Service

Segmentation
and Targeting

Dr. Javed Mahmud

December 2020
• It is not possible for service marketers to address the whole market with their
offers.
• The decision for the service firms is to choose its markets and target them
with its service offers.
• The process of identifying market segments, selecting one or more of them
and developing a marketing mix to meet their needs is known as target
marketing.
• Market segmentation is a process of dividing a heterogeneous market into
homogenous subunits,
• It is defined as dividing a market into distinct groups of buyers with different
needs, characteristics, or behavior who might require separate services or
marketing mixes.
Definitions
 The segments should be:
• Measurable and obtainable: Size, purchasing power, and characteristics of
segments
• Accessible: The segments should be effectively reached and served.
• Substantial and Viable: The segment chosen should be large and profitable. It
should be cost-effective for the service marketer to address the segment.
• Intensity in Competition: More the intensity of competition, less attractive is
the segment.
• Actionable: If the segments are attractive and have the potential for profit
making, then effective marketing programs can be designed.
• Differentiable: The segments should be distinct from each other, behaving
and responding differently. Or else, the process becomes like Undifferentiated
Marketing.
Effective Segmentation
 demographic
geography
s

psychograph
behavior
ics

Bases for Segmenting the Service Consumer

 income
er fam
nd ily
ge

ed
uca
age

tio
n
Demographic Segmentation
 Adolescents’
Infants Market Child Market Teen Market
Market

Elders/Senior Middle-aged
Youth Market
s Market Market

Age Segmentation
 Gender

Family
 Very Rich

Consuming Class

Climbers

Aspirants

Destitute

Income Segmentation Education Segmentation

 Cities

Districts

States
Urban Rural
Areas Areas
Countries

gross domestic product

per capita income
standard of living
Population
Climatic lifestyle
Conditions
culture
values
Geographic Segmentation
 Personality
behaviors that make a person unique

Lifestyle
the way in which a person lives.

Psychographic Segmentation
 Occasion Benefits

Frequency

Need Attitude

Behaviouristic Segmentation
Product Benefits
 Attitudes
Enthusiastic Positive Indifferent Negative Hostile

Behaviouristic Segmentation
 Develop Measures for Selecting Customer
Attractiveness
Identifying Customer Segments
Segments Analyze the segments
identified based on their Involves developing
Identify the customer the profiles of the
size, growth potential,
segments using any of customer segments
profitability and the
the bases or a
purchasing power. identified and analyzed
combination of the
bases. This will help the for profit and growth
marketers to choose and potential
The marketer should
invest in those segments Includes developing
determine the basis for
which have great marketing mix that
segmentation based on
potential to produce
the area of business.
profits for the firm in
match the user
future. profiles.

Steps in Market Segmentation

 • In undifferentiated marketing organizations have only one
product and the product is aimed at the whole market.
• It expected the customers to take it or leave it, since there
was no choice in the offer.
• It never bothered with individual tastes and it manufactured
one product for the whole market.
• The advantage of this method was that it introduced the
concept of mass marketing.

Undifferentiated Marketing vs. Differentiated Marketing

 • A lot of cost was cut in terms of having
– low inventory
– fewer models and
– economy of scale in the manufacturing process
• Communication was also not very complicated and mass
media was used.
• The customers looked for their basic, core need to be
satisfied.

Undifferentiated Marketing vs. Differentiated Marketing

 • Differentiated Marketing is the second stage of evolution of
marketing.
• With a little more competition, and with the customers
becoming more mature, the organization now introduced
slight variations in its product models.
• Nevertheless, it dumped the entire product on to the market.
Expecting the market to choose slight variations, the
organization offered the same core product in these
variations.

Undifferentiated Marketing vs. Differentiated Marketing

Undifferentiated Marketing vs. Differentiated Marketing
 • In Niche Marketing, the service
marketer looks for a very
specialized segment.
• His entire offer - and marketing
resources - is tailored towards this
very special group of consumers.
• The size of the market is small, the
consumers have very special
preferences and there were no
other players catering to these
customers.
Niche Marketing
Market Targeting
Any Questions???