Unit: 03

Bank Market Segmentation

Market segmentation involves dividing the market into groups where

individual have similar needs & wants for services & product. It could
also be a segmentation of people on the basis of behavior, culture and
economic stages.

Meaning of Market Segmentation

Market segmentation is a process of viewing heterogeneous market as

consisting of smaller & more homogeneous parts called segmentation.

According to Philip Kotler “Market Segmentation is a subdivision of

market into homogenous sub-section of customers where any sub-
section may conceivably be selected as a market Target to be reached
with a distinct Market Mix.
Segmenting Consumer Market / Basis of Market Segmentation

Basics of Market Segmentation

Geographic Demographic Psychographic Behavioral

1. Village 1. Age 1. Leadership 1. Usage rate

2.Local Market 2. Gender 2. Conservation 2. Readiness

Stage

3.Zonal Region 3. Material Status 3. Personality 3. Brand

loyal

4. Brand Belief

4.City or metor 4.Education 4.Ambitiousness 5.Attitude

 5.Country 5.Income 5.Authortarianism 6.Market
factors

6.Religion

7.Family size

8.Nationality

ICICI BANK -- SAVINGS ACCOUNT

ICICI savings account

Gender wise ICICI Bank interest rate

ICICI interest save a/c 3% - 3.50%

Advantage woman Aura 3% - 3.50%

Age wise Minimum Bal

Young stars savings a/c 3% - 3.50% 2500

Senior club savings a/c 3% - 3.50% 4500-125000

Income wise

Smart stars savings a/c 3% - 3.50% 2500

Retire happy savings a/c 3% - 3.50% 25000

Defense savings a/c 3% - 3.50% NIL

Family size

Savings family banking 3% - 3.50% NIL

Regular savings a/c 3% - 3.50% 2500-10000

Basic savings a/c 3% - 3.50% NIL

Gender-Women

Union Bank of India – Union Nari Shakti Scheme Karnataka bank-

KBL Vanitha ICICI – Advantage women Aura a/c

Criteria for making segmentation:

1.Identity

2. Accessibility

3. Responsiveness

4.Size

How to determine Market Segment?

Phase 1: Setting Expectation or objectives what is purpose or goal of

performing market Segmentation?
What does the company hope to find out by performing market
segmentation does the company have any expectation on what
market segment may exists.

Phase 2: Identify customer segment

What segments are the company’s competitor selling to?

What publicity available information is relevant & available to our

market?

How can we collect it which the types of market segments do we

wants to segment by.

Phase 3: Evaluate potential segment

What risk are there that our data is not representative of there
market segment why should we choose to cater to one type of
customer over another.

What is the long term re-pretension of choosing one market

segment over others

What is the company’s ideal customer profile & which segments best
overlap with this perfect customer

Phase 4: Develop segment strategy

How can the company test its assumptions on a sample test market

What defines a successful marketing segments strategy

How can the company measures weather the strategy is working.

Phase 5: Launch & Monitor

Who are the key stakeholders that can provides feedback, after the
market segments strategy has been unveiled

What barriers to execution Exists & how can they overcome.

How should the launch of market campaign be communicated

internally.

Importance of segmentation in Banking sector:

1. To understand the customer’s expectation

2. Customer’s retention
3. To understand the customer’s interest
4. To grow your business
5. Lower spending rate
6. To identify low medium & high value customers
 7. Advantages of Segmentation:
1. To understand potential customers
2. Pay proper attention to particular areas
3. Formulate Marketing programs
4. Select channels of distributions
5. To understand the competition
6. Use market resources effectively
7. Advertise the product & launch, sales
8. Promotion Activities

Disadvantages of segmentation:

1. Lack of information & Data

2. Difficulty in predicting customer behavior
 3. Hard to search customers Segments once identified
4. Time consuming
5. High cost
6. Difficult to cover all the areas

Mass Marketing

Mass marketing is the process of appealing to an entire market

rather than one target group. The market technique uses mas
distribution and mass media to reach the widest Audience possible.

Advantages of Mass marketing:

1. Scope & cost efficiency of advertisement

2. It increases the brand awareness
3. It reaches the maximum numbers of people
 4. Time saving

What is service marketing?

Service marketing is the process of promoting and selling a service or

an intangible goods to a specific group of people. It is a new way of
marketing that has become very popular & helps companies all over
the world to promote their services e.g.: Health care industry,
Hospitality industry , professional services.

Health care industry:

Biotechnology
Pharmaceuticals
Life sciences tools & services

Hospitality industry:
 Tourism
Hotel
Restaurant

Professional services:

Project Management
Marketing
Computer and information technology

Importance of service marketing

1. To maintain the good relationship

2. To retain the customers
3. To understand the key difference

Institutional segmentation
A market consisting of schools, universities, hospitals, , charities,
clubs, and similar organizations which buy goods & services for use
in the production of their own goods and services.

Psychographic e.g.: cafeterias in state & local govt buildings, schools,

universities, prisons, hospitals, or similar organizations.

Types of services:

1. Physical services
2. Experimental services
3. Intellectual services
4. Emotional services
Services segmentation strategy for agriculture
There are several factors that argue for the importance of market
segmentation in agriculture finance. Firstly, a bank Customer base
in the agriculture sector is heterogeneous. It might not be possible
for banks to meet the needs to breakdown total entire market into
segment & choose those that are best to serve.

Secondly customer needs differ under products & services by the

bank which cater the need of each segment agriculture finance
market is dividend Enterprises & Farmers.

A small scale or marginal farmers who are engaged in agricultural

require little marketable surplus, might require only simple
agriculture loan products.

Agri-business segmentation
Segmentation Main client Key parameter
approach segmentation
Strategic Corporate SME Loan exposure, total
segmentation farmers assets or revenue of
the people the sub
segmentation is done
based on the
corporate, SME &
farmers
Value change Producer’s Classifications based
segmentation processors traders on people engaged in
agriculture specially
farmers, agricultural
processes and the
 such as whole seller-
retailers. Sub-
segmentation can be
made based on
credit-product like
crop finance or loan
size
Geographical Region/zone A bank may segment
segmentation is agricultural
business under
region or zones
followed by sub
segmentation
around loan size &
 duration, loan type,
crops or protection
processing &
marketing.
Product offering and services

Client segment Activity segment Product offering

Corporate Agriculture Production finance,
marketing loans for crop
processing production, firm
production machinery, farm
equipment loans,
land development
loans, leasing hire
 purchase, loan
against receivable,
agriculture
marketing, import
loans, letter of credit,
investment credit,
term loans for fixed
assets, higher
purchase facilities
SME Agriculture Working capital, &
processing term credit firm,
agriculture acquisition of fixed
production assets, term credit,
 trade finance
products.
Farmers Production Crop loans, post-
harvest loans,
warehouse finance
loans, against
receivable if sold
under purchase
contract from SMEs,
term loan, leasing,
hire purchase
finance.
Industrial segmentation:
Industrial segmentation is a type of market segmentation that
involves dividing the market into different groups of individual
customer based on factors of such as their industries, size , locations,
and purchasing powers.

Benefits:

1. Improved targeting
2. Better customer understanding
3. Increased efficiency
4. Competitor advantage

Types:

1. Industries based segmentation

2. Size based segmentation
 3. Location based segmentation
4. Purchasing power segmentation
5. Customer type-based segmentation

Household segmentation

Family size segmentation

Family size segmentation is a method of dividing the customers into

different groups basis on the number of people in their household.
This segmentation strategy recognizes that the needs preferences
purchasing behavior of family with different family size can vary
significantly. In family size segmentation business divided
customers into groups such as

1. Singles
2. Couple without children
3. Family with one child
4. Family with two or more children
5. Empty nester: these customer may have ore disposable income
and properties and luxury and comfort. While making
purchasing decision businesses can target their segment by
offering premium product or services as well as promoting
features like relaxation or leisure activity.
Market segmentation technique for personal and corporate
customer also known as customers.
Customer segmentation
Customer segmentation is a process of grouping customer
based on different clear characteristics or variables with the
goal of personalizing market message you also can use the
customer journey life cycle to gain inside on how to divide
customer into groups.
The most common factors to consider while dividing group:
1. Demographic
2. Geographic location
3. Purchasing behavior
4. Psychographic listening
5. Economic status for B2B companies
6. It is a industry
7. Location
8. Partners
9. Customers life time value