PRESENTATION
ON
MARKET SEGMENTATION
DEFINITION
Market segmentation can be defined as the process of dividing a market into different
Homogeneous Groups of consumers .
According to Philip Kotler ‘’market segmentation is the subdividing of market into
Homogeneous sub set of customers, where any subset may conceivably be selected
As market target to be reached with distinct marketing mix.
BENEFITS OF MARKET SEGMENTATION
Market segmentation offers the following potential benefits to a business:
1- Better matching of customer needs: Customers needs differ . Creating separate products for each
segment make senses.
2- Enhanced profits for business: Customers have different disposable incomes and vary in how sensitive
they are to price. By segmenting markets, businesses can raise average price and subsequently
enhance profits.
3- Better opportunities for growth: Market segmentation can build sales. For example, customer can be
encouraged to ‘’trade-up’’ after being sold an introductory, lower-priced product.
4- Retain more customers: By marketing products that appeal to customers at different stages of their
life, a business can retain customers who might otherwise switch to competing products and brands.
Bases for segmentation
1- Geographical bases.
2- Demographic bases.
3- Psychographic bases.
4- Behaviour bases.
1- GEOGRAPHICAL SEGMENTATION -
This is the most common form of market segmentation, wherein, companies segment
the market by attacking a restricted geographical area . Potential customers are in a
local, state, regional or national market place segment. If a firm selling a product such
as farm equipment, geographic location will remain a major factor in segmenting
Your target markets since their customers are located in particular rural areas.
2- DEMOGRAPHIC SEGMENTATION-
Demographic segmentation uses various population measures including age, sex, income,
Nationality, education, and occupation as the basis for dividing people into specific
markets. Demographic segmentation is easy to measure and is widely used.
The following four variables are example of demographic factors used in market segmentation:
Age- This demographic variable is often used to divide markets. For clothing department store, demographic
segmentation based on age works well.
E.g.- Amul has segmented his product in different age group.
For kids: Amul cool, choclate milk, Nutramul energy drink.
For Youth: Amul cool kafe.
For women’s and older people: Amul calci+, Amul Shakti energy drink.
Gender- Dividing a market into different groups based on sex, has long been common for many products
including cosmetics, clothing and magazines.
Example: Emami segmented its product in gender,
Women’s : Naturally fair
Men: Fair and handsome
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 fact that people change the goods and services they
want and need over their Lifetime.
Psychographic segmentation-
Psychographic segmentation divides the market into groups based on social class, lifestyle and
Personality characteristics. It is based on the assumption that the types of products and brands
an individual purchases will reflect that persons characteristics and patterns of living.
The art of marketing is such that the marketer needs to highlight that part of the commodity that appeals
Most to a particular customer, and tell him the features of the product and how it will benefit him, as a part
Of the advertising process.
Behavioural segmentation-
Behavioural segmentation is possibly the most useful way to segment the market as it is based on
Consumers’ knowledge of, attitude towards, uses for, and response to a product (Kotler). After all ,
Marketing is about finding out what people need and want and then developing a product that satisfies
Those needs.
Behavioural bases for segmentation include:
Purchase occasion- Markets can be segmented on the basis of when and why people buy.
For example- you might purchase a bottle of wine for an evening meal at home, for a dinner party,
To take a BYO restaurant, for cooking, for cellaring, or for a gift. No doubt you would buy a different
type and quality of wine for each occasion or purpose.
Benefit sought - benefit segmentation as ‘ the process of grouping customers into market segments
According to the benefits they seek from the product’.
Example- Nestle has found a separate segment Atta noodles as distinct from the maida noodles.
Usage rate and user status – Usage- rate sementation as ‘ dividing a market by the amount of product
Bought or consumed’.
Example- newer product such a light beers and premium beers are targeted at non- traditional market,
Such as younger people and females.
Loyalty status- completely loyal consumers are those that would not consider buying another brand or
Visiting a different outlet .
Example- I trend to be more loyal for service products, such as my hairdresser and my doctor.
Attitude- An attitude as a ‘ learned tendency to respond consistently towards a given object’. People’s
attitude toward the product can be ‘ enthusiastic, positive, indifferent , and negative. Frankly,
it is a waste of time trying to convince people with a negative attitude toward the product
to buy it.
Example- shampoos, soap and all FMCG products buying behavioural segmentation is used.
