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Definition

Segmentation:

“Aggregating
Although not all these consumers prospective buyers
are completely alike, they share into groups that (1)
relatively similar needs and wants have common
Marketing action: involves efforts, needs and (2) will
resources, and decisions--product, respond similarly to
distribution, promotion, a marketing
and price
action.”
Market Segmentation

A fundamental principle of marketing

• In the past, segmentation has been largely used as


a guiding conceptual principle for developing
marketing plans and strategies rather than a call
for empirical data analysis.

• Today, some form of quantitative measurement is


typically required if you want to segment.

• Segmentation is facilitated by the computer and


other information technology.

• However, raw data are not segments, only the


building blocks of segmentation.
Way to Market
Segmentation
The Principle of Segmentation

“It is more important to reach the people who


count than to count the people you reach.”
•Based on the believe that individuals and
businesses have differences.
•Defining and targeting segments is a way
to leverage knowledge about individuals’
or companies’ differential responses.
MARKET SEGMENTATION LOGIC
 Markets consist of buyers, and
buyers differ in one or more
respects, including...

• Wants
• Resources
• Buying attitudes
• Buying practices
• Geographical locations
Segmentation Variables
There is no single way to segment a market. A
marketer has to try different segmentation
variables, singly and in combination.

 Geographic
 Demographics
 Psychographics
 Purchase Behavior
Basic Market-Preference Patterns
Ice Cream Preference Example
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Creaminess
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Creaminess

Creaminess
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Sweetness Sweetness Sweetness

Homogeneous Diffused Cluster


Preferences Preferences Preferences
Levels of Market Segmentation

Segment marketing

Individual marketing

Niche marketing

Local marketing
Levels of Market Segmentation
Segment marketing – Dividing the market into
different segments on the basis of
homogenous need.
Segmented on basis of broad similarity with
regard to some attributes
Segmentation is also sometimes identifying,
capturing & retaining potential new markets
Levels of Market Segmentation
Individual marketing – Extreme marketing in
which marketers focus on individual
customers.
Keep track of individual tastes & preferences
of individual customers
 Many companies are approaching individuals
through e-mails to promote their products.
Levels of Market Segmentation
Niche marketing – Marketers effort to
position their product or service in smaller
markets that have similar attributes and have
been neglected by other marketer
Segment further divided into sub segments to
cater unsatisfied needs of small group is
called as niche
Levels of Market Segmentation

Local marketing – marketers offer customized


products to suit the local markets.

 KFC introduced “Muslimized” or “Pakistani” products such as


Spicy Chicken, Hilal Chicken, Zinger Extreme and more…
SEGMENTING BUSINESS MARKET

DEMOGRAPHIC: Industry, Company size, Location.


OPERATING VARIABLES: Technology, User or Non-user status,
Customer capabilities.
PURCHASING APPROACHES: Purchasing function organization,
Power structure, Nature of existing relationships, General
purchase policies, Purchasing criteria.
SITUATIONAL FACTOR: Urgency, Specific application, Size of
order.
PERSONAL CHARACTERSTICS: Buyer-seller similarity, Attitudes
towards risk & Loyalty.
BUSINESS BUYERS can be FIRST TIME PROSPECTS, NOVICES,
SOPHISTICATES.
INDUSTRIAL BUYERS can be PROGRAMMED, RELATIONSHIP,
SEGMENTING CONSUMER MARKET

GEOGRAPHIC SEGMENTATION :Nations, states, regions,


countries, cities or neighborhood.
DEMOGRAPHIC SEGMENTATION : Based on age, family size,
family life cycle, gender, income, occupation, education,
religion, race, generation, nationality & social class.
PSYCHOGRAPHIC SEGMENTATION: Based on Lifestyle, value &
personality.

BEHAVIORAL SEGMENTATION: On basis of decision roles,


occasions, benefits, user status, usage rate loyalty status,
readiness stage, attitude towards product.

MULTI-ATTRIBUTE SEGMENTATION (GEOCLUSTERING): Combining


several variables for identifying smaller better defined target
group.
Requirements for Effective
Segmentation
Measurability
The degree to which the size and purchasing power of
the segments can be measured. Some segments are
hard to measure. (Teen smokers who are rebelling)
Accessibility
The degree to which the segments can be effectively
reached and served. (Perfume and single women who
frequent bars late at night.)
Substantiality
The degree to which the segments are large,
homogenous, and/or profitable enough. (Cars for
people who are 4 feet tall)
Actionability
The degree to which effective programs can be
formulated for attracting and serving the segments.
(Airlines with small staff serving seven segments.)
Segments--Examples (1)
Air Travel
Business/Executive: Inflexible; relatively
price insensitive (Small number of people, but
travel often)
Leisure Traveler/Student: Relatively
flexible; very price sensitive (other methods of
travel--e.g., bus, car, train--are feasible; travel
may not be essential) (Very large segment)
Comfort Travelers: Comfort (e.g., space,
food) important; willing to pay (Small segment)
Examples (2)
SEGMENTATION FOR
COSMETICS

Over the last decade, women have become


more confident and the negatives attached to
a well-dressed woman are on the wane.
People have accepted color cosmetics as an
essential part of daily grooming.
The color cosmetics market can be
broadly divided into two segments:

* Organized sector dominating 36%of the


market.

* Unorganized sector catering to 64% of the


market
The segments that are targeted are as follows:
* Age
Youth segment (15 - 24yrs): Elle 18
Core target (24+): Lakme Radiance
* Purchasing power
Affluent segment: Aviance, Orchids
Middle segment: Lakme Radiance
Lower segment: Lakme does not exactly
cater to the lower segment but the Elle-18
range it offers is low-priced and hence can
satisfy this end of the market also.
Evaluating Market
Segments
Before selecting the respective market segment,
the company should evaluate the possible market
segments in the current markets. It should
identify and select its target consumers, give
them their product according to their needs and
establish that group of consumer in to permanent
market segments.
Selecting the Market Segments

Single Segment Concentration: Focusing


on a single segment gives the marketer
the advantage of high sales as all the
efforts are concentrated on that one
segment

Example: Mercedes concentrates on upper income


group
Selecting the Market Segments

Selective Specialization:

Process in which the company focuses


its resources on a few segments and
develops its expertise in fulfilling the
needs of those segments
Selecting the Market Segments

Product Specialization :

The firm makes a certain product that it


sells to several segments

Example: Microscope manufacturer who


sells to university, government, and
commercial laboratories.
Selecting the Market Segments

Full market coverage:

Company targets the full market rather


than any specific segment.

Example: Hewlett-Packard targets the


full market for its printers.
Selecting the Market Segments

Market specialization:
The firm concentrates on serving many needs
of a particular segment

Example: A firm sells assortment of


product to university laboratories.
Conclusion

Market Segmentation is the backbone of


marketing tactics. No matter of the locality
market segmentation plays an important role in
the products life cycle. It is one of that important
practice that can never be ignored and specially
in this era of mass customization.

Thanks !! (Dinesh Sharma– MBA)