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Principles of Marketing

SESSION:16-19

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Market Segmentation

Market Segment: is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs

A market segment consists of a group of customers who share a similar set of needs and wants.

Market Segmentation: Market Segmentation is the process of dividing the total heterogeneous market into relatively homogenous sub-groups of consumers with common needs or characteristics and selecting one or more segments to target with distinct marketing programme

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Market Segmentation

Need For Segmentation• Needs and wants are heterogeneous

• Consumers differ by age, sex, income, attitude, lifestyle

• Segmentations helps marketers to select target market and develop distinct marketing program

• Segmentation also helps the marketer to redesign, reposition and to target new segments for existing product

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Market Segmentation

Categories of Segmentation: Segmentation falls under the following categories

1. Geographic Segmentation

2. Demographic segmentation

3. Psychographics segmentation

4. Behaviouristic segmentation

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Market Segmentation1. Geographic segmentation:

• Segmenting on the basis of geographic location

• Geographic units may be continents, Nations, Region, state, city, town, area etc

• Assumption is that people who belong to a certain geographic location share homogenous needs

• People in north India have homogenous food habits than the people in south India

• Hotel chains offering different menus according to the location they are present in

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Market Segmentation

2. Demographic segmentation:

• Segmentation on the basis of demography

• Demographic characteristic such as age, sex, education, income, marital status, family size, social class etc are used to segment

• Toy manufacturers segment on the basis of the age of children

• Bicycle manufacturers segment mainly on the basis of the school goers, auto on the basis of income

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Market Segmentation

3. Psychographics segmentations• Segmentations on the basis of personality or lifestyle

• Characteristics of personality – confident, aggressive, conservative, modern, extrovert, introvert etc

• What people do in their spare time is a good indicator of lifestyle – two lifestyle segments that were most likely to drink and drive 1. Good Timers – partygoers

2. Problem Kids – display troublesome behaviour

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Market Segmentation

Lifestyle of Indian women – are home focused, less likely to visit restaurant, more price sensitive, spend time preparing meals at home and fond of movies

Lifestyle of adult students --- ……… ?

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Market Segmentation

4. Behaviouristic segmentation:

• Segmentation on the basis of use occasion, user status, user rate, loyalty status, buyer readiness stage and attitude

• Use occasion of greeting cards are different. User status could be non-users, potential users or first time users

• User rate can be light, medium or heavy users

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Market Segmentation

Buyer-Readiness Stage Aware Ever tried Recent trial Occasional user Regular user Most often used

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Market Segmentation

Loyalty Status Hard-core Split loyals Shifting loyals Switchers

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Market Segmentation

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable

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Market Segmentation

4. Behaviouristic segmentation:

• Segmentation on the basis of use occasion, user status, user rate, loyalty status, buyer readiness stage and attitude

• Use occasion of greeting cards are different. User status could be non-users, potential users or first time users

• User rate can be light, medium or heavy users

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Four levels of Micromarketing

Segments Niches Local areas Individuals