MARKET SEGMENTATION

By-
Shalini Mukerji
Sandeep Satishchandra
Ashish Babaria
Aabhas Rastogi
 Contents
• Evolving Marketing Strategies
• What is Market Segmentation?
• Why segmentation?
• What are the requirements of Segmentation?
• Benefits & Limitations of Segmentation
• Segmenting Consumer Markets
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- Behavioural Segmentation
 Evolving Marketing Strategies
• Mass Marketing :The term mass market refers to a large, undifferentiated
market of consumers with widely varied backgrounds. Products and
services needed by almost every member of society are suited for the mass
market. Such items as electric and gas utilities, soap, paper towels and
gasoline, for example, can be advertised and sold to almost anyone, making
them mass market goods
• Mass Marketing –
• An attempt to appeal to an entire market with one basic marketing strategy
utilizing mass distribution and mass media. Also called undifferentiated
marketing.
• The appeal of mass marketing is in the potential for higher total profits.
Companies that employ the system expect the larger profit to result from
(1) expanded volume through lower prices and (2) reduced costs through
economies of scale made possible by the increased volume.
• Henry Ford applied the concept in the automobile industry. His Model T
was conceived and marketed as a "universal" car—one that would meet
the needs of all buyers.
 Product Variety

• After the mass marketing strategy another

strategy with similar characteristics but
overcoming its predecessor’s shortcomings came
into existence. That is product variety strategy.
• An attempt to appeal to the entire market with a
huge variety of products produced in mass is
made.
• However, like Mass marketing in this case also the
customers needs & wants are not taken into
account while developing the product.
• Target Marketing-
• Is a market segmentation and market coverage strategy
whereby a product is developed and marketed for a
very well-defined, specific segment of the consumer
population.
• Target marketing is particularly effective for small
companies with limited resources because it enables
the company to achieve a strong market position in the
specific market segment it serves without mass
production, mass distribution, or mass advertising. It
enables firms to capitalize on the respective serve
market share
 Requirements of Market Segments

In addition to having different needs, for

segments to be practical they should be
evaluated against the following criteria:

• Identifiable: the differentiating attributes of

the segments must be measurable so that
they can be identified.
• Accessible: the segments must be reachable
through communication and distribution
channels.
• Measurable: It has to be possible to determine
the values of the variables used for segmentation
with justifiable efforts. This is important
especially for demographic and geographic
variables. For an organization with direct sales
(without intermediaries), the own customer
database could deliver valuable information on
buying behavior (frequency, volume, product
groups, mode of payment etc).
• Substantial: the segments should be
sufficiently large to justify the resources
required to target them.
• Unique needs: to justify separate offerings,
the segments must respond differently to the
different marketing mixes.
• Durable: the segments should be relatively
stable to minimize the cost of frequent
changes.
Defining Marketing
Segmentation
 ‘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 is essentially the
identification of subsets of buyers within a
market that share similar needs and
demonstrate similar buyer behaviour. The
world is made up of billions of buyers with
their own sets of needs and behaviour.
Segmentation aims to match groups of
purchasers with the same set of needs and
buyer behaviour. Such a group is known as
a 'segment'.
• The process of defining and subdividing a
large homogenous market into clearly
identifiable segments having similar
needs, wants, or demand characteristics is
called Segmentation. Its objective is to
design a marketing mix that precisely
matches the expectations of customers in
the targeted segment.
• Market Segmentation consists of taking
the total heterogeneous market for a
product & dividing into several sub-
market of segments, each of which tends
to be homogenous in full significant
aspects – William Stanton
• Market Segmentation is the marketing
process of identifying and breaking up the
total market into groups of potential
customers with similar motivations, needs
or characteristics, who are likely to exhibit
homogeneous purchase behaviour.
Undertaking this process allows marketing
efforts to be targeted at select groups.
Market segmentation involves the
subdividing of a market into distinct
subgroups of customers, where any
subgroup can be selected as a target
market to be met with a distinct marketing
mix. - CIMA
• A marketing term referring to the
aggregating of prospective buyers into
groups (segments) that have common
needs and will respond similarly to a
marketing action. Market segmentation
enables companies to target different
categories of consumers who perceive the
full value of certain products and services
differently from one another.
• Market Segmentation is the process of
splitting customers, or potential
customers, in a market into different
groups, or segments, within which
customers share a similar level of interest
in the same or comparable set of needs
satisfied by a distinct marketing
proposition.
Market segmentation is the process of
dividing the whole market of goods or
services in groups of people with similar
needs. By making this division there is a
high chance that each group responds in
favour to a specific market strategy.
 Benefits and Limitations
Benefits:
The Organisation gets to know its customers better.
Provides guidelines for resource allocation.
It helps focus the strategy of the organisation.

Limitations:
Targeting multiple segments increases marketing costs.
Segmentation can lead to proliferation of products.
Narrowly segmenting a market can hamper the
development of broad-brand equity.
 Why Segmentation?
• To develop marketing activities
• Increase marketing effectiveness
• Generate greater customer satisfaction
• Create savings
• To identify strategic opportunities and niches
• Allocation of marketing budget
• Adjustment of product to the market need
• To estimate the level of sales in the market
• To overcome competition effectively
• To develop effective marketing programmes
• To contribute towards achieving company goals
Bases for Segmentation in Consumer
Markets
 Geographic Segmentation
The following are some examples of geographic variables
often used in segmentation.
• Region: by continent, country, state, or even
neighbourhood.
• Size of metropolitan area: segmented according to size of
population.
• Population density: often classified as urban, suburban, or
rural.
• Climate: according to weather patterns common to certain
geographic regions.
Geographic Segmentation
Geographic Segmentation
Geographic Segmentation
The salt worth its salt.
Age
Gender
Life-cycle stage: Dividing a market into different groups based on which stage in the life-
cycle, presented in the table below, reflects the fact that people change the goods and
services they want and need over their lifetime.

Life-cycle stages

Bachelor Stage young, single people not living at home

Newly Married Couples young, no children
Full Nest I youngest child under six
Full Nest II youngest child six or over
Full Nest III older married couples with dependent children
older married couples, no children living with
Empty Nest I
them
older married couples, retired, no children living at
Empty Nest II
home
Solitary Survivor I in labour force
Solitary Survivor II retired
Psychographic Segmentation
 AIO Inventories
AIO studies envisage a wide variety of variables
and measures the major dimensions shown

Activities Interests Opinions Demographics

Work Family Themselves Age

Hobbies Home Social Education
Social events Job Politics Income
Vacation Community Business Occupation
Entertainment Recreation Economics Family size
Club member Fashion Education Geography
Community Food Products City size
Shopping Media Future Lifecycle
Sports Achievements Culture Dwelling
 VALS System Classification:
The VALS theory and database were first applied to markets in
1978. VALS provides a dynamic framework of values and
lifestyles; which helps to explain why people act as they do as
social groups and as consumers. VALS, unlike some other
approaches, waves together:
Demographics, 2. Attitudes, 3. Activities, 4. Consumption
patterns, 5. Brand preferences. 6. Media graphics.

The VALS study leads to the identification of four major groups:

The need driven

The outer directed
The inner directed
The integrated
 Female Lifestyle Types
• Cathy the contented housewife
• Cathy epitomises simplicity. She is devoted to her family
and faithfully serves them as mother housewife and cook.
She enjoys a relaxed pace and avoids anything which might
disturb her equilibrium.

• . Candice-the chic subarbanite

• Candice is an urban woman.She is well educated and
genteel. Socializing is an important part of her life. She is a
doer, interested in sports and the outdoors, politics and
current affairs. Her life is hectic and lived at a fast clip. She
is a voracious reader and there are few magazines she does
not read.
• Eleanor-the elegant socialite: Eleanor is a woman with style. She
lives in the city because that is where she want to be. She likes the
socio-economic aspects of the city in terms of her career and
leisure time activities. She is fashion conscious and dresses well.
She is financially secure and hence not a careful shopper. She shops
for status and style and not for price. She is a cosmopolitan woman
who has travelled abroad and wants to.

• Mildred-the militant motherMildred is a woman who got married

young and had children before she was ready to raise a family. Now
she is unhappy. She is frustrated and vents her frustration by
rebelling against the system. Television provides an ideal medium
for her to live out her fantasies

• Thelma-the old fashioned traditionalist: Thelma is a lady who has

lived a good life. She has been a devoted wife, a doting mother and
a conscientious housewife. Even now, when most of her children
have left home, her life is centred around the kitchen. She lacks
higher education and has little appreciation for the arts or cultural
activities. Her spare time is spent watching TV.
 Similarly the suggested male lifestyle
types are :

• Ben-the self made businessman.

• Scott-the successful professional.
• Dale-the devoted family man
• Fred-the frustrated factory worker
• Herman the retiring homebody.
• LINK
 Experiencers
They’re the
young
enthusiastic, imp
ulsive people
who seek variety
and excitement.
They spend a
comparatively
high proportion
of income on
fashion, entertai
nment, and
socializing.
 Thinkers
They’re mature,
satisfied, and
reflective people
motivated by
ideals and who
value order,
knowledge, and
responsibility.
They seek
durability,
functionality, and
value in products.
Here we’re
considering
Mont-Blanc
 Achievers
They’re successful, goal
oriented people who
focus on career and
family. They favour
premium products that
demonstrate success to
their peers. In this
segment we can
consider most of the
premium timeless luxury
watches, such as Rolex,
TAG Heuer, and Omega.
Neil Armstrong gave
Omega speed master the
ultimate endorsement
when he wore it on his
historic moon walk in
1969.
 Believers
They’re conservative,
conventional, and
traditional people with
concrete beliefs. They
prefer familiar, Indian
made products and are
loyal to established
brands. Here we consider
Bisleri. As one of the
world’s most trusted
brands. Bisleri is leading
the way in bringing about
positive change in our
daily lives. They believe in
being a part of a
meaningful movement
called the ‘Aqua Green
Revolution’
 Strivers

They’re trendy fun loving

people who are resource
constrained. They favour
stylish products that
emulate the purchases of
those with greater
material wealth. They
favour stylish products
that emulate the
purchases of those with
greater material wealth
 Makers
They’re
practical, do
wn to
earth, self
sufficient
people who
like to work
with their
hands. They
seek Indian
made
products
with a
practical or
functional
purpose.
 Survivors

They’re
elderly, passive
people
concerned
about change
and loyal to
their favourite
brands.
While to the
consumers it's
a beacon of
faith and
trust, competit
ors look upon
them as an
example of
marketing
brilliance.
Behavioural Segmentation
 Usage
Customers can be
segmented on the basis
of usage status- heavy
users, light users & non-
users of a product
category. The profiling
of heavy users allows
this group to receive
most marketing
attention (particularly
promotion efforts) on
the assumption that
brand loyalty among
these people will pay
heavy dividends.
 User status
Every product has its
nonusers, ex-users,
potential users, first-
time users and regular
users. A company
cannot always rely on
the regular users, it has
to attract the other
types as well. The key
too attracting potential
users, or possibly, even
non-users, is
understanding the
reasons due to which
they are not using your
product.
 Attitude
Attitude is defined as
a learned tendency to
respond towards
something. People’s
response towards a
product may range
from –
Enthusiastic, Positive, I
ndifferent, Negative, H
ostile .
Occasions
Brand Loyalty
Benefit Sought
THANK YOU