographic

Demographic

Easy & low

Low Predictability of consumer High
choice behaviour

IIM Ranchi PGP 2019-21

Demographic Segmentation
 Primary factors
 Age, lifestage
 Gender
 Family size
 Occupation, income
 Education
 Geographic
 Geo-demographic
 May not provide deep insights into consumer
behaviour

IIM Ranchi PGP 2019-21

Ford C-195
 Designed specially for Indian market
 Selecting a target market segment
 Most consumers: highly educated, looking for best
VFM
 Decided on features typical for Indian customers

IIM Ranchi PGP 2019-21

Research Results
Segments (%) Demographics Outlook Car
Full of Life (20) Early 30s successful, wants to distinctive, attention
communicate to the grabbing design,
world, living for today brand, price, loves
driving, owns
800/Zen

Affluent Puppies (13) Mid-sized businessman, affluent, status and owning premium car
college graduate show-off, two cars in is important, features
household, cell and style, already
phones, watch TV, owning premium car
eating out with
family/friends
Starting Out Small Late 30s, married, owns least affluent, family price is most
(20) homes man, simple pleasures important,
in life, prefers Indian enthusiastic about
products driving, 800/Zen
(first car)
IIM Ranchi PGP 2019-21
 Research Results
Segments (%) Demographics
Contented Mid-40s, married, owns
Conformist (17) homes, senior
executives
The Upper Crust (4) Late 30s, wealthy, highly
successful businessmen
Life Without Spice (2) 30s, small business or
executive, mostly
unmarried
IIM Ranchi PGP 2019-21
Outlook Car
quiet, secure, well- driving not a
planned life, not pleasure, chauffeur,
sports enthusiasts safe, durable,
comfortable cars; just
a means of
transportation, own
one premium car
very successful, well large, comfortable,
travelled, and safe cars; latest
sophisticated tastes features, appearance,
own at least 2
premium cars
watch TV, going to certain indifference
movies, Net surfing, toward cars, self-
lack passion in most driven, price
realms of life sensitive, 800/Zen,
some drove premium
cars
Ford Ikon
 Chauffeur driven
 More focus on rear compartment – styling, leg
room, air conditioning vents, head space for
turbans
 Women
 Sarees - Sharp edges removed by using
injection-moulded parts
 Family
 Large trunk volume
 Comfortable entry or exit for all members
IIM Ranchi PGP 2019-21
Psychographic Segmentation
 Primary factors
 Lifestyle
 Class
 Personality
 Benefits sought

IIM Ranchi PGP 2019-21

IIM Ranchi PGP 2019-21
Values Segmentation
 Preferences
 What the customers stand for
 Influence the kinds of brands are attracted
to
 The kinds of communication they will
respond to

IIM Ranchi PGP 2019-21

Y&R 7 Values
 Enlightenment - reformer
 Discovery - explorer
 Control - successful
 Status - aspirer
 Security – mainstream
 Escape – struggler
 Survival – resigned

IIM Ranchi PGP 2019-21

Values: Status
 Brand: Ralph Lauren
Polo Shirts
 Classy, trendy
 Target - respect,
recognition
 Style - assured, casual
persona
 Communication:
visual gloss

IIM Ranchi PGP 2019-21

Y&R 7 Values
 Enlightenment - reformer
 Discovery - explorer
 Control - successful
 Status - aspirer
 Security – mainstream
 Escape – struggler
 Survival – resigned

IIM Ranchi PGP 2019-21

Values: Survival
 Brand: Toshiba vinyl
turntables
 Predominantly older people
 Unchanging values
 Warm nostalgia
 Respect institutions
 Familiar choice
 Communication: family
story

IIM Ranchi PGP 2019-21

VALS Framework

IIM Ranchi PGP 2019-21

Two of Eight
Innovators
 Always taking in information
(antennas up)
 Confident enough to
experiment
 Sceptical about advertising
 International exposure
 Self-directed consumers
 Believe science and R&D are
credible
 Most receptive to new ideas
and technologies
 Widest variety of interests
and activities
IIM Ranchi PGP 2019-21
Makers
 Distrustful of government
 Strong interest in all
things automotive
 Strong outdoor interests
 Believe in sharp gender
roles
 Protect what they
perceive to be theirs
 See themselves as
straightforward; appear
to others as anti-
intellectual
 Want to own land
(www.strategicbusinessinsights.com)
Behavioural Segmentation
 Actual behaviour towards products/services
based on
 Usage – heavy/medium/light
 User status - non-user / potential / first-time /
regular / ex-user
 Loyalty status – hardcore / soft-core / shifting /
switchers
 Media Usage
 Responses
 Needs
IIM Ranchi PGP 2019-21
Needs: Camera
 Point-and-clickers
 Ease of use, auto-settings, no guess work
 Budget buyers
 Gadget freaks
 Big menu, functionalities
 Settings junkies
 Manual controls, settings
 Professionals/serious enthusiasts
 High performance, body & lenses, data capture
formats
IIM Ranchi PGP 2019-21
Needs: Charles Schwab
Segment Customer Needs Distinguishing Attributes

Individual Investor Fee sensitive Age 24-45

Value choice of investment instruments Assets of less than $1M
Require access to high-quality & unbiased Single professional living in
research major metros

Advised Investor More time than fee sensitive Age: 45+

Resist any investment advise that appears Dual income professionals
to be biased Home Owners
Want someone to manage their portfolio for Assets of $1M-$5M
them
Will reject any approach that feels cookie
cutter

Frequent Traders Risk seeking/independently minded Male

Invest for themselves and/or for others Age 24-35
Fee Sensitive Subscribes to technical &
Needs access to cutting-edge tools financial trade pubs
Requires speedy trades & lowest fees Trades 2x+ per month
possible

IIM Ranchi PGP 2019-21

Multi-criteria Segmentation
better defined
more focused
Variable 1
Education

Variable 3 Variable 2
Usage rate Age

IIM Ranchi PGP 2019-21

Segmenting Business Markets
Turnover
No. of employees

Firmographics Years in business

Financial situation
Industry group

Capabilities & processes

Innovativeness
Segmentation
Business culture Technology
Bases Growth orientation
Decision making - power centre

Time and frequency of purchase

Purchase procedure
Size and urgency of order
Usage behaviours Share of purchase
Benefits sought – service support, financing
Risk aversion

IIM Ranchi PGP 2019-21

Segmentation vs Differentiation
Segmentation

Offering +
Other
marketing Segment
variables

Differentiation

IIM Ranchi PGP 2019-21

 Thank You!!

IIM Ranchi PGP 2019-21