In this topic, a marketer decides which segment of customer to target and divide the product segment according to the consumer segmentation.

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Consumer segmentation

2. Meaning
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 Customer segmentation(also known as market segmentation) is the practice
of dividing a customer base into groups of individuals that are similar in
specific ways relevant to marketing, such as age, gender, interests, spending
habits, and so on.
 Customer Segmentation is the subdivision of a market into discrete customer
groups that share similar characteristics.
 Customer Segmentation can be a powerful means to identify unmet customer
needs.
 Customer Segmentation is most effective when a company tailors offerings to
segments that are the most profitable and serves them with distinct
competitive advantages.

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 This prioritization can help companies develop marketing campaigns and
pricing strategies to extract maximum value from both high- and low profit
customers.
 A company can use Customer Segmentation as the principal basis for
allocating resources to product development, marketing, service and delivery
programs.

4. Objectives
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 To identify profit and market share maximizing strategy for each need based
customer segment to minimize :
 Over satisfying some customer segment needs (excess financial cost)
 Under satisfying others (market share cost)

5. How Customer Segmentation works:
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 Customer Segmentation requires managers to:
 Divide the market into meaningful and measurable segments according to
customers' needs
 Determine the profit potential of each segment by analyize the revenue and
cost impacts of serving each segment
 Target segments according to their profit potential and the company's ability to
serve them in a proprietary way
 Measure performance of each segment and adjust the segmentation approach
over time as market conditions change decision making throughout the
organization

6. Companies use Customer Segmentation
 Prioritize new product development efforts
 Develop customized marketing programs
 Choose specific product features
 Establish appropriate service options
 Design an optimal distribution strategy
 Determine appropriate product pricing
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7. Approaches to Consumer segmentation:
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 A priori segmentation : it is the simplest approach, uses a classification
scheme based on publicly available characteristics such as industry and
company size to create distinct groups of customers within a market.
 It may not always be valid, since companies in the same industry and of the
same size may have very different needs.
 Needs-based segmentation : it is based on differentiated, validated drivers
(needs) that customers express for a specific product or service being
offered.
 The needs are discovered and verified through primary market research, and
segments are demarcated based on different needs rather than characteristics
such as industry or company size.

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 Value-based segmentation : This type of approach differentiates
customers by their economic value, grouping customers with the same
value level into individual segments that can be distinctly targeted.

9. Limitations
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 We have not been able to provide a quantitative validation to our finding
because of non-availability of sales figures
 The changes in the brand equity as measured by us capture only a relative
measure and not an absolute score.
 Further, for the purpose of our study, we have categorised consumers into
three age categories namely <15,15-30 and >30 only.
 However we believe that the model is only a generalised framework and the
brand manager’s need to adapt it to the parameters as thought relevant by
them.

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