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Online Mktg – Segmentation Strategy
© Ramakrishna Kongalla, Assistant Professor
Indian Institute of Tourism & Travel Management(An Organization of Ministry of Tourism, Govt. of India)
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Market Segmentation
• 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
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.
• 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. For an organization with direct sales (without intermediaries), the own customer database could deliver valuable information on buying behavior (frequency, volume, product groups, mode of payment etc).
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• 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.
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‘Market Segmentation’
Market Segmentation is the sub-dividing of customers into homogenous sub-set of customers where any sub-set may conceivably selected as market target to be reached with distinct Marketing Mix – Philip Kotler
• Segmentation is essentially the identification of subsets of buyers within a market that share similar needs and demonstrate similar buyer behaviour.
• The world is made up of billions of buyers with their own sets of needs and behaviour. Segmentation aims to match groups of purchasers with the same set of needs and buyer behaviour. Such a group is known as a 'segment'.
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• The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics is called Segmentation.
• Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.
• Market Segmentation consists of taking the total heterogeneous market for a product & dividing into several sub-market of segments, each of which tends to be homogenous in full significant aspects – William Stanton
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• Market Segmentation is the marketing process of identifying and breaking up the total market into groups of potential customers with similar motivations, needs or characteristics, who are likely to exhibit homogeneous purchase behaviour.
• Undertaking this process allows marketing efforts to be targeted at select groups.
Market segmentation involves the subdividing of a market into distinct subgroups of customers, where any subgroup can be selected as a target market to be met with a distinct marketing mix. - CIMA
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• A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.
• Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.
• 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.
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Market segmentation is the process of dividing the whole market of goods or services in groups of people with similar needs. By making this division there is a high chance that each group responds in favour to a specific market strategy.
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Benefits & 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.
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
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Geographic Segmentation
• The following are some examples of geographic variables often used in segmentation.
• Region: by continent, country, state, or even neighbourhood.
• Size of metropolitan area: segmented according to size of population.
• Population density: often classified as urban, suburban, or rural.
• Climate: according to weather patterns common to certain geographic regions.
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Life-cycle stage: Dividing a market into different groups based on which stage in the life-cycle, presented in the table below, reflects the fact that people change the goods and services they want and need over their lifetime.
Life-cycle stages
Bachelor Stage young, single people not living at home Newly Married Couples young, no childrenFull Nest I youngest child under six Full Nest II youngest child six or overFull Nest III older married couples with dependent children
Empty Nest I older married couples, no children living with them
Empty Nest II older married couples, retired, no children living at home
Solitary Survivor I in labour forceSolitary Survivor II retired
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AIO Inventories AIO studies envisage a wide variety of variables
and measures the major dimensions shown
Activities Interests Opinions Demographics
Work Family Themselves Age Hobbies Home Social Education Social events Job Politics Income Vacation Community Business Occupation Entertainment Recreation Economics Family size Club member Fashion Education Geography Community Food Products City size Shopping Media Future Lifecycle Sports Achievements Culture Dwelling
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VALS System Classification:• The VALS theory and database were first applied to markets in 1978.
VALS provides a dynamic framework of values and lifestyles; which helps to explain why people act as they do as social groups and as consumers. VALS, unlike some other approaches, waves together:
• Demographics, 2. Attitudes, 3. Activities, 4. Consumption patterns, 5. Brand preferences. 6. Media graphics.
• • The VALS study leads to the identification of four major groups:• • The need driven• The outer directed• The inner directed• The integrated
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Female Lifestyle Types
• Cathy the contented housewife • Cathy epitomises simplicity. She is devoted to her family and
faithfully serves them as mother housewife and cook. She enjoys a relaxed pace and avoids anything which might disturb her equilibrium.
• . Candice-the chic subarbanite • Candice is an urban woman.She is well educated and genteel.
Socializing is an important part of her life. She is a doer, interested in sports and the outdoors, politics and current affairs. Her life is hectic and lived at a fast clip. She is a voracious reader and there are few magazines she does not read.
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• Eleanor-the elegant socialite: Eleanor is a woman with style. She lives in the city because that is where she want to be. She likes the socio-economic aspects of the city in terms of her career and leisure time activities. She is fashion conscious and dresses well. She is financially secure and hence not a careful shopper. She shops for status and style and not for price. She is a cosmopolitan woman who has travelled abroad and wants to.
• Mildred-the militant motherMildred is a woman who got married young and had children before she was ready to raise a family. Now she is unhappy. She is frustrated and vents her frustration by rebelling against the system. Television provides an ideal medium for her to live out her fantasies
• Thelma-the old fashioned traditionalist: Thelma is a lady who has lived a good life. She has been a devoted wife, a doting mother and a conscientious housewife. Even now, when most of her children have left home, her life is centred around the kitchen. She lacks higher education and has little appreciation for the arts or cultural activities. Her spare time is spent watching TV.
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Male lifestyle types are :
• Ben-the self made businessman. • Scott-the successful professional. • Dale-the devoted family man• Fred-the frustrated factory worker• Herman the retiring homebody.
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• Experiencers– They’re the young enthusiastic, impulsive people who seek variety and
excitement. They spend a comparatively high proportion of income on fashion, entertainment, and socializing.
• Thinkers– They’re mature, satisfied, and reflective people motivated by ideals and who
value order, knowledge, and responsibility. They seek durability, functionality, and value in products. Here we’re considering Mont-Blanc
• Achievers– They’re successful, goal oriented people who focus on career and family. They
favour premium products that demonstrate success to their peers. In this segment we can consider most of the premium timeless luxury watches, such as Rolex, TAG Heuer, and Omega. Neil Armstrong gave Omega speed master the ultimate endorsement when he wore it on his historic moon walk in 1969.
• Innovators– They’re usually successful, sophisticated, active, “take charge” people with a
high self esteem. Purchases often reflect cultivated tastes for relatively upscale, niche oriented products and services. Here we’re considering the niche market of upscale segmentation by technology adaptation.
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• Believers– They’re conservative, conventional, and traditional people with concrete beliefs.
They prefer familiar, Indian made products and are loyal to established brands. Here we consider Bisleri. As one of the world’s most trusted brands. Bisleri is leading the way in bringing about positive change in our daily lives. They believe in being a part of a meaningful movement called the ‘Aqua Green Revolution’
• Strivers– They’re trendy fun loving people who are resource constrained. They favour stylish
products that emulate the purchases of those with greater material wealth. They favour stylish products that emulate the purchases of those with greater material wealth
• Makers– They’re practical, down to earth, self sufficient people who like to work with their
hands. They seek Indian made products with a practical or functional purpose.• Survivors– They’re elderly, passive people concerned about change and loyal to their favourite
brands.– While to the consumers it's a beacon of faith and trust, competitors look upon
them as an example of marketing brilliance.
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Behavioural Segmentation
• Usage– Customers can be segmented on the basis of usage status- heavy users, light users &
non-users of a product category. The profiling of heavy users allows this group to receive most marketing attention (particularly promotion efforts) on the assumption that brand loyalty among these people will pay heavy dividends.
• User status– Every product has its nonusers, ex-users, potential users, first-time users and regular
users. A company cannot always rely on the regular users, it has to attract the other types as well. The key too attracting potential users, or possibly, even non-users, is understanding the reasons due to which they are not using your product.
• Attitude– Attitude is defined as a learned tendency to respond towards something. People’s
response towards a product may range from – Enthusiastic, Positive, Indifferent, Negative, Hostile .
• Occasions• Brand Loyalty• Benefit Sought
