Segmentation

 “The identification of sub-sets of buyers within a market who share similar

needs and who have similar buying processes”
 Companies aim to satisfy the needs of specific market segments better
than anybody else

From Heterogeneous Market

From Mass Market To Market Segmentation

Homogeneous
Market
 Levels of Market Segmentation
Mass Marketing: Mass Production,Mass distribution, Mass
Promotion of one product for all. (Surf)

Segment Marketing: A large identifiable groups with

homogeneous needs. (luxury car among automobiles e.g
Esteem)

Niche Marketing: More narrowly defined groups, whose

needs are not being served. (Nirma)

Local Marketing: Think global act local. (McDonald, Milk from

DMS)

Individual Marketing: Customized markets or “one-to-one

markets”. (Airtell Different caller tunes)
 Patterns Market Segmentation

when consumers have consumer needs and desires are consumer needs and
relatively uniform needs and so diverse that clear clusters desires for a good or
desires for a good or service cannot be identified service category can be
category. classified into two or
more clusters, each with
different purchase criteria
 Characteristics of Effective Segments

Measurable Actionable

Substantial Accessible

Differentiable
 Demographic Segmentation

• Demographic segmentation consists of dividing the market

into groups based on variables such as age; gender family
size, income, occupation, education, religion, race and
nationality.
• Demographic segmentation variables are amongst the most
popular bases for segmenting customer groups because
customer wants are closely linked to variables such as
income and age.
• Also, for practical reasons, there is often much more data
available to help with the demographic segmentation.
Age: Consumer needs and wants change with age although they may still wish to consume the
same types of product. So Marketers design, package and promote products differently to meet the
wants of different age groups e.g. marketing of toothpaste (contrast the branding of toothpaste for
children and adults) and toys (with many age-based segments).

Family Life-cycle: A consumer stage in the life cycle is also an important variable e.g.
Infants: Baby foods like Cerelac and Farex; Young child: Leo toys, Barbie dolls (Again these can be
segmented by gender basis for small girls and boys); Adolescent: Trendy products and services like
Jeans, T-shirts, and Coffee shops; Young Adults: Mobikes, music systems, mobile phones; Old
people: Investment instruments, health packages for old.

Gender: Gender segmentation is widely used in consumer marketing. The best examples include
clothing, hairdressing, magazines and toiletries and cosmetics e.g. Kinetic scooters are targeted more
at women.

Income: income is another popular basis for segmentation. Many companies target affluent
consumers with luxury goods and convenience services e.g. Mercedes, Pizza Hut Pizzas, Ebony and
Parker pen. On the contrary marketing products that appeal directly to consumers with relatively low
incomes e.g. Nirma, and Reliance phones.

Social class: Many Marketers believe that a consumer “perceived” social class influences their
preferences for cars, clothes, home furnishings, leisure activities and other products & services.
There is a clear link here with income-based segmentation.
 Geographic Segmentation

 Geographic segmentation tries to divide markets into different

geographical units Such as:
• Nation or country: e.g. India, USA
• State or region: In India 5 regions among regions there are different
states
• City or metro size: e.g. Delhi is a metro where as Gaziabad is a city
• Density: Urban, Semi-Urban, Rural.
• Climate:Northern, Southern
 Geographic segmentation is an important process - particularly for
multi-national and global businesses and brands. Many such
companies have regional and national marketing programmes that alter
their products, advertising and promotion to meet the individual needs
of geographic units.
 Behavioral segmentation
 Behavioral segmentation divides customers into groups based on the way they respond to, use
or having Knowledge of a product. Behavioral segments can group consumers in terms of:
• Occasions: When a product is consumed or purchased e.g. in India, lots of home shopping
takes place on the occasion of Diwali’. Colour TV sets were introduced in Asiad-82.
• Benefits Sought: Benefit segmentation requires Marketers to understand and find the main
benefits customers look for in a product. E.g. toothpaste where research has found four main
“benefit segments” - economic; medicinal, cosmetic and taste.
• Usage Rate: Some markets can be segmented into light, medium and heavy user groups.
Marketer are usually attracted to Heavy users e.g. Indian Airlines offer ‘frequent flier status’ to
its heavy users.
• Loyalty Status: Segment the market into four type according to the intensity of their loyalty
• Hard Core loyal: who are extremely brand loyal (emotional bonding with
brand).
• Spilt Loyal: who use more than one brand (use one or more brand of
perfumes).
• Shifting Loyal: who shift from one brand to another (using Peers might
shift to Dove).
• Switchers: who are impulsive (can buy any brand).
 Psycho graphic segmentation
 Psychographic segmentation helps marketers understand
buyer behaviour better and design the products accordingly.
The most prominent bases for segmentation are as
• Lifestyle: different lifestyle depending on their income,social
groups etc. e.g. sportsman buy trendy products on the other
hand top managers prefer formal wears.
• Personality: personality characteristics such as aggression,
masculinity, extroversion et. Also influence the buyer
behavior e.g (Graiver, Gillate)
• Values: values affect customer behavior in the long run.
Marketers believes that if the values of customers can be
influenced their impact on them is for a longer period e.g.
(Airtell ad of Baba mi)
 Market Targeting Strategies
• Evaluating and selecting market segments requires assessing
the segment’s overall attractiveness in light of company’s
objectives and resources.
• Five patterns of target market selection can then be
considered.
 Five Patterns of Target Market Selection

Focusing on a single Focusing on Specific Concentrating Targets full

market, e.g few markets & product to on different market rather
Mercedes for upper develop different needs of than specific
class expertise, e.g. markets,e.g. customer in a segment, e.g.
Hyundi Gillette particular HP ranges its
Santro, market, e.g. printers for
Accent, ordinance home to
Sonata factory serves heavy duty
Indian Army printers.
 Market Targeting Strategies
• Targeting multiple segments may result in cost
economies
• Supersegment targeting may be appropriate
• Blocked markets often require megamarketing
countermeasures
• Be aware of ethical concerns
 Product Differentiation
• Differentiated products feature meaningful and valuable
differences that distinguish the company’s offering from the
competition.

• Differences are stronger when they are important, distinctive,

superior, preemptive, affordable, and profitable.
 Positioning and Differentiation
Product Differentiation Tools
Performance Features
Form Reliability
Repairability Design
Style Durability
Services Differentiation Tools
Ordering ease Maintenance and repair
Installation Customer consulting
Customer training Delivery
Personnel Differentiation Tools
Competence Credibility
Communication Courtesy
Reliability Responsiveness
Channel Differentiation Tools
Coverage Expertise
Performance
Image Differentiation Tools
Symbols Media
Atmosphere Events
 Positioning
• Positioning is defined as the act of designing the company’s offering
and image to occupy distinctive place in the target market’s mind
• Two views of positioning:
– Ries and Trout: products are positioned in the mind of prospect
– Treacy and Wiersema: positioning via value disciplines
• Product leader firm
• Operationally excellent firm
• Customer intimate firm
• Positioning statements:
– To (target group and need) our (brand) is (concept) that (point-of-difference)
• Example: To young, active soft-drink consumers who have little time for sleep,
Mountain Dew is the soft drink that gives you more energy than any other brand
because it has the highest level of caffeine.
 Positioning Strategies
• Price – Quality Approach: most of us perceive that if a
product is expensive will be a quality product where as
product that is cheap is lower in quality.
• Positioning by Use or Application:Basically this type of
positioning-by-use represents a second or third position for
the brand, such type of positioning is done deliberately to
expand the brand’s market. If you are introducing new uses
of the product that will automatically expand the brand’s
market. (Nescafe Coffee ).
• Positioning by Product Process: Another positioning
approach is to associate the product with its users or a class
of users. Johnson and Johnson repositioned its shampoo from
one used for babies to one used by people who wash their
hair frequently and therefore need a mild shampoo.
 Positioning Strategies
• Product characteristics or Customer Benefits: focuses upon the
characteristics of the product or customer benefits. For example
durability, economy or reliability etc. e.g. motorbikes.

• Positioning by Cultural Symbols: In today’s world many advertisers

are using deeply rooted cultural symbols to differentiate their brands
from that of competitors e.g. Air India uses maharaja as its logo which
shows royal treatment with lot of respect and it also highlights Indian
tradition.

• Positioning by Competitors - In this type of positioning strategies, an

implicit or explicit frame of reference is one or more competitors.
Colgate when entered into the market focused on to family protection
but when Pepsodent entered into the market with focus on 24 hour
protection and basically for kids, Colgate changed its focus from
family protection to kids teeth protection.