CLASS XI// MARKETING
TOPIC: SEGMENTATION, TARGETING AND POSITIONING
All customers in a broadly defined
market don’t have the same
needs. But successful marketers
decide about the products to offer
and the markets to be serviced. One
size doesn’t fit everyone very well.
“One cannot be everything to
everyone, but can be everything
to a selected few” and that no two
individuals can be the same. These
are the foundations for segmentation. For this purpose market
segmentation is core to marketing. To create differentiation, marketers use
segmentation, targeting, and positioning, or STP.
MEANING OF SEGMENTATION
Segmentation process consists of three
stages: Segmenting, targeting, and
positioning. The three are popularly
known as STP in marketing. .
Market segmentation is the process of
dividing a heterogeneous market
(aggregated) into homogeneous sub
unit (segregated). Market
segmentation is the identification of portions of the market that are
different from one another or share a similar set of needs.
IMPORTANCE OF SEGMENTATION
IMPORTANCE OF SEGMENTATION
No market is totally homogeneous and to create meaningful segments,
marketers must understand different purchase combinations that satisfy
the need. For example: Mercedes produces worldwide the same cars, but it
advertises the cars as “quality” cars in Germany, but as “prestige” cars in
India
1.Improved Customer Relations: Segmentation will enable the buyer
to find the products most fitting to their physical or/and psychological
needs. Customers finding products more tailored to their needs, would be
more loyal to the firm (s). Since segmentation helps to meet the customer
needs, expectations, aspirations and share of wallet, market segmentation is
customer-oriented.
2.Perfect-like Marketing Mix: Since market segmentation assists in
defining shopping habits (when, how much and how many times), price
sensitivity and the benefits required. This helps in making marketing mix
more accurate.
3.Better Resource Allocation: Since Segmentation’s objective is to serve
customers better and earn more profits, the firm would like to
allocate resources more efficiently. Segmentation reveals who not to target
and which customer groups will be best recipients of resources. Thus,
market segmentation will lead to better marketing.
4.Competitor Analysis: To compete better in the market one must have
complete knowledge of the competitors, the segments being served by
them, and their working practices. Especially, the medium-sized firms can
grow rapidly through strong positions in specialised market segments.
Thus, segmentation is a source of competitive advantage and enhances
awareness of external market trends and competition.
5.Taking care of Dynamic Environment: Customer segments, which are
likely to frequent changes due to changing environment, can be taken
care of in strategic marketing planning. In fact, large companies with
resources at command are leaving mass marketing.
6.Focus Marketing Communication: Segmentation establishes
commitment and single-mindedness with the organisation: one vision,
one voice, harmonised messages. Segmentation allows an organisation to
identify media channels competent to reach the target group. Young women
interested in fashion are more likely to read ‘Femina’. Thus marketer can
select this medium instead of going in for mass media.
7.Measurement: To measure the market share, growth, specification
of target customers, recognition of relevant competitors, to formulate
marketing objectives and strategies, segmentation is essential.
BASIS OF MARKET SEGMENTATION
It is a mirror through which the population of customers in an industry are
divided. Thus it is an art. The variables on which segmentation can be done
are numerous. To define customers who they are, they are segmented on
the following basis:
BASIS /TYPES OF MARKET SEGMENTATION
1.GEOGRAPHIC/DEMOGRAPHICS SEGMENTATION. Geography and
Demographics, if clubbed it is known as geo demographics. It consists of
defining customers according to:
a) Their country of birth and their location, dividing a country into
regions, states. location does not mean that all consumers in a
location will behave the same way, but the approach helps identify
certain general patterns.
b) Important variables
according to Geography
may be global, global
regional, national, regional,
city/state,
neighbourhood/local,
topography, and climate.
c) In case of large companies
these regions may be further
subdivided into sizes –small,
medium, and large.
d) In case of international
marketing or global business
different countries might
be taken up as different
market segments.
e) Another basis may be
geographical density – urban, suburban, and rural.
f) Next basis may be climate – warm, cold, and rainy.
g) The next base may be locality.
h) Demographic segmentation is good to guide the media plan and help
the creative agencies to understand how to bring the segment to life.
Types of Market Segmentation
Geographic / Personal Socioeconomic Behavioural Psychographic
Demographics Demographic Segmentation Segmentation Segmentation
Segmentation Segmentation
Personality
Country of Birth Age Income Usage Status Characteristics
Brand Loyalty Lifestyle
Location Gender Education
Levels
Climate Family Structure Occupation Benefit Sought Values
Occasions for
Race Social Class
Purchase
Frequency of
Politics purchasing
Willingness to
Family Size buy
Psychological Season
Life Cycle
Segacity Tribal
Neighbourhood
and dwelling
2.PERSONAL DEMOGRAPHICS SEGMENTATION. Populations are often
broken down into categories on the basis of age, gender, ethnic origin,
education, income, occupation, Religion, Family size, Stage of
family life cycle, social status/class, etc. Basis of this segmentation
are:
Age: Today virtually every age band from
life to death is the focus of a marketing
campaign. The requirements are different in
different age groups. In case of readymade
garments, it may be for new borne babies,
children, teens, youth, middle age people, old
people. All of them have different needs.
Gender: In case of clothes, it may be male and female, In case
of fashionable clothes the two segments vary a lot. Women
prefer scooties, and boys use motorcycles. By 2025, India will
have 90 million working women in the age group of 18-44
year age band.
Family Structure: People at different stages of
different life cycle have needs different from each
other. A family may be in bachelor stage, newly
married couple -marriage alters the needs, Full
Nest I, Full Nest II (older married couples with
dependent children), Empty Nest (older married
couples with no children living with them) and
solitary survivor (older single People).
Race: The ethnic background is a good base for segmentation. Hindus
celebrate Diwali, and Chinese celebrate their New Year differently and the
two are good segments.
Politics: Different political party members have their liking for different
members and commodities. For example Congress party members in India
prefer white caps, Samajwadi Party goes for red cap, BSP members want
a blue cap, whereas BJP members wear a
saffron colour cap.
Family Size – Two segments may be small family
and the large family segments. Smaller the family
small size packs would be preferred, and larger
the family larger packs would be needed.
The Psychological Life cycle: Here the chronological age
may not necessarily be the factor of greatest importance in
determining consumption patterns. Rather it is the
transformation of attitudes and expectations that becomes
a more important factor. The emergence of’ ‘kid adults’,
and old youngsters represent the psychological lives.
Segacity: It is a refinement of the family life cycle grouping system,
showing different behavioural patterns and aspirations to people as they
proceed through life. These stages may be Dependent, Pre-family, Family,
and Late. The family and late may be further classified into Better off and
worse off and these two bases may be further classified on the basis of
occupation as White Collar and Blue Collar.
Type of neighbourhood and dwelling: Geo
demography may also be used for segmentation by
focusing on local neighbourhood geography. The
proposition is that the neighbourhood area in which
a consumer lives will be reflected in one’s
professional status, income, life- stage and behaviour.
People living in different localities or different types of
dwellings have different needs, but in one kind of
dwelling situated in one locality they have similarity
of needs.
3.SOCIOECONOMIC: The populations are broken down according to
income, employment, education, social class, home/car ownership, etc.
Income: Segmenting by income is very
popular, especially for cars, luggage,
vacations and fashion goods. There may
be people belonging to lower class,
middle class and high net worth
individuals. The housing boards offer
low-income houses, middle income
houses and high income houses.
Education: College-going students have different demands
than the people who after good higher education join the
companies as executives, and those who are illiterates.
Occupation: The requirements for executives
and a school teacher would altogether be
different. The executive class would require
Armani suit, whereas the other one would
require a suit of any brand which is cheaper.
Social Class: Social class indicates one’s social position, and is objectified
through income, occupation, and location of residence. A policeman might
be earning more than a college professor, off course through accepting
under the table challans, but he belongs to a social class lower than that of
a professor.
4. BEHAVIOURAL SEGMENTATION. In this segmentation emphasis is
placed on differences in peoples’ values and not on differences in socio-
demographic profiles. It takes into consideration the purchasing
behaviour as the starting point, how frequently they buy, how loyal they
are, what benefits they seek, when they buy, etc. These are:
Usage status: The segmentation may be done on the basis of ‘light’,
‘medium’, and ‘heavy’ users of a product. The other way can be non-
users, first-time users and regular users. Airlines ‘frequent flyer’ schemes
are based on this philosophy.
Brand Loyalty Levels: The segments may be
made on the basis of ‘Hard Core Loyals’ (same
brand every time), ‘Soft Core Loyals’ (loyalty
divided between two or more brands), ‘Shifting
Loyals’ (Brand switchers), and ‘Switchers (no
particular preference).
Benefit sought: Benefit segmentation depends on benefit sought is
identifiable, using these benefits , marketers must be able to divide the
customers into recognisable segments, and one or more of the resulting
segments must be accessible to the firm.
Occasions for Purchase: Some of the
products are purchased only on certain
occasions. These occasions may be used as the
basis for segmentation. Gifts are normally
exchanged on Diwali, - but colours are
purchased only on Holi. Demand for dates
increase during the month of Ramadan. An
event may be routine or emergency. Muslims do
not eat pork and drink alcohol on Friday, but
European Catholics do eat fish on Friday. Valentine’s Day, Mother’s Day,
and Father’s Day are the critical events used by Greeting Card companies
and the chocolate companies.
Frequency of purchasing: People may buy for the
whole year, or for one quarter or one month or one
week. In India there are some households who buy rice
at the time of harvesting for the whole year. They buy in
35 or 50 kg. Bags, Those who buy only for a month buy
5kg. Bags. Thus, frequency of purchasing is a good basis
for segmentation.
Willingness to buy: A few people might not know the
product, a few know it but never used, and some people
know it and have used it. Each one of these segments
requires a different marketing strategy.
Season: In India, we have three seasons- summer,
rainy, and winter seasons. For each season we
have different requirements. Air conditioner is
purchased only for summers. But gone are the
days when players in the air conditioner (AC)
segment would market their products only during
summers. Now, with erratic weather conditions,
AC sales take place throughout the year.
Tribal: It is segmentation based upon social
groups or cultures with which customers
identify. The BBC started a programme for tribes
in society such as young, independent women or
the Indian TV channels starting ‘Saas-Bahu’
serials keeping in view the social structure.
5.PSYCHOGRAPHIC SEGMENTATION:
Psychographic segmentation examines mental
characteristics and predispositions connected with
purchasing habits. It is related with similarity of
values and lifestyles. Consumers buy things because
of the personality, lifestyle and the consumer values
they hold.
Personality Characteristics: Advertising agency,
Young & Rubicam has classified customers into
Mainstreamers (not to stand out of crowd),
Reformers (creative and caring, many doing charities, and buying private
labels), Aspirers (young, ambitious, and keen to get on, and buy latest
designs and models), and success achievers (achieved in life, feel no need
for status symbols or bother for what people will say).
Lifestyle: Lifestyle and consumption are closely related, and therefore,
marketers adopt it for segmentation. Lifestyle means approach to life. AIO
(Activities, interests, and opinions) reflect lifestyles of people. People are
grouped on the basis of how they spend their time, the importance of
things in their surrounding, beliefs about themselves and broad issues
and some demographic characteristics, such as income and education.
Values: Values reflect the realities of life. Researchers at Survey
Research Centre at University of Michigan have identified nine basic
values: Self Respect, security, Excitement, Fun and enjoyment in life, having
warm relationships, Self-fulfilment, Sense of belonging, Sense of
accomplishment, Motives/hobbies, Knowledge and being well respected.
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