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Segmentation

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94 views

Segmentation

Uploaded by

vinit_shah90
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Segmentation

Bases of segmentation
CONSUMER MARKETING Business - Business

User’s Behavior User’s related Behavior


related
•Demographic •Benefit •Customer size •End use
•Social class •Usage •Location •Usage
•Structure
•Geographic •Price •Product /
•Buying process
•Lifestyle •Brand service
•Attitude towards
•physography •situation vendor •application
•Decision criteria
•Type of product
What is segmentation?
• “Market segmentation is a
process of dividing potential
customer into smaller group
which seeks similar benefit
from a product”
Why segmentation?
• Customer in each segment are different
• Their needs are different
• Competitor’s are different
• Size, growth, potential and profitability are
different
• Key success are different
Why market segment is critical for all
product categories?
• Key factor that makes understanding
market segment is important

Slower market
More varied
growth rate
customers

Technological
advances Fragmented minority
market
Criteria for effective segmentation
• Measurability

Actionable substantial

Differentiable accessible
measurability
• Different variable such as:-
1. Age
2. Social status
3. Purchasing power
4. size

such variable must be clearly measurable for


dividing the customers
substantial
• The segment are large
and profitable to serve
Accessible
• Easily accessible to the marketing firm
• The marketing mix can be used
effectively when the segment selected:-
1. Is easily approachable thru Advt. & SP
2. Better quality product
3. Segment can be effectively reached &
served
Differentiable

• The segment is conceptually


distinguishable
• Respond differently to different
marketing mix elements and
programs
Actionable

• Effective programs can be


formulated to attack & serve
the segment effectively
Estimating segment potential
• Set the time period of interest
• Define product line
• Specify segment characteristics (distinguish
feature / quality etc.
• Identify geographic market boundaries
• Make market environment assumption
• Make company’s efforts assumption
• Make estimation of potential and sales
Segment analysis
• How attractive are the alternative market
segment?
• What capacity do we have for competing
in the segment?
• How much customization should the firm
offer in it’s program? i.e at what point in
continuous frequency
Mass Market
Market segment Market Niche

Will the firm construct it’s plan?


Bases for market segmentation
• Geographic segmentation
• Demographic segmentation
• Socio-economic segmentation
• Psychographic segmentation
• Behaviouristic segmentation
• Segmentation as per market condition
• Segmentation as per volume purchase
Geographic segmentation

Geographic segmentation

village Taluka District State Nation


Demographic segmentation

Demographic segmentation

Age sex income Family Occupation Education Language Social


size status
Socio-Economic segmentation

Socio – Economic Segmentation


Reference
group

Cultural Social Upper Middle Lower


background class class class class
Psychographic segmentation

Psychographic segmentation

Life style Personality trait Social status

•Social class: upper class, upper middle, lower middle etc.


Liberal •Personality: self-confidence, ambitious, aggressive,
religious Orthodox sociable etc..
•Life style: Liberal, conservative, religious, health & fitness
Behaviouristic segmentation

Behaviouristic segmentation

User status Attitude towards


Loyalty Pattern
The product
Segmentation as per the volume of
purchase

Segmentation as per the volume of


purchase

One time
Regular Buyers Small Buyers Bulk Buyers
Buyers
Basic
Market-
Preference
Patterns for
Ice Cream
Homogeneous preferences
• Market where all consumer have same
preference.
• Predicting that existing brand would be
similar
Diffused preference

• Consumer preference may be scattered


throughout space
• The 1st brand to enter the market is likely to
position in centre to appeal to most people
• 2nd competitor could locate next to 1st brand &
fight for market share
• It could also locate in a corner to attrack a
customer group that was not satisfied with
centre brand
Clustered preference

• The 1st firm in this market has following


option:-
1. It might position in center (hoping to
appeal to all group)
2. It might position in the largest market
segment. (concentrated market)
Target market selection
• Single segment concentration
m1 m2 m3

p1

p2

p3

• firm gains strong knowledge of segments needs

•Achieves a strong market presence

•Firm enjoys operating expenses thru specializing in prod’s / dist’s / pro etc..

•Concentrated market involves risk


Target market selection
• Selective specialization
m1 m2 m3

p1

p2

p3

•Firm select number of segments, each objectively attractive & appropriate

•There may be little or no synergy among segments, BUT promises to be


money maker
Target market selection
• Product specialization
m1 m2 m3

p1

p2

p3

•Firm makes a certain product that it sells t several segments


Target market selection
• Market specialization
m1 m2 m3

p1

p2

p3

• Firm concentrates on serving many needs of a particular customer group

The firm gains a strong reputation in serving this customer group


and becomes a channel of additional products
Target market selection
• Full market coverage
m1 m2 m3

p1

p2

p3

Firm attempt to serve all customer group with all the products they might need

Eg:- Coco-cola can undertake full market coverage


Example of 6 buyers in the market
Fig. 1
• Eg:- Total market before
segmentation

Completely segment market


i.e. market of 6 different buyers
After segmentation Fig. 2

Fig. 3 Same market is now


(A)
© Segment into 3 distinct
Groups of customers
B (B) i.e partial segment
A

E C

D
Steps in market segmentation
• Survey of existing market
• Scrutiny of existing market
• Cluster profiling
• Selection of promising segment
• Finalizing of appropriate marketing mix
•
Importance of market segmentation
• Facilitates:-
1. consumer-oriented marketing
2. Suitable marketing mix
3. Introduction of effective product strategy
4. The selection of promising markets
5. Exploitation of better marketing opportunities
6. Selection of proper marketing program
7. Provides proper direction to marketing efforts
8. Effective advertising
9. Special benefits to small firms optimum use of
resources
Limitation of segmentation
• Too much concentration on few segments is
dangerous
• Rational segment is difficult
• Excessive segmentation leads to fragmentation
• Expensive exercise
• Limited contribution in solving marketing
problem
• Consumer behavior is unpredictable
• Difficult to introduce
Mass marketing v/s. market segmentation
MASS MARKETING MARKET SEGMENTATION
Meaning Sellers/ producer produce goods on large scale. The seller divides total market for product
Promote ONE goods to all buyer’s /market into convenient segment .select one seg.
& promote goods
Position of market Whole market is treated as a single unit Total market is divided into convenient
segment

Position of segmentation Seg. Is NOT introduced in MM Seg is used for the purpose of marketing
& sales promotion
Cost of product & marketing COP & Marketing will be low, as one marketing mix COP 7 Marketing will bE HIGH
will be use by entire market

Position of target market Entire market will be treated as a target market Each segment of total market selected will
be treated as total market
Attention to the seller On the entire market of the product Concentrate on one or two specific market

Spreading of marketing risk Spreading of marketing risk over wide marketing Will NOT be able to spread marketing risk
area is possible over wide period

Present trend Present marketing trend is not favourable to mass Present marketing trend is favourable to
marketing market seg.
Type of approach Shot gun approach Rifle approach

Use of marketing mix Only one marketing mix is used Sepearate marketing mix is used

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