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SEGMENTATION AND ZONE OF

TOLERANCE

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What is a service? The activities or benefits one party offers

that is essentially intangible.

It does not result in ownership of anything.

It may or may not be attached with a

physical product.

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SEGMENTATION

A process of grouping the potential andactual customers who have similar needs,

wants, preferences or buying behavior.

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The Classic Segmentation Variables forConsumer Markets

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Demographic Variables the most widely used and most widely

available variable.

Marketers segment the market on basis of

age, gender, occupation, income, race and

social class.

Eg.: Recently employed and married

couples would be the target market

segment.

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Psychographics Variables

l Personality characteristics

Marketers appeal to positive/favorable personalcharacteristics to influence the purchase decision.

l Motives Marketers use individuals differing purchase

motives to segment a product market.

l Lifestyles

Marketers segment markets according to howindividuals choose to spend their time in various

activities, their income, their interest andopinions, and their education.

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Geographic

Unlike products, customers have to be presentin or around the point of delivery of mostservices.

eg: Primary schools, health clubs,physicians, maternity hospital, etc. must be ata reasonable distance to provide prompt

service to the target market segment.

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Customer Service Expectations Desired service -- the level of service the

customer hopes to receive

Adequate service -- the level of service the

customer must receive.

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Dual Customer Expectation Levels

Adequate Service

Desired Service

Zone of Tolerance

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Zones of Tolerance

The range of expectations between desired

and adequate can be wide or narrow

can change over time

can vary among individuals may vary with the type of product/service

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Factors that Influence Desired Service

DesiredService

AdequateService

Zoneof

Tolerance

Enduring ServiceIntensifiers

Personal Needs

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Factors that Influence Desired Service

Personal Needs ---

states or conditions

essential to thephysical or

psychological well

being --- physical,

social, psychological,and functional

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Factors that Influence Desired Service Enduring Service

intensifiers ---

individual stablefactors that lead the

customer to a

heightened sensitivity

derived serviceexpectations

personal service

philosophy

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Factors that Influence Adequate Service

DesiredService

AdequateService

Zoneof

ToleranceSelf-PerceivedService Role

SituationalFactors

Perceived ServiceAlternatives

Transitory ServiceIntensifiers

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Factors That Influence Adequate Service

Expectations Transitory service

intensifiers --- short-

term, individualfactors that make a

consumer more aware

of the need for

service

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Factors That Influence Adequate Service

Expectations Perceived Service

Alternatives----

As the number ofalternatives increases,

the level of adequate

service increases and

the zone of tolerancenarrows

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Factors That Influence Adequate Service

Expectations

Situational

Factors Temporary changes

in the normal state of

things ---- tends to

lower the level of

adequate serviceexpected and widen

the zone of tolerance

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Situational Factors

Reason for purchase

Consumer mood Weather

Time constraints

Emergency

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Factors That Influence Adequate Service

Expectations Self Perceived

Service Role --- how

well the customerperceives they are

performing their own

role in service

delivery

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SEGMENTATION is important for..

Establishing the zone of tolerance across

different customer decision criteria likeprice, performance and service quality.

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Customer segmentation based on pricesensitivity

Low

Moderate High price segment

Different segments have differentexpectations of desires and adequate

service and perception of service product.