MARKET SEGMENTATION

STRATEGIES AND CASES

BY
SMART LEARNING WAY
 FLOW OF PRESENTATION
• Introduction
• Definitions of Marketing segmentation
• Basis of Market Segmentation
• Objectives of Marketing segmentation
• Characteristics of market segmentation
• Flow Chart of Segmentation process
• Indian examples of various market segments
• Market Segmentation Strategies
• Strategic marketing planning
• Limitations of Segmentation
• Methods of Seg-men-ta-tion
• Requirements for segmentation
• Case Example Path Segmentation & Profiling
System in Healthcare
• Grand on Nirma ,Hul ,and Godrej.
• Conclusion
• Review of presentation
• Bibliography
 INTRODUCTION
Marketing segmentation is a process of
grouping the customers into number of different
divisions on the bases of similar characteristics. It
is a customer oriented philosophy. A market
segment consists of a identifiable group within a
market. Every product is not required by
everybody. Therefore marketer must group the
customers on the basis of similar characteristics
or uniform response to a concentrate either on
one or more groups depending upon his
capability instead of launching his product in the
open market.
• Market segmentation strategy involves dividing the
market into groups, where individuals have similar needs
and wants for services and products. It could also be a
segmentation of people on the basis of behavior, culture
and economic status. To get a clearer picture of what is
market segmentation, one can always look into the
definition provided by business dictionary. COM, market
segmentation is defined as, "Process of defining and sub-
dividing a large homogenous market into clearly
identifiable segments having similar needs, wants, or
demand characteristics".
 Definitions of Marketing
segmentation
According to Philip Kotler, ” Market segmentation is the sub-dividing
of market into homogeneous sub-sections of customers . where any sub-
section may conceivable be selected as a market target to be reached
with a distinct marketing mix.”
According to W. J .Stanton, ”Market segmentation consists of taking
the total heterogeneous market for a product and dividing information
technology into several sub-markets or segments, each of which tends to
be homogeneous in all significant aspects.
Market segmentation allows a marketer to take a heterogeneous
market , a market consisting of customers with diverse characteristics
,needs , wants and behavior , and carve information technology up into
one or more homogeneous markets which are made up of individuals or
organizations with similar needs, wants and behavioral tendencies.
marketing segmentation means “Group according to their similarity
related to a particular product category.
 McDonald’s and other marketers have found
market segmentation to be a valuable technique for
the following reasons:
• Efficient use of marketing resources
• Better understanding of customer need
• Better understanding of the competitive situation
• Accurate measurement of goals and performance
 Market segments are groupings of two or more consumers for a
product or service so that their needs are better served.
Market segmentation can be designed as indicated in Fig.8.1
Basis of Market Segmentation

Geographic Demographic Psychographic Behavioural

Village Age Compulsiveness Usage rate

Local market Gender Gregariousness Readness stage
Zonal Region Race Autonomy Benefits sought
City or Metro Marital status Conservation Enduse
Size of density Education Leadership Brand loyality
Country Income Occupation Authoritarianism Brand belief
Climatic conditions Religion Ambitiousness Market factors
Family size Personality Occasions
Family life cycle Attitude towards
Nationality products
Objectives of Marketing segmentation

• To understand market segmentation and

targeting.

• To be able to evaluate the success of market

segmentation for businesses.
 Market Segmentation
• This is where the
market is broken down • Age
into smaller sub groups • Gender
that share similar • Income
characteristics
• Religion
• Ethnic group
• Level of education
Examples • Geographical
• Social class
What is
?

You might understand the parts, but might miss the whole chicken
 Characteristics of market
segmentation
• Age
• Gender
• Geographic location
• Income
• Spending patterns
• Cultural Background
• Demographics
• Marital status
• Education
• Language
• mobility
Flow Chart of Segmentation process
Analyze the needs of customers

Analyze the characteristics of consumers

Disaggregate the consumers into suitable segments

Formulate different market mix for different segments

Feedback of various segments

Select the higher potential segments

 INDIAN EXAMPLES OF VARIOUS
MARKET SEGMENTS
1. Single Segment Concentration -Woodland shoes
- Cellular phones

2. Selective Specialization DENTA Cream Tooth Powder (Dabur)

3. Market Specialization Sultan Chand & Sons ( Books covering all

types of student need , schools , colleges
& institutes)
4. Product Specialization -Mahindra & Mahindra jeeps
- Bajaj Auto

5. Full Coverage Pepsi, Titan , Bata

PRACTICAL REQUIREMENTS OF
MARKET SEGMENTATION
 Market Segmentation Strategies
How a market is segmented is based on variables used for
segmentation; behavioral, demographic, psychographic and
geographical differences.

1.Behavioral Segmentation:
Behavioral segmentation is based on the customer's needs and
subsequent reaction to those needs or toward the purchase of
intended products and/or services. This study is conducted on all
variables that are closely related to the product itself, like loyalty
to a particular brand, cost effectiveness in terms of benefits and
usage, circumstances responsible for the purchase, whether the
customer is a regular, a first timer or and has the potential to
become a customer, and whether the readiness to buy is linked to
status.
• 2.Demographic Segmentation:
Demographic segmentation refers to a wide study of the
potential customers. While marketing a product many
variables like age, gender, education, income, size of the
family, occupation, socioeconomic status, culture and
religion, language and nationality are taken into account.
There are many instances where such a segmentation has
worked very profitably, toys and clothes for every age group,
certain food products that do well in certain counties and
don't in some, either due to cultural or religious reasons.
Demographic segmentation plays a vital role in determining
whether a product can be mass marketed or designed for
specific clientele. Dividing the market into groups based on
variables such as age, gender family size, income, occupation,
education, religion, race and nationality.
• 3.Psychographic Segmentation:
Segmenting people according to their lifestyles and
values, and how they translate into consumption or
purchases of products of services is what psychographic
segmentation is all about. How one's interest, opinions,
values, attitude and the activities they perform, all affects
how and why a group of people would lean towards one
product more than others. A high status would translate into
an expensive flying habit, while a thrift value will translate
into an economy flight.
• 4.Geographical Segmentation:
Geographical segmentation is done by dividing people
(markets) into different geographical locations. The country,
state, or neighborhood, the king of gentry, climate, size of a
place segmented into size of its age wise population, etc. all
play a role in devising market strategies. This helps the
producer and the marketers to understand what will sell and
what won't, for example, a market for winter wear would
definitely not work in warm regions. Geographic
segmentation tries to divide markets into different
geographical units.
 Strategic marketing planning
• Strategic marketing planning involves four steps.
1)Situation Analysis
Situation analysis is the starting point in all planning activities ,I.e. .,where
are we now? Information technology analyses existing marketing programmed
and where the programmed should go in the future. Information technology
gives information on market demand, market environment and performance.
it enlightens us on our capabilities and limitations. Information technology
also reviews the existing marketing mix thoroughly.
2)Marketing Objectives and Strategies
these at the marketing level are closely allied with corporate objectives
and strategies. The marketing objectives translate corporate strategy is 20 per
cent cost reduction in order to enhance profitability. This company strategy
will now be the marketing objective and the marketing strategy may be
payment of sales remuneration in the form of commission instead of salary.
3) Segmentation and target market
in a new company, segmentation enables the company to identify
potential target markets. In a running concern, management reassesses
the choice of target markets and modifies them, if necessary. The firm
may also reconsider segmentation strategy. Information technology has
to ascertain sales forecast in its target markets.

4) Marketing –mix
A distinctive marketing –mix is now prepared to satisfy target market
demand and attain marketing objective for each target market.
marketing-mix and its implementation constitute the bulk of
company’s marketing efforts. We have the best integration of product,
price, promotion and distribution strategies.
 Advantages of Segmentation
• The main advantage of market segmentation lies in a better
understanding of the consumer needs and behaviour so that a
marketer can plan accordingly. In brief, market segmentation helps:
1. Understand potential customers;
2. Pay proper attention to particular areas;
3. Formulate marketing programmes;
4. Select channels of distribution;
5. Understand competition;
6. Use marketing resources efficiently;
7. Advertise the products and launch sales promotion
programmes;and
8. Design marketing mix- product , price, place and promotion.
 Limitations of Segmentation

• Lack of information and data: some markets are poorly

researched with little information about what customers
want

• Difficulty in measuring and predicting consumer behaviour:

humans don’t all behave in the same way all of the time.

• Hard to reach customer segments once identified: it is one

thing spotting a segment; it is another reaching target
customers with an effective marketing message
 Methods of
Seg-men-ta-tion
Demographic/Geographic refers to age, sex, income, education, race, martial
status, size of household, geographic location, size of city, and profession.
Life stage refers to chronological benchmarking of people's lives at different
ages (e.g., pre-teens, teenagers, empty-nesters, etc.).
Lifestyle refers to the collective choice of hobbies, recreational pursuits,
entertainment, vacations, and other non-work time pursuits
Psychographics refers to personality and emotionally based behavior linked
to purchase choices; for example, whether customers are risk-takers or risk-
avoiders, impulsive buyers, etc.
Belief and value systems includes religious, political, nationalistic, and
cultural beliefs and values.
Behavior analysis includes what behaviors consumers actually engage in
(after all is said and done)
Requirements for segmentation

Identifiable: the differentiating attributes of the segments

must be measurable so that they can be identified .

Relevant/Accessible: the segments must be reachable through communication

and distribution channels.
Question: What are some criteria that could be used
to ensure that a segmentation has utility?
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.
 Fashion Channel: Market
Segmentation (Brief Case)
• The new Senior Vice President of Marketing for The Fashion
Channel (TFC), a cable television network dedicated to round-the-clock,
fashion-oriented programming, is preparing to recommend a change in
the company's traditional marketing approach by introducing a market
segmentation program. This program is, in part, a response to the
intensifying competitive environment for TFC, and it needs to strengthen
the company's brand and positioning with viewers and advertisers. At the
same time, the program must maintain consumer and distributor
satisfaction with the network. Several segmentation options are being
considered, each with pros and cons. Consumer research provides insights
but does not give a simple answer regarding the best path to take. The
reader must evaluate the research results, calculate financial scenarios,
and make a recommendation. Also looks at change management issues.
TFC has never done a program like this before, and the Senior Vice
President of Marketing is new to the job. In addition to making a
recommendation, she must manage the change process to insure that the
organization and her leadership team peers are fully aligned.
 NIRMA
• Shri Karsanbhai Patel is typical example of success of Indian
entrepreneurship face of stiff competition . Starting as one
man operation in 1969 , the brand is today industries third
best brand as per ORG MARG survey . Norma's strategy has
always been to provide the consumer with “VALUE FOR
MONEY” option.
MARKET PROMOTION & ADVERTISING ACTIVITIES

Executive
Advertising
Nirma
Ltd.

Advertising
Agency
Poornima ads

Media
Air
Tv etc.
 Hindustan Unilever Limited,
Hindustan Unilever Limited, 51.6 Subsidiary of Unilever Plc , is the
largest FMCG co. in the country. The co. business sprawl from Personal &
household care Products to foods , beverage , specialty , chemicals &animal
Feeds .HUL is the market leader in he detergent & soap industry .
HUL’S DISTRIBUTION NETWORK

HUL
Factory

Carrying
&
Forwarding
Agents

Stockiest

Retailers & wholesalers

 GODREJ
Godrej’s Major product line are toilets soaps & Detergent , industrial
Chemicals , cosmetics & Men’s toiletries . It has interest in several other
business such as real estate, agro produce etc. through its subsidiaries
POPULAR SEGMENT : shoodh ganga, Doodh ganga , cinthol, Cinthol Fresh,
Godrej NO-1 , Fair Grow

MID PRICE SEGMENT : Cinthol lime , cinthol Cologne

PREMIUM SOAPS : Cinthl ultimate , Vita
 Conclusion
• Market segmentation: is separating a market into distinct
groups of potential consumers who share common
characteristics and interests and who are likely to be
attracted to particular products or services. Segmentation
allows you to develop products and plans which fit the
needs of customers more efficiently. Market segmentation
is also separating the customers into different groups, and
sometimes can split up into different age groups because
different age customers are interested in different things
from the business. Market segmentation is a marketing
approach that encompasses the identification of different
groups of customers with different needs or responses to
marketing activity. The market segmentation process also
considers which of these segments to target.
 Review of the Presentation
• Introduction
• Definitions of Marketing segmentation
• Basis of Market Segmentation
• Objectives of Marketing segmentation
• Characteristics of market segmentation
• Flow Chart of Segmentation process
• Indian examples of various market segments
• Market Segmentation Strategies
• Strategic marketing planning
• Limitations of Segmentation
• Methods of Seg-men-ta-tion
• Requirements for segmentation
• Case Example Path Segmentation & Profiling System
in Healthcare
• Grand on Nirma ,Hul ,and Godrej.
• Conclusion
• Review of presentation
• Bibliography
 Bibliography
1) The essence of international marketing
- Stanly J. Paliwoda
• Prentice –Hall of India, New Delhi

2)Principles of marketing
- Philip Kotler
- Gary Armstrong
• Prentice –Hall of India Private Limited
3. Marketing management
-S.A. sherlekar
• Himalaya publishing house

4. management-2
-Anand K. Bewoor
-S. KULKARNI
• Tech-max publications, pune
Thank you