From- Anjali Sharma

Bus. Adm. Department

MEANING OF MARKET SEGMENTATION
 Segmentation is a Marketing Strategy which involve
dividing a broad target market into subset of
Consumers who have common needs, interests
and priorities and then designing and implementing
strategies to target them.
DEFINITION OF MARKET SEGMENTATION
Market Segmentation is the Sub- dividing of
customers into homogenous sub-set of customers
where any sub- set may conceivably selected as
market target to be reached with distinct Marketing
Mix.
Philip Kotler
 Segmentation aim to match groups of buyers with
the same set of needs and buyer behaviour. Such
group is known as a ‘Segment’.
 STP stands for-
a) Starting, Transportation, Promotion
b) Segmentation, Targeting, Promoting
c) Segmentation, Targeting, Positioning
d) Selling, Telling, Providing

 Segmentation is the approach of-

a) Marketing Mix
b) Marketing Strategy
c) Marketing Environment
d) Marketing Plan

 _____________ is the process of dividing the broad target

market into sub-markets, sub units of consumers.
a) Market Targeting
b) Market Positioning
c) Market Segmentation
d) None of these
BASES FOR MARKET SEGMENTATION
 Market Segmentation

Demographic Segmentation Geographic Segmentation

Local,
Age, Gender, Regional,
Income, Marital National,
Status International

Psychographic Segmentation Behavioural Segmentation

Benefits,
Life Style,
Volume
Social class,
purchased,
Personality,
Loyalty,
Values
Occasions
 Market can be Segmented by-
a) Demographic Segmentation
b) Geographic Segmentation
c) Psychographic Segmentation
d) All of these

 Variable not including in Demographic

segmentation is-
a) Age
b) Gender
c) Cities
d) Income

 Match the following-

a) Geographic Segmentation 1. Who
b) Psychographic Segmentation 2. How
c) Behavioural Segmentation 3. What
d) Demographic Segmentation 4. Where
 DEMOGRAPHIC SEGMENTATION

 In Demographic Segment market is divided into

groups on the basis of Variables such as religion,
community, language, age, stage in the family life
cycle, gender, marital status, family size,
occupation, income, educational level and social
status of the consumer .
VARIABLES IN DEMOGRAPHIC SEGMENTATION

 Age- Babies, Kids, Teen, The Youth (age 29 and below), The
working group of age 30 and Above, The senior Citizen

Example- marketing company engaged in ready-made

garments should opt for age-group distribution of population
for the purpose of market segmentation.
 Region- Metro, urban, sub-urban and rural
 Gender- Man, Woman
 Income/ Purchasing Capacity- Buyer’ Preferred Price Range
Example- HCL identified the Below Rs 10000 per month’ income
group as a distinct and strong segment in home PC’s. By
offering PC’s at a low price of Rs. 12990. the company found
it a ‘growth segment’. Through this segmentation , HCL has
come to enjoy a 14.5% market share in home PC’s.
GEOGRAPHIC SEGMENTATION

 Geographically markets can be segmented on the

basis of Climate zone, Region, Countries, Nations,
States, Districts and urban/ rural area.
Climate- Temperate, Hot, Humid, Rainy
Region- Southwest, Mountain States
PSYCHOGRAPHIC SEGMENTATION

 Market can be segmented on the basis of the

psychological elements like psyche and personality
traits like self-concept, life styles, attitude and value
system.
 It facilitates grouping of consumers in such a
manner that group shares a common buying
behaviour .
VARIABLES IN PSYCHOGRAPHIC SEGMENTATION
 Lifestyle- It takes into account different dimensions
of consumer such as their activities, interests,
opinions and their spending.
Example- Titan Watches, Cafe coffee day
 Personality- Extrovert, novelty seeker, aggressive,
innovators
 Perception- Low risk, Moderate risk, High risk
 BEHAVIOURAL SEGMENTATION

 It is also called Buyer behaviour segmentation.

 Market can be segmented on the basis of the
behaviour of buyer like benefit sought, product
usages rate, brand loyalty, buyer’s readiness status
for the product , volume of purchase, purchase
occasion Buyer’s attitude towards the products.
 Benefit sought- Benefit expected by the consumer
 Example- Natural beauty care product

 Product uses rate- the market is divided into

currently users & currently non- users.
 Volume-Quantities of purchase

 Attitude- it is a learned tendency to respond

towards a product range from enthusiastic, positive,
indifferent negative hostile
 Occasions- choose Cadbury

 Brand loyalty- Johnson's

BENEFITS OF MARKET SEGMENTATION
o The benefits of marketing segmentation are:

It helps to distinguish one customer group from another

within a given market.

It facilitates proper choice of target market.

It facilitates effective tapping of the market.

It helps to divide the markets and conquer them.

It makes the marketing effort more efficiently.

BENEFITS OF MARKET SEGMENTATION
o The benefits of marketing segmentation are:

Firm can create marketing plans & programmes according

to needs of market.

Design the right products & services that match the market
demand.

Small marketing firm with limited resources can compete

more efficiently.

4 p’s can de used intelligently & rationally to obtain the twin

objectives- maximum customer satisfaction & Profitable
sales volume.

It better explains the needs & preference of customers.

 TARGET MARKETING
 A target market is a set of buyers sharing common
needs and characteristics that the marketing firm
decides to serve.
 Deciding which segment will be selected as target
market.
 Ramaswami & Namakumari opine that ‘through
segmentation, a firm divides the market into many
segments but all these segments need not form its
target market.
 CONT.…
 Target marketing involves 3 activities:-
MARKET SEGMENTATION
MARKET TARGETING
MARKET POSITIONING
 It is called S.T.P. strategy in Marketing.
 Market segmentation is a process of taking the total
heterogeneous market for a product & dividing it into sub-
markets or segments, each of which tends to be homogeneous.
 Market targeting means choosing one’s target market. In
choosing the target market, a firm basically carries out on
evaluation of the various segments and select those segments
that it wants to adopt as its market.
 Market positioning is next dimension of marketing strategy,
which indicates the place, the brand or product occupies in a
given market. Positioning is not what you do to a product, it is
what you do to the mind of the prospect. Positioning is the act of
designing the company’s offering and image to occupy a
distinctive place in the mind of the target market.
SELECTION OF THE TARGET MARKET
Market Targeting is a process of evaluating &
selecting the market segments which the firms
decides to serve.
In evaluating different market segments, the firm must
look at two factors:-
• THE SEGMENT’S OVERALL ATTRACTIVENESS
• THE COMPANY’S OBJECTIVES & RESOURCES
EVALUATING MARKET SEGMENTS
 Size of the Segment
In evaluating the segment, its size must
be considered whether it is sizable or not.
If a firm wants a very large volume, it should think on
bigger segment comparison to premium segment.
EVALUATING MARKET SEGMENTS
 Growth potential
In evaluation of the segments, the
growth rate of the segment should also be
considered.
Usually business firms, seek out the high growth
segments.
EVALUATING MARKET SEGMENTS
 Attractiveness
It focus on whether a potential segment
have characterize that make it generally attractive,
such as size, growth, profitability and low risk.
If a firm feels attractiveness in a segment it can select
as target market.
EVALUATING MARKET SEGMENTS
 Must be measureable
The degree to which any information
about the segment (buyer characteristics) obtainable
could be measured determines the market targeting.
It is hard to measure the number of customers who
are motivated to buy a car with accessories primarily
by consideration of credit policy.
EVALUATING MARKET SEGMENTS
 Accessible-
The effectiveness of market targeting is
considered by the effective focus on chosen segment.
Popular segment may be accessible only to firms
with a cost advantages so price is the major
determinant in this segment.
Premium segment may be accessible only to firms
which enjoy a differentiation advantage.
EVALUATING MARKET SEGMENTS
 Conformity with company’s goals & objectives
In evaluating & selecting the
segment, company’s goals & objectives should be
considered.
Some of the segments may be attractive, but they do
not match with the company’s goals & objectives.
Therefore, segment (target market) should be having
conformity with company’s goals & objectives.
EVALUATING MARKET SEGMENTS
 Resources
if company’s resources are limited, popular
segment may be chosen, for others, the premium
segment.
4 GUIDELINES OF STANTON
 Stanton has suggested the 4 guidelines about how
to determine which segment should be selected as
Target Market-
1. The Target market should be compatible with the
organization's goals & objectives.
2. It should match with the market opportunity
represented in the target markets with the
company’s resources.
3. An organization should seek markets that will
generate sufficient sales volume at a low enough
cost to result in a profit.
4. A company ordinarily should seek a market where
there are the least and smallest competitors.
TARGETING STRATEGIES
 Three alternative strategies for selecting a target
market are:-
MARKET AGGREGATION
 SINGLE SEGMENT
 MULTIPLE SEGMENT
AGGREGATION STRATEGY
 In this strategy, the marketer treats the total market
as a single segment.
 Therefore, management develops a single
marketing mix and reach most of the customers in
the entire market.
 So, it is a market coverage strategy in which a firms
decides to ignore market differences and present
single product for the entire market.
 It relies on mass distribution & mass advertising.

 This strategy is suitable for the firm that are making

an undifferentiated, stable product such as salt or
sugar.
COND…
 Advantage of this strategy is- Cost minimization
 It enables a company to produce, distribute,
promote its product very efficiently.
 Due to low cost, the company can turn its lower
costs into lower prices to win the price- sensitive
segment of the market.
 Kotler also says that ‘in this strategy the firm
ignores segment differences and goes after the
whole market with one offer.’
SINGLE SEGMENT STRATEGY
 It is also known as concentration strategy in which
a firm decides one segment from within the total
market as target and develop one marketing mix to
reach this single segment.
 The strength of a single segment strategy is that a
firm can initiate a single segment strategy with
limited resources.
 Through this strategy, the firm gains a strong
knowledge of the segment’s needs and achieves a
strong market presence, along with operating
economics.
 If the market potential of that single segment
declines, the marketer can suffer considerably.
MULTIPLE SEGMENT STRATEGY
 Under this strategy, two or more different groups of
potential customers are identified as target market, and
a separate marketing-mix is developed to reach
each segment.
 In multiple segment strategy, a firm decides to target
several market segments and present separate product
for each segment.
 Market segmentation can also be accomplished with no
change in the product, but rather with separate
distribution channels or promotional appeals, each
tailored for a given market segment.
 The firm operates in several market segments and
designs different product for each segment.
PRODUCT POSITIONING
 Positioning is related to the introduction of product in
target market.
 Positioning is an act of developing the company’s
offerings and image to occupy a distinct place in the
minds of the target market.
 Positioning is a consumer driven strategy in which the
objective is to occupy a unique place in the customer’s
mind and maximise its potential benefit for the firm. Each
brand must thus be ‘positioned’ in a particular class or
segment.
 Example, Mercedes is positioned for luxury segment and
Volvo is positioned for safety.
COND…
 The end result of the positioning is the successful
creation of a customer-focused value preposition which
explain logically why the target market should buy the
product.
 In this way by offering varieties of products and market
variations, it attains a higher sales and a deeper position
within each market segment.
 The result of multiple segment strategy is greater sales
volume than a single segment strategy.
KOTLER OPINES THAT A COMPANY MUST AVOID THE
FOLLOWING 4 MAJOR POSITIONING ERROR:-

 Confused positioning may be the result of company’s

claims about brand who makes too many claims or
changes the brand’s positioning too frequently.
 In doubtful positioning, buyers may find it hard to
believe the brand’s claims in view of the product’s
features or price.
 Over positioning may be in the result of too narrow
image of buyer about a brand
 Under positioning is possible when buyers have only a
vague idea of the brand and see it as another entry in a
crowded marketplace.
POSITIONING STRATEGY

1. A firm should identify possible competitive advantage in the

form of:
(a) Product Differentiation
(b) Service Differentiation
(c) Personnel Differentiation
(d) Image Differentiation
2. Then, it should select right competitive advantages
3. Then, there should be proper media-planning and campaign
planning by the firm.
4. Timing is an important factor in positioning.
5. Keeping in view the whole marketing environment, it should be
decided by the firm where and how to position the product.