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MARKET
SEGMENTATION
Prof. Manu Priya Gaur
Meeting hundred per cent
expectations of ten consumers is better than meeting ten per cent expectations
of hundred consumers
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Key Decisions for Marketing Strategy
What geographic area will we operate in?
What timeframe do we have in mind?
Who are our prospects?
What will we offer?In what broad range of price?
To whom will we offer it?
How will we let them know about our offering?
How/where will we engage in exchange with them?
Whom will we compete with?
How Best to Answer?
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DEFINING MARKET SEGMENTATION
³process of dividing the totalheterogeneous market into relativelydistinct homogeneous sub-groups of consumers with common needs or
characteristics & selecting one or moresegments to target with distinct marketingprogramme.´
It is basic & universally adopted tool & strategy for identifying special groups of consumers & introducing specialty in theproducts to suit these special groups.
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Market SegmentationMarket Segmentation
Market
MarketSegment
MarketSegmentation
People or organizations withneeds or wants and the ability and
willingness to buy
A subgroup of people or organizations sharing one or morecharacteristics that cause them to
have similar product needs.
The process of dividing a marketinto meaningful, relatively similar,identifiable segments or groups.
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What is a Market?What is a Market?
PEOPLEPEOPLE
BUT - not just ANYANY people, they have to have
Willingness to buy
Purchasing power (money)
Authority to buy
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The Concept of Market SegmentationThe Concept of Market Segmentation
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Requirement of Effective Segmentation
Determine whether the market isheterogeneous.
Must be some logical basis to identify &
divide the population.
Comparison of estimated sales potential,
costs & profits of each segments can be
estimated.
Segment must have enough profitpotential.
It must be possible to reach the target
segment effectively.
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How Segmentation Helps«««
Used to uncover needs & wants
Used to guide in redesigning, repositioning or targeting
Help in identifying the appropriate promotional media.
Evaluation of Marketing Programmes
Creating the competition effectively
Helps in preparing marketing Budget
Use of segmentation in marketing strategies
Uses of segmentation in marketing opportunities
Decision makers can define objectives and allocate resources.
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Criteria for SegmentationCriteria for Segmentation
SubstantialitySubstantiality
IdentifiabilityIdentifiabilityMeasurabilityMeasurability
AccessibilityAccessibility
ResponsivenessResponsiveness
Segments are large or profitable
enough to serve.
Size, purchasing power, profiles of segments can be measured.
Segments can be effectivelyreached and served. with
marketing mix.Effective programs can be designed
to attract and serve the segments
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Segmentation StrategiesSegmentation Strategies
Mass MarketingMass Marketing ex. Tata Salt,ex. Tata Salt, Shakti Shakti
Bhog Bhog aataaata
Concentrated MarketingConcentrated Marketing ex. Rollsex. RollsRoyce, designer jewellery Royce, designer jewellery
Differentiated MarketingDifferentiated Marketing ex. Diet ex. Diet
coke, Shampoos for dry hair, normal tocoke, Shampoos for dry hair, normal to
oily hair. Nokia & consumer durableoily hair. Nokia & consumer durable
goods.goods.
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Segmentation BasesSegmentation Bases
Characteristics of
individuals, groups,or organizations used
to divide a total market
into segments.
Variables
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Bases Of SegmentationBases Of Segmentation
Hybrid SegmentationBenefits Sought
Psychographics
Demographics
Geographic Sociocultural
Use Situation
Use-Related
Psychological
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Geographic Segmentation
Segmenting markets by region of the country or world, market size, market density, or climate.
Region of the country or worldRegion of the country or world
(Southwest, Mountain state,(Southwest, Mountain state, Alska Alska))City sizeCity size(M(Metropolitanetropolitan, Small cities, Towns ), Small cities, Towns )
Market densityMarket density(Urban, Suburban, rural)(Urban, Suburban, rural)
ClimateClimate
(Temperate, Hot, Humid, Rainy)(Temperate, Hot, Humid, Rainy)
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Benefits of Regional SegmentationBenefits of Regional Segmentation
New ways to generate sales in sluggish andNew ways to generate sales in sluggish and
competitive marketscompetitive marketsScanner data allow assessment of bestScanner data allow assessment of best
selling brands in regionselling brands in region
Regional brands appeal to local preferencesRegional brands appeal to local preferencesReact more quickly to competitionReact more quickly to competition
Ex.
Bru Coffee preffered in South India
Lipton Tea has market in North India Boroline, Colgate, Everyday, Dettol, enjoy premium position in Eastern India
Dalda is as a strong brand in rural India
Health conscious people of urban India would prefer Saffola or Sunflower.
Hero Honda quality assurance for rural locations
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Demographics Segmentation
Age Age
age is another way to divide the
market into segments since so many products are based upon
³time of life´
(Under 12, 12(Under 12, 12--17, 1817, 18--34, 3534, 35--49, 5049, 50--64)64)
Ex.Ex.
diapers for babies
toys for children- Leo toys,Leo toys, FunskoolFunskool
entertainment for ³over 19´
Cartoon network
Jhnadu Kesari jeewan
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Gender Gender
gender is an obvious way to divide the market into segments
since so many products are gender-specific. Male & Female. clothing
medical products
sports products/services
entertainment
Ex. Fair & Lovely, Nivea for men, Shaving creams
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Marital StatusMarital Status
Single, married, divorced, living together, widowed,Single, married, divorced, living together, widowed,dual income.dual income.
Bachelor spend on entertainment, clothingBachelor spend on entertainment, clothing
Married on investment, household appliancesMarried on investment, household appliancesEgEg.. TanishqTanishq, small microwaves, two, small microwaves, two--cup coffeecup coffee
maker.maker.
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OccupatiOccupati --
. ar r . ar r
usi ss classBusi ss class
Pr f ssi alsPr f ssi als
Blue collar sBlue collar s
White collar sWhite collar s
Social ClassSocial Class--
..Upward class
Upward classBackward classBackward class
Middle ClassMiddle Class
High ClassHigh Class
Lower classes.Lower classes.
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Psychographics Segmentation
³The use of psychological attributes, lifestyles and
attitudes in determining the behavioral profiles of differentcustomers´
Psychographic profiles on a target market segment are
obtained by doing a lot of questionnaires and surveys to
ask people if they agree/disagree with certain statementsmade about particular activities, interests or opinions
AIO - activities, interests, and opinions
1. Passive / Uncertain
2. Mature
3. Home Economists
4. Active/Convenience
5. Modern Shoppers
6. Traditional Home/Family Oriented
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How time is spentHow time is spent
Importance of thingsImportance of things
around themaround themBeliefsBeliefs
SocioeconomicSocioeconomic
characteristicscharacteristics
Lifestyle SegmentationLifestyle Segmentation
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E xamples of Life-style Orientation
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Needs-motivation - Shelter, safety, security,
affection, self-worth
Personality - Extroverts, novelty
seekers, aggressive.
Perception - Low risk, moderate ±risk,high-risk
Attitudes - Positive attitude,
negative attitude
Psychological Segmentation
Enjoy car driving prefer elegant sports cars
Likes car but skeptical about advertising claims
Don¶t like driving want safety features
View cars as necessary evil
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E mphasis on power need
Symbol of success & achievement
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Cultures - American, French, Italian, Chinese
Religion - Catholic, Jewish, Moslem e.t.c.
Subculture- Asian, Hispanic, Caucasians
Social-Class- Lower, Middle, Upper.
Family Life-cycle ± Bachelors, Young married, full
nesters.
Sociocultural Segmentation
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Family Life Cycle StagesFamily Life Cycle Stages
1. Young Single
2. Young Married with no Children (DINKS)3. Young - married with children
- divorced without children
- divorced with children
4. Middle Aged
a. married without childrenb. divorced without children
c. married with children
d. divorced with children
e. married without dependent children
f. divorced without dependent children
5. Older
(i) older married (ii) older unmarried (divorced, widowed)
6. Other- SSWDs
single separated widowed / divorced
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Benefits Segmentation
The process of grouping customers into market segments
according to the benefits they seek from the product.
Conveneience, Social acceptance, longlasting, economy
People buy something because it causes a benefit
Many marketers now consider benefit segmentation one of themost useful methods of classifying markets´
ie. atches
ie. Diet coke - less sugar, lose weight
ie. Colgate Total ± decay prevention, Extra white toothpaste,
better smile
ie. Aquafresh, Promise.
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Benefit SegmentationBenefit Segmentation
of the Snackof the Snack--Food MarketFood Market
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Use Situation
Time - Leisure work, rush, morning, night.
Objective - Personal, gift, snack, fun, achievement.
Location - Home, work, friends, members, friend¶s
home.
Person - Self, family members, friends, peer, boss
Ex. Archies card
Hallmark
Titan WatchesCelebration
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Use-Related
Usage rate - Heavy users, medium users,
light users, non users Ex. Cigrates, Beverages
Awareness - Unaware, aware, interested,
Status enthusiastic
Brand - None, some, strong
Loyalty
Ex. Videocon, P&G
Dividing a market by the amount of product bought or consumed .
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Hybrid Segmentation
oo Psychographic Psychographic--Demographic Demographic ProfilesProfiles--
Useful in creating consumer profile, it revelinformation for segmenting mass market, decision
for type of promotional appeals & media.
oo GeodemographicsGeodemographics--
Based Based onon premise premise that that people people whowho livelive closeclose toto oneone
another another areare likely likely toto similar similar ecoeco.. status,status, interest,interest,
taste,taste, preferences, preferences, lifestylelifestyle..
oo SRI SRI VALSVALS-- (Values(Values && LifeLife stylesstyles ) )
ThisThis segmented segmented consumer consumer according according toto their their valuesvalues
&& lifelife stylesstyles inin USAUSA..
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V ALS 2V ALS 2
Principle Oriented Action Oriented
Achievers
Actualizers
Strugglers
Strivers
Fulfilleds
Believers
Experiencers
Makers
Abundant Resources
Minimal Resources
Status Oriented
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V ALS has 2 dimension:V ALS has 2 dimension:
11.. Self Self--orientationorientation-- goalsgoals ,, behavior,behavior, patternpattern of of attitude,attitude, activities,activities, helphelp individualindividual toto reinforce,reinforce,
sustainsustain or or modifymodify self self imageimage..33 basicbasic self self
orientationorientation::
a)a) PrinciplePrinciple- -orientationorientation- - choiceschoices areare guidedguided byby
beliefs,beliefs, principle,principle, notnot byby feeling,feeling, desire,desire, eventsevents..
b)b) StatusStatus- -orientationorientation- - influencedinfluenced byby action,action, approvalapproval
&& opinionsopinions of of othersothers..c)c) Action Action- -orientationorientation- - desiredesire physicalphysical && socialsocial
activity,activity, varietyvariety && riskrisk takingtaking
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V ALS Consumer Segment:V ALS Consumer Segment:
ActualisersActualisers
Resources: highestResources: highest
Established leaders in businessEstablished leaders in business
Active with high self esteem Active with high self esteem
Leading edge of changeLeading edge of change Guided by principles or byGuided by principles or by
desires, fond of reading, not fonddesires, fond of reading, not fond
of T.V of T.V
Finer things in lifeFiner things in life
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V ALS Consumer Segment:V ALS Consumer Segment:
FulfilledFulfilled
Resources: highResources: high Mature, responsibleMature, responsible
WellWell--educated professionalseducated professionals
WellWell--informedinformed Rational decision makersRational decision makers
Open to new ideas and socialOpen to new ideas and social
changechange
Like home & familyLike home & family
Open mindedOpen minded
Purchase products for durability,Purchase products for durability,
functionality .functionality .
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VALS onsumer Segment:VALS onsumer Segment:
Believer Believer
Resour ces: lowResour ces: low Lar gest segmentLar gest segment
onser ati e, pr edictableConser ati e, pr edictable
Modest incomesModest incomes Li es center ed on f amil ,Li es center ed on f amil ,
r eligion communit , nationr eligion communit , nation
Fond of watching .V, little Fond of watching .V, little
r eading.r eading.
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V ALS Consumer Segment:V ALS Consumer Segment:AchieversAchievers
Resources: highResources: high Successful, workSuccessful, work--orientedoriented
Satisfaction from homes andSatisfaction from homes andfamiliesfamilies
Conservative, respect statusConservative, respect statusquoquo
Favor established productsFavor established productsthat show off their successthat show off their success
Choices based on desire toChoices based on desire toenhance position.enhance position.
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V ALS Consumer Segment:V ALS Consumer Segment:
StriversStrivers
Resources: lowResources: low
Depend on others, blue collar Depend on others, blue collar
workersworkers
Believe money representBelieve money representsuccesssuccess
Style is importantStyle is important
Read less, prefer to watch T.V
Read less, prefer to watch T.V
Easily boredEasily bored
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V ALS Consumer Segment:V ALS Consumer Segment:
ExperiencersExperiencers
Resources: highResources: high Youngest segmentYoungest segment
High energyHigh energy²²physical andphysical and
social activitiessocial activities
Spend heavily on clothing, fastSpend heavily on clothing, fast
food, and music, sportsfood, and music, sports
Like new products andLike new products and
servicesservices Seek excitement, variety inSeek excitement, variety in
lives to take risk.lives to take risk.
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V ALS Consumer Segment:V ALS Consumer Segment:
MakersMakers
Resources: lowResources: low
Traditional family valuesTraditional family values
Practical, self Practical, self--sufficientsufficient
Focus on family, work, physicalFocus on family, work, physicalrecreationrecreation
Little interest in broader worldLittle interest in broader world
Suspicious of new ideas,Suspicious of new ideas,respect authority.respect authority.
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V ALS Consumer Segment:V ALS Consumer Segment:
SurvivorsSurvivors Resources: lowestResources: lowest
Motivation: doesn¶t fit with anyMotivation: doesn¶t fit with any
of the three, resources too lowof the three, resources too low Oldest segmentOldest segment
Tend to be brand loyalTend to be brand loyal
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Segmentation for Industrial Markets
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The competitive advantage of a firm lies in being everything to a
select few. To be everything to everyone is sure recipe for a
strategic failure.