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Segmentation is dividing a market into well‐
defined slices or groups of customers who share
similar set of needs and wants
Why is segmentation important?
Difficult for companies to contact all
customers in large and diverse markets
Groups of consumers with distinct
needs and wants can be served more
effectively
Segmentation requires strategic
planning and understanding consumer
behaviour
Bases for Market Segmentation
• Urban India: Education and Occupation of Chief
Wage Earner (CWE) – A1 to E2
• Rural India: Education and Type of House – R1 to R4
Psychographic
Segmentation
VALS Framework
Needs and Benefits
Initiators
Deciders Buyers
DECISION
ROLES
Approvers Influencers
Users Gatekeepers
Behavioural Segmentation based on User and Usage‐
related Variables
• Occasions: Festive, Business, Life occasions
• User status: Non‐users, past‐users, potential users, first‐time
users, regular users
• Usage rate: Light, medium, heavy users
• Buyer readiness stage
• Loyalty status: Hard‐core loyals, split loyals, shifting loyals,
switchers
• Attitude: Enthusiastic, Positive, Indifferent, Negative, Hostile
• Multiple
Segmentation Criteria
Measurable
Substantial
Accessible
Differentiable
Accessible
Market Targeting
A target market is a set of buyers who share
common needs and wants that a company
decides to serve
Targeting Strategies
Full market coverage / Mass / Undifferentiated marketing
Differentiated / Segmented / Multiple segment
marketing
Single segment / Concentrated / Niche marketing
Local / Individual / Micromarketing / Customization
Choosing a targeting strategy depends on:
• Company’s resources
• Extent of product variability
• Product / industry life cycle stage
• Market variability
• Competitors’ marketing strategies