EPGPM 2020

Marketing Management 1
Market Segmentation - I

Dr. Jones Mathew

Professor in Marketing,
Great Lakes Institute of Management,
Gurgaon

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 Agenda

• Customer-driven marketing strategy and STP

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Market Segmentation

Market segmentation is dividing a market into smaller

homogenous segments with distinct and similar
needs, characteristics, or behavior patterns that
require separate marketing strategies or mixes

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e.g. Singapore Airlines
• Singapore Airlines, practices segmentation to meet
the needs of different segments through four distinct
subsidiaries:
• Singapore Airlines => for long-haul premium service;
• Silk Air => for medium-haul premium service;
• Scoot => for long-haul budget service; and
• Tiger (part owned) => for budget service in medium-haul
markets.

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Market segmentation
• In concept, marketing boils down to two questions:
• Which customers will we serve? and
• How will we serve them?
• The STDP/STP approach tries to answer these difficult questions

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 Bases for segmentation
WHY ?
Why do customers make the Such insight helps firms convert non-loyal consumers into
loyal ones; design new products to appeal to new groups
decisions they do? of consumers; or change marketing strategy to increase
Needs, preferences, decision share & profitability.
processes

Catalog marketers often segment mkts. on 3 factors, i.e.

WHAT ? RFM: Recency, Frequency, & Monetary value of
What have the customers purchase. This approach is commonly used in database
done? mktg by cos. who track their customers’ transaction data.
Research shows segments based on RFM model
Usage, loyalty, profitability
correlating well with customers’ future purchases.

Factual info. like- age, education, income, family size etc.

WHO ? (B2B equivalent could be type of industry; size of
business) makes segmenting easy & actionable.
Who are the customers? Marketers hope consumers’ demographics & related
Demographics, media habits, characteristics will correlate highly with their
lifestyle needs/preferences. e.g. low income segments more likely
to be price-sensitive, looking for value brands than high-
income ones.
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