2. “Market segmentation is the process of dividing the total market
into relatively distinct homogeneous sub-groups of consumers with
similar needs or characteristics that lead them to respond in similar
ways to a particular marketing programme”.
A market segment is a portion of a larger market in which the
individuals, groups, or organizations share one or more
characteristics that cause them to have relatively similar product
needs.
Market Segmentation… A CB Approach
3. Requirements for Effective Segmentation:
Five conditions must exist for segmentation to be meaningful:
1. A marketer must determine whether the market is
heterogeneous. If the consumers’ product needs are
homogeneous, then it is senseless to segment the market.
2. There must be some logical basis to identify and divide the
population into relatively distinct homogeneous groups,
having common needs or characteristics and which will
respond to a marketing programme.
Differences in one market segment should be small
compared to differences across various segments.
Market Segmentation… A CB Approach
11. 3. The total market should be divided in such a manner that
comparison of estimated sales potential, costs, and profits of each
segment can be done.
4. One or more segments must have enough profit potential that
would justify developing and maintaining a marketing
programme.
5. It must be possible to reach the target segment effectively. For
instance, in some rural areas in India, there are no media that can
be used to reach the targeted groups.
Market Segmentation… A CB Approach
12. Some different ways you as a Brand Manager, can segment your
market include the following:
o Demographics which focuses on the characteristics of the
customer. For example age, gender, income bracket, education, job
and cultural background.
o Psychographics which refers to the customer group’s lifestyle.
For example, their social class, lifestyle, personality, opinions, and
attitudes.
o Behavior which is based on customer behavior. For example,
online shoppers, shopping centre customers, brand preference
and prior purchases.
o Geographical location such as continent, country, state,
province, city or rural that the customer group resides.
Market Segmentation… A CB Approach
14. Examples:
Google’s Android One for Indonesian Market
Google says it's also “working on to reduce data costs for people in
Indonesia” to compliment to Android One effort.
15. Google is also said to have tied up with carriers for special data plans for Android One
smartphones. Android One smartphones will get Google Play “auto-installs” and
“automatic” updates. This would ensure that the user does not have to be in a Wi-Fi
hotspot to update the software or apps.
Examples:
16. How Segmentation Helps…
Segmentation studies are used to uncover needs and wants of
specific groups of consumers for whom the marketer develops
especially suitable products and services to satisfy their needs.
Market Segmentation… A CB Approach
17. Bases for Segmentation…
A segmentation variable is a characteristic of individuals, groups
or organizations that marketers use to divide and create
segments of the total market.
Segmentation descriptors fall under four major categories and
include geographic variables, demographic variables,
psychographic variables, and behaviouristic variables.
Market Segmentation… A CB Approach
18. o Geographic variables focus on where the customers are
located…
o Demographic variables identify who the target customers are…
o Psychographic variables refer to lifestyle and values…
o Behaviouristic variables identify benefits customers seek, and
product usage rates.
Market Segmentation… A CB Approach
19. Segmentation Variables
Region Nation
Urban, Rural State
City size Climate
Terrain Market Density
Geographic variables
Gender Family size
Age Occupation
Race Family life cycle
Religion Income
Social class Education
Demographic variables
Personality attributes
Motives
Lifestyle
Psychographic variables
Usage volume, Occasion
End use
Benefits sought
Brand loyalty
Price sensitivity
Behaviouristic variables
20. Geographic Segmentation
Geographic segmentation focuses on dividing markets into
different geographic units, such as regions, nations, states, urban,
rural, etc.
Demographic Segmentation
Demographic characteristics are commonly used to segment the
market. Factors such as age, sex, education, income, marital
status, household life cycle, family size, social class, etc., are
used singly, or in a combination, to segment a market.
Market Segmentation… A CB Approach
23. Psychographics Segmentation
When segmentation is based on personality or lifestyle
characteristics, it is called psychographic segmentation.
Behaviouristic Segmentation
Dividing the market on the basis of such variables as use
occasion, benefits sought, user status, usage rate, loyalty
status, buyer readiness stage and attitude is termed as
behaviouristic segmentation.
Market Segmentation… A CB Approach
28. Segmentation Variables for Organizational Markets
Main approaches to segment organizational markets can be
grouped under five heads:
Demographic-Psychographics Segmentation
Demographic and psychographic profiles work best when
combined together because combined characteristics reveal
very important information about target markets.
Market Segmentation… A CB Approach
Geographic Location
Customer Size
Product Use
Type of Organization
Buying Behavior and
Situation
29. Targeting Market Segments:
Instead of aiming a single product and marketing programme
at the mass market, most companies identify relatively
homogeneous segments and accordingly develop suitable
products and marketing programmes matching the wants and
preferences of each segment.
Segment Attractiveness and Business Strength Factors
The attractiveness of a market segment can be evaluated
based on the company’s current business strength and market
potential assessment.
Market Segmentation… A CB Approach