Market

Segmentation!

By,
Vishal Gaur
Roll No. 29
 Market Segmentation

Marketing is the process by which companies create customer interest in products or

services. It generates the strategy that underlies sales techniques, business communication
and business development. It is a process through which companies build strong customer
relationships and create value for their customers and for themselves. It is used to identify
the customer, to keep the customer, and to satisfy the customer.

Market segmentation is the identification of portions of market that are different from one
another. Segmentation allows the company to better satisfy the needs of its potential
customers. Market segmentation makes it possible for the firms to target a specific market,
thus better satisfying customer needs.

Requirements of market segments

A market segment should be:

 Measurable
 Accessible
 Substantial
 Differentiable
 Durable

Substantial

For a market segment to be a worthwhile target, it must consist of a sufficient number of

people and focus on specific need or interests or the group.

Accessible

Marketers must be able to reach the market segment they want to target through media
and distribution channels in an economical way. Marketers are constantly on the lookout for
newer accessibility points.

Differentiable
Segment should be distinguishable and respond differently to different marketing programs.
Ex: If married and unmarried men respond similarly to the launch of a new brand of shirts,
then they are not different market segments.

Durable

Not changing too quickly.

Measurable

Lastly the market segment should be measurable in terms of size, purchasing power and
other characteristics.

Before the widespread acceptance of market segmentation, the smart way of doing
business was though “Mass marketing”. Offering the same product and marketing mix to all
consumers. Mass marketing allows economies of scale to be realized through mass
production, mass distribution and mass communication. The advantage of mass marketing is
that it costs less: one standard product, one advertisement, one campaign and only one
distribution or packaging strategy. On the other hand, there is a disadvantage also, the
customer needs and preferences differ and providing the same offering in unlikely to be
viewed as a positive point. If a firm ignores the different customer needs, another firm is
likely to enter the market with a product that serves a specific group and the initial
companies would lose its customers. This is where “Market segmentation” takes place.

Target marketing on the other hand recognizes the diversity of customers and does not try
to please all of them with the same offering. The first step in target marketing is to indentify
different market segments and their needs.

Segmentation – Targeting – Positioning (STP)

After segmentation of the market the marketer must select one or more segments to target.
One must decide on a specific marketing mix – that is specific product, price, place and
promotion. The final step is positioning the product in the consumers mind.

Bases for segmentation

A market can be segmented by various bases, and industrial markets are segmented
somewhat differently from consumer markets.

Consumer market segmentation

A basis for segmentation is a factor that varies among groups within a market, but that is
consistent within groups. One can identify four primary bases on which to segment a
consumer market.

 Geographic Segmentation: It is based on regional variables such as region, climate,

and population density and population growth rate.

 Demographic Segmentation: It is based on variables such as age, gender, ethnicity,

education, occupation, income and family status.

 Psychographic Segmentation: It is based on variables such as values, attitudes and

lifestyle.

 Behavioural Segmentation: It is based on variables such as usage rate, patterns,

price sensitivity, brand loyalty and benefits.

The optimal bases on which to segment the market depends on the particular situation and
are determined by marketing research, marketing trends.

Business Market Segmentation

In contrast to consumers, industrial customers tend to be fewer in number and purchase

larger quantity. They evaluate offerings in more detail and the decision process usually
involves more than one person.

 Geographic Segmentation: It is based on regional variables such as customer

concentration, regional industrial growth rate.

 Customer type: It is based on factors such as size of the organization, its industry,
position in the value chain, etc.

 Buyer behaviour: It is based on factors like loyalty to suppliers, usage patterns, and
order size and buying status.
The market segmentation process
The process is continuous and follows four different stages:

1) Survey
2) Analysis of findings
3) Segment profiling
4) Evaluation

Survey

This stage consists of extensive consumer research, as marketers try to gather extensive,
quantitative and qualitative information about consumer buying, buying patterns. At this
stage, marketers use the segmentation variables to gain an understanding of consumer
behaviour.

Analysis of findings

The data gathered has to be collated in a meaningful way and analysed. The aim of the
analysis is to identify is to fill the gap in the market, develop new buying patterns, shift
consumer perceptions, attitudes, values and other changes which may act as an
opportunity.

Segment profiling

At this stage, market may try to find additional information about the observed segments,
such as media habits, ownership of durables, spending patterns on other related categories
to gain a detailed understanding of the segment.

Evaluation

The last stage of the segmentation process, before the marketers decide on segment to
target. It is a detailed study of the different market segments.

Market segmentation exists because consumer diversity exists. Market segmentation

focuses first on homogeneous needs and then group customers that have these needs into a
market segment. A segmented approach to business strategy is win- win situation both for
consumers and companies. It is not a one time exercise; marketers have to continuously
review segments, segmentation variables and adapt their marketing mix to the evolving
needs.

Market Segmentation – Case study – Kingfisher (Beer)

History

1857 – Mr. Thomas Leishman formed the UNITED BREWERIES LTD.

1947 – Mr. Vittal Mallya became the first chairman of the Indian origin.
1983 – Dr. Vijay Mallya became the chairman of the UB group.

It’s headquarter is in Bangalore. United Breweries is India's largest producer of beer with a
market share of around 48% by volume. It’s owned by Vijay Mallya who is also a member of
the Indian parliament. United Breweries now has greater than a 40% share of the Indian
brewing market with 79 distilleries and bottling units across the world .

Beer

 Kingfisher Blue - Premium Beer

 Kingfisher Red
 Kingfisher Strong - Strong Beer
 Kingfisher Premium - Mild Beer
 Kingfisher Ultra

Facts about Kingfisher

 50% market share nationally

 Sold in over 52 countries and also in international flights
 Every third beer sold in India is Kingfisher
 India’s first global consumer brand
 54% market share in the domestic market

STP for Kingfisher beer

Segmentation: Geographically it is available throughout India and is dominant in particularly

south and west India.

Demographic Segmentation: Age basis, Youth: 16 – 25 years (Kingfisher mild)

Adults: 25 yrs and above (Kingfisher strong)

Segmentation based on situation: (Psychographic): Birthday’s anniversaries or New Year’s

party.
Targeting: Kingfisher has two different products for different market segments.
Kingfisher mild: Alcohol less than 4% is for people who drink for fun. First time drinkers who
drink for experience. Also the urban woman who prefer to drink light.

Kingfisher strong: Alcohol content is more than 4 %. This is for those who switch from light
beer to something stronger. Also for regular drinkers who prefer strong flavour.

Positioning: Kingfisher has positioned itself as a brand for successful and professional
individuals who are always ready to take a break, party or just chill out. It has positioned
itself as “The king of good times”.