1

MARKETING
ENVIRONMENT AND
MARKET
SEGMENTATION
Chapter 3

Marketing Environment:
2

Environment is something that surrounds an

enterprise.
It is the sum total of all factors within which the
enterprise operates.
These environmental factors may be controllable ,
uncontrollable, qualitative and quantitative.
Definition of Marketing Environment:
According to Philip Kotler:
a companys marketing environment consists of the
external factors and forces that affect the companys
ability to develop and maintain successful transactions
and relationships with its target consumers.:

Factors influencing
environment:

MEANING of MARKETING
4

SEGMENTATION:

The concept of market segment is based

on the fact that the markets for
commodities are heterogeneous and not
homogeneous.

Market represents a group of customers

having common characteristics .

But human behavior defers from person

to person and also in term of nature,
tastes, likes,hobbies,income etc.

So customers having similar

characteristics are grouped in segments.

Market segmentation is the process of

dividing the market and identifying the
groups of buyers on the basis of their
various needs and desires.

Meaning:
5

It is a method of achieving
maximum market response
by diving the market into
various groups on the basis
of certain common features.
Its strategy to DIVIDE AND
CONQUER .
Market segmentation is a
two fold process:

Identifying the segments

Designing separate
marketing programmes for
each segment of the market
to achieve maximum
consumer satisfaction and
profit to org.

Definitions:
6

Philip Kotler:

Prof. William Stanton:

Market segmentation is a process of identifying

gropus of buyers with differnet desires or
requirements.
Market segmentation is the process of diving the total
heterogeneous market for a product into several sub
markets or segments in such a way that each of the
segment tends to be homogeneous in all respects.

R.S.DAVAR:

Grouping of buyers or segmenting the market is

described as market segmentation.

Approaches/types of market
segmentation
7

People oriented
approach:

Under this approach , a

consumer can be classified
based on various dimensions
such as geographic location,
demography, economic,
social and psychological
factors.

Product oriented
approach:

Under this approach , the

response or behavior of the
consumer is studied in
relation to the product
benefits, product usage,
brand loyalty.

Essentials/elements of market
segmentation
8

Identifiable

Measurable

Adequate market potential

Economically assessable

React to marketing efforts

Stable over a period of time

dynamic

Bases of market
segmentation:
consumer market

Geographic segmentation

Demographic segmentation

Psychographic Segmentation

Behavioral segmentation

Geographic segmentation:
10

It means grouping consumers

into homogeneous groups in
terms of geographical
similarities and factors such
as :
Nations
States
Regions
Cities
Climate
Density of population
Topography

11

Demographic
segmentation:

It means grouping the

customers into
homogenous groups in
terms of demographic
similarities like:
Age
Gender
Income
Educational level
Religion
Size of family
Economic activities

12

Psychographic
segmentation:

It means grouping the

customers into
homogenous groups
in terms of
psychographic
similarities like:

Life style

Personality traits

Behavioral segmentation:
13

In this type , buyers are

divided into groups on the
basis of their knowledge,
attitudes, use or response
to a product:

User status

Usage rate

Loyalty

Attitudes

Benefits sought

14

Bases of segmenting
industrial goods market:

Kind of business

Buying criteria

Geographical
criteria

Consumer criteria

15

Importance/benefits of
market segmentation:

Increases market opportunities

Helps to identify and compare market
opportunities
Helps to design a product
Helps into fix prices
Assists in deciding distribution strategies
Helps in deciding appropriate promotion mix
Helps to forecast marketing budget
Ensures optimum utilization of resources
Provides better services to customers
Increases sales volume
Helps to develop sound marketing programme

16

Limitations of market
segmentation:

Expensive:

Product, production,promotion,inventory ,
management cost

Time consuming
unpredictable consumer behavior
Changing environment
Diversity of Indian market
Conservative attitude of management
Wrong judgments

17

Differentiated
marketing:

It is aimed at two or
more specific segments
in the market.
The firm decides to
target several
segments and develops
different products with
different marketing mix
aimed at varying group.
It is also called as multi
segment marketing.

18

Differentiated
marketing:

Merits:

Attain higher sales

Consumer demand is highly diversified
Availability of a wide range of variety

Demerits:

Increase overall costs

Requires developing separate marketing plans
Increase in promotion cost

Concentrated marketing:
19

Concentrated marketing is targeted

o one specific market segment or
audience.
It aims a few well defined
segments.
A product is developed and
marketed for a very well defined
specific segment.

Merits:

Allows small cos. with limited

resources to achieve a strong
position in the specific market.
Enjoys operating economies because
of specialization in production,
distribution and promotion.

Demerits:

Involves higher than normal risk

May make more difficult for a co.
to expand

Questions for study:

20

Define marketing environment. Explain the internal factors

of marketing environment by giving suitable examples.

Define marketing environment. Explain the external factors

of marketing environment by giving suitable examples.

Define market segmentation. Explain essentials of effective

market segmentation.

What is market segmentation? Explain the basis of

segmenting consumers as well as industrial market in
detail.

Explain the benefits and limitations of market

segmentation.

Questions for study:

21

Write short notes on:

Types of market segmentation
Undifferential marketing
Differential marketing
Concentrated marketing
Procedure of market segmentation.
Demographic/geographical/behavioural /psychological
segmentation
External factors of marketing environment
Internal factors of marketing environment