1. MARKET SEGMENTATION

2. Contents
 Evolving Marketing Strategies
 What is Market Segmentation?
 Why segmentation?
 What are the requirements of Segmentation?
 Benefits & Limitations of Segmentation
 Segmenting Consumer Markets
- Geographic Segmentation
- Demographic Segmentation
- Psychographic Segmentation
- Benefit sought Segmentation
- Behavioral Segmentation

3. Evolving Marketing Strategies
 Mass Marketing :The term mass market refers to a large,
undifferentiated market of consumers with widely varied backgrounds.
Products and services needed by almost every member of society are
suited for the mass market. Such items as electric and gas utilities, soap,
paper towels and gasoline, for example, can be advertised and sold to
almost anyone, making them mass market goods
 Mass Marketing –
 An attempt to appeal to an entire market with one basic marketing
strategy utilizing mass distribution and mass media. Also called
undifferentiated marketing.
 The appeal of mass marketing is in the potential for higher total profits.
Companies that employ the system expect the larger profit to result
from (1) expanded volume through lower prices and (2) reduced costs
through economies of scale made possible by the increased volume.
 Henry Ford applied the concept in the automobile industry. His Model T
was conceived and marketed as a "universal" car—one that would meet
the needs of all buyers.

4. Product Variety
 After the mass marketing strategy another
strategy with similar characteristics but
overcoming its predecessor’s shortcomings came
into existence. That is product variety strategy.
 An attempt to appeal to the entire market with a
huge variety of products produced in mass is
made.
 However, like Mass marketing in this case also
the customers needs & wants are not taken into
account while developing the product.

5. Target Marketing-
 Is a market segmentation and market coverage strategy
whereby a product is developed and marketed for a very
well-defined, specific segment of the consumer
population.
 Target marketing is particularly effective for small
companies with limited resources because it enables the
company to achieve a strong market position in the
specific market segment it serves without mass
production, mass distribution, or mass advertising. It
enables firms to capitalize on the respective serve market
share

6. Requirements of Market Segments
In addition to having different needs, for
segments to be practical they should be evaluated
against the following criteria:
 Identifiable: the differentiating attributes of
the segments must be measurable so that they
can be identified.
 Accessible: the segments must be reachable
through communication and distribution
channels.

7.  Measurable: It has to be possible to determine the
values of the variables used for segmentation with
justifiable efforts. This is important especially for
demographic and geographic variables.
 Substantial: the segments should be sufficiently large
to justify the resources required to target them.
 Unique needs: to justify separate offerings, the
segments must respond differently to the different
marketing mixes.
 Durable: the segments should be relatively stable to
minimize the cost of frequent changes.

8. Defining Marketing Segmentation

9. Market Segmentation
People or organizations with
Market needs or wants and the ability and
willingness to buy
A subgroup of people or organizations
Market
sharing one or more characteristics that
Segment cause them to have similar product needs.
The process of dividing a market into
Market
meaningful, relatively similar, identifiable
Segmentation segments or groups.

10. ‘Market Segmentation’
Market Segmentation is the sub-dividing of
customers into homogeneous sub-set of customers
where any sub-set may conceivably selected as
market target to be reached with distinct marketing
mix.
- Philip Kotler

11.  Market Segmentation is the process of splitting
customers, or potential customers, in a market
into different groups, or segments, within which
customers share a similar level of interest in the
same or comparable set of needs satisfied by a
distinct marketing proposition.

12. Benefits and Limitations
Benefits:
The Organisation gets to know its customers better.
Provides guidelines for resource allocation.
It helps focus the strategy of the organisation.
Limitations:
Targeting multiple segments increases marketing costs.
Segmentation can lead to proliferation of products.
Narrowly segmenting a market can hamper the
development of broad-brand equity.

13. Why Segmentation?
 To develop marketing activities
 Increase marketing effectiveness
 Generate greater customer satisfaction
 Create savings
 To identify strategic opportunities and niches
 Allocation of marketing budget
 Adjustment of product to the market need
 To estimate the level of sales in the market
 To overcome competition effectively
 To develop effective marketing programmes
 To contribute towards achieving company goals

14. Levels Of Market Segmentation
 Segment Marketing
 Niches marketing
 Local Marketing
 Individuals Marketing

15. 1. SEGMENT MARKETING
 Consists of a group of customers who share a
similar set of needs and wants.
 Identifiable Group with in a Market with
Similar
• Wants
• Purchasing Power
• Geographical Location
• Buying Attitudes

16. 2. NICHE MARKETING
 Concentrating all marketing efforts on a small
but specific and well defined segment of
the population. Niches do not 'exist' but are
'created' by identifying needs, wants,
and requirements that are being
addressed poorly or not at all by other firms,
and developing and
delivering goods or services to satisfy them.

17. 3. LOCAL MARKETING
 Marketing programs tailored to the needs
& wants of local customer groups in trading
areas, neighborhoods , etc.
 This trend is also called grass roots
marketing.

18. 4. INDIVIDUAL MARKETING
 Ultimate segmentation – segments of 1 or
customized marketing or one to one
marketing.
 Customerization – empower the consumers
to design the product or service offering of
their choice.

19. Bases for Segmentation
Geography
Demographics
Bases
Used to
Segment Psychographics
Consumer
Markets
Benefits Sought
Usage Rate

20. Geographic Segmentation
 When an organization localizes its marketing
efforts to accommodate the unique needs of
specific geographic regions
 Geographic Variables
• Region
• City or metro size
• Density
• Climate

21. Demographic Segmentation
 Demographic segmentation is the most popular basis for
dividing groups, primarily because consumer usage and
wants or needs.
 Demographic Variables
• Age
• Gender
• Occupation
• Family size
• Education
• Nationality
• Religion
• Income

22. Psychographic Segmentation
 Grouping customers together based on social
class, lifestyles and psychological
characteristics
 Psychographic Variables
Lifestyle Personality
• Hobbies Compulsory
• TV viewing habits Outgoing
• Social activities Authoritarian
• Club membership Ambitious

23. Benefits-Sought Segmentation
 Markets can be segmented based on the
benefits that consumers desire from using a
specific product

24. Behavior/Usage Segmentation
 Markets can be segmented by how often or how
heavily consumers use a specific product
 Behavioral Variables
• Occasion
• Benefits
• User status
• Usage rate
• Loyalty status
• Readiness stage
• Attitude towards product

25. Market Segmentation
 Differentiated
 Concentrated
 Undifferentiated

26. Differentiated Marketing
 An organization targets multiple market segments and
develops segment specific mixes
Concentrated Marketing
 When an organization concentrates its marketing efforts
on a smaller segment of a larger market
Undifferentiated Marketing
 An organization develops one strategy appropriate for all
members of the total market

27. Summary of Basic Methods