Segmentation and Targeting

Example 3
 Segmentation
• Market segmentation is the process of dividing large
heterogeneous group of customers into homogenous
subgroups or segments of customers with similar
needs and preferences

• A market segment consists of a group of customers

who share a similar set of needs and wants
 STP
SEGMEN
TARGETI POSITIO
TATION
NG NING
Group
Assess the Define
customers
attractivene value
based on
ss of each proposition
similar
segment for target
needs
segments
Select
Profile
segment/s Develop an
each
to target action plan
segment
 Benefits of Segmentation
Benefits to the organizations
• Identification of unfulfilled needs and underserved
customer segments
• Results in better products and services
• More targeted promotions and customize products
• Increased customer satisfaction
– Sustainable profit growth
 Benefits of Segmentation
Benefits to the customer
• Customized products offer convenience, time saving
and enrich customer experience
• Tailored products and services
• Relevant offers
• Personalized experiences
Bases for Segmentation
 Geographical Segmentation
• Nation, region, city, urban / rural, climate

• Region: South, North, East, West

• City: Class-I, class-II, metros, cities with population
of 0.5 M to 1 M etc
• Rural and semi-urban: Villages with population of
<2000, towns with population of 20,000 to 50,000 etc
 Demographic segmentation
Dividing the market into groups based on
variables such as
– Age and life cycle
– gender
– income
– occupation
– education
– religion
– generation
 Socio-Economic Classification
• Classify households in India based on two variables
– Education of chief earner
– Number of “consumer durables” ( from a predefined
list)-owned by the family. The list has 11 items,
ranging from ‘electricity connection’ and
‘agricultural land’-to cars and air conditioners

• 12 categories in the new SEC system, ranging from

A1 to E3
 Psychographic segmentation
• Dividing buyers into different groups based on
lifestyle, personality traits

– Life-style: Culture oriented, sports-oriented, outdoor-

oriented
– Personality: Authoritarian, ambitious, compulsive
 Behavioral segmentation
Dividing buyers into groups based on their knowledge,
attitudes, uses, or responses to a product

– Occasions: Regular, special, seasonal

– Benefits sought: Quality, service, economy, speed
– User status: nonuser, ex-user, potential, first-time
– Usage rate: Light, medium, heavy
– Loyalty status: none, medium, strong, absolute
– Attitude towards product: enthusiastic, positive, indifferent,
negative, hostile
 Characteristics of useful segmentation/
Effective Segmentation Criteria

Measurable/
identifiable
Accessible

Substantia Differentia
l ble
 Targeting
• Evaluating the attractiveness of each market segment;
Selecting one or more segments to pursue and; the
designing marketing programs to serve them.

• Goal is to select segments that improve the

organization’s chances of maximizing its long-term
profitability in those segments
Factors influence the selection of segments

Target market
selection

Company fit
Objectives
Competencies
Resources

Segment Competition
characteristics Competitor’s strengths
Segment size
Growth Competitive intensity
Profitability Competitor’s resources
 Ethical and Privacy Issues
• Public reactions, privacy and ethical concerns should
be considered
 Segmentation, targeting and Strategy
Formation
• Early 1990s
• Mobil uncovered five segments
– Road Warriors (16%)
– True Blues (16%)
– Generation F3 (27 %)
– Homebodies (21 %)
– Price Shoppers (20%)

• 20% increase in sales by focusing on non-price

sensitive segments
 Niche
A niche is a more narrowly defined customer group
seeking a distinctive mix of benefits with a segment
Possible Levels of Segmentation