RETAIL MARKET SEGMENTATION

Introduction to segmentation
A market segment is a subgroup of people or

organizations sharing one or more characteristics that cause them to have similar product needs. The concept of market segment is based on the fact that the market of commodities are not homogeneous but they are heterogeneous. Market represent a group of customer having common characteristics but two customer are never common in their nature, habits, hobbies income and purchasing techniques.

DEFINITION
Market Segmentation is a method of
dividing a market (Large) into smaller groupings of consumers or organizations in which each segment has a common characteristic such as needs or behavior.

According to Philip kotler , Market

segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.

SIGNIFICANCE OF SEGMENTATION

1 2

Deciding store location Understanding consumer behavior Deciding retail marketing mix Deciding merchandise assortments Deciding promotional campaign positioning

 Deciding store location:

Market segmentation helps a retailer in deciding locations for its new outlets in case of expansion. A location which is attractive and has a good traffic flow the retailers have the advantage. Understanding consumer behavior: Once the market is divided into few homogenous groups it becomes easy for a retailer to develop an effective marketing & promotional strategy. Deciding retail marketing mix: market segmentation helps a retailer in deciding marketing mix (7ps) depending upon the target market to service.

 Deciding merchandise assortment:

a retailer is always bothered about which item of inventory should be bought and displayed on the stores shelves. Once the market is segmented, the retailer can decide which item will go on the shelves Understanding consumer behavior: market segmentations helps a retailers in deciding and developing accurate promotional campaigns that hit the target at the right time and right place Positioning:

segmentation helps a retailer in positioning itself in a particular target market. For EX: shoppers stop have positioned themselves for higher income level while vishal mega mart and big bazaar for middle class people

Levels of Segmentation
Mass Marketing Same product to all consumers (no segmentation)

Product variety Marketing Different products to one or more segments (some segmentation)
Niche Marketing Different products to subgroups within segments ( more segmentation) Micromarketing Products to suit the tastes of individuals or locations (complete segmentation)

Mass marketing
Mass marketing is a market coverage strategy in

which a firm decides to ignore market segment differences and appeal the whole market with one offer or one strategy. The idea is to broadcast a message that will reach the largest number of people possible. In theory this would directly correlate with a larger number of sales or buys into the product. Mass marketing is the opposite to Niche marketing as it focuses on high sales and low prices. Mass Marketing aims to provide products and services that will appeal to the whole market.

Examples of mass marketing

Product variety Marketing

When the retailer or the marketer realize that one

standard product is now no more appreciated in the market by the general public they try provide same product in different size, shape, colors, quality, and features. For Name ofexample: the product Product variety
Maruti Television refrigerator Petrol, diesel, Lx, Lxi, Vx, Vxi, automatic, semi-automatic, etc 21, 29, flat, eye protected, LCD, LED, etc 165 litre, 220 litre, double door, sixth sense,etc

Niche Marketing
The market niche defines the product features

aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact. The niche market is highly specialized, aiming to survive among the competition from numerous super companies. Group of customers seeking a distinctive mix of benefits who are ready to pay extra premium.

Examples of niche marketing

Micro marketing
It is a marketing strategy in which advertising

efforts are focused on a small group of highlytargeted consumers. Micromarketing requires a company to narrowly define a particular audience by a particular characteristic, and tailor campaigns for that particular segment. It can be a more expensive technique due to customization and lack of an economy of scale

Example of micromarketing
example of micromarketing is found within the

real estate industry. A local realtor who develops a reputation for working with properties within a specific price range typically also understand the needs and wants of potential buyers who can afford homes within that price range

Segmentation Criteria
Geographic
Nations, states, regions or cities

Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioral
Occasions, benefits, uses, or responses

Segmentation Criteria
GEOGRAPHIC VARIABLES
Division of the market based on the location of

the target market People living in the same area have similar needs and wants that differ from those living in other areas Region of the world or country, East, West, South, North, Central, coastal, hilly, etc. Country size/country size : Metropolitan Cities, small cities, towns. Density of Area Urban, Semi-urban, Rural. Climate Hot, Cold, Humid, Rainy.

Demographic Criteria
Demographic variables

age gender sexual orientation Family size family life cycle education income occupation education socioeconomic religion nationality/race language

Psychographic Criteria
Psychographic variables Partitioning of the market based on lifestyle, value, attitude and personality characteristics Marketers use it to further refine a target market Its appeal lies in the vivid and practical profiles of consumer segments that it can produce. Kelloggs targets health-conscious consumers with brands such as Special K and Product 19

Behavioral Criteria
Behavioral variables
benefit sought product usage rate

brand loyalty
product end use readiness-to-buy

stage decision making unit profitability

Market Segmentation Process

5 Design and implement the marketing program 4. Determine the product positioning strategy 3. Select the segment(s) to be served

Market Positioning

Market Targeting

2 Identify and describe potential segments

1. Define and analyze the market

Market Segmentation

1. Define and analyze the market: determine market parameters (based on characteristics that may include or exclude customers from a group) within organizations mission and business definition, as well as its strategic intent. 2. Identify and describe potential segments: decide on the most useful dimensions or variables for selecting members of potential market segments; then aggregate customers into homogeneous groups, develop a profile of the characteristics of each group, etc.

3. Select the segment(s) to be served: select segments by evaluating against predetermined criteria, then rank according to the organizations ability to serve the market profitably while providing customer satisfaction. 4. Determine the product positioning strategy: determine the best fit between a product and a market according to features most desired by customers; consider competitors positioning strategies, organizational goals, and the market situation.

5. Design and implement the marketing program: develop a tactical plan (marketing mix) and determine objectives for the marketing program; all elements of the marketing mix must be consistent with the selected positioning strategy

Key retail segments

Indian retail sector broadly has been studied under following key segments: Fashion, fitness and personal care. Health and pharmaceuticals Entertainment retailing Food and grocery

Fashion, fitness and personal care

This section is divided into beauty parlor (both

men & women), health care centers, spa, gym, and yoga centers. World over, fashion is the largest sector in retailing. India has over 10,00,000 retailers , of whom 50% belongs to personal care. The retailers in this sector are
Apollo health &lifestyle limited
VLCC Lakme liver Health and glow

Health and pharmaceuticals

Today due to increase in per capita income in

India, people are becoming health conscious and have been spending more on health and pharmaceuticals product. Currently, India has 50,00,000 retailers, of whom 16 % are chemist. Following are the leader in this segment:
Apollo pharmacy Life spring Ranbaxy OTC Dr. Batra Dr. Lal path labs

Entertainment retailing
Rising middle class income due to economic

growth spurred consumer expenses on entertainment in India A few retail chain have emerged particularly in the retailing of amusement parks, music products and movies. The retail segment includes following outlets:
Theme parks Water parks

Cyber cafes
Music store amusement park Cinemas

Food and grocery

The food and grocery sectors is divided in to

restaurants, fast food, coffee shops, juice bars, etc. Wal-Mart, MacDonald's, big bazaar, etc are some of the key sectors globally. Food sales accounted for 77% of total, growing to 70.7 lakh crores from35 lakh crores in 2011. The number of food outlets has increased at the rate of 46 % form 2006 to 2011

Indian food retailer in India:

Subhiksha

Six to ten
Reliance fresh More Mc Donald's Haldiram Pizza huts Subways Bikaner Spencer, etc.

Consumer electronics
Consumer electronics is one of the most amazing

development in the field of retailing. NEXT is the leading retailer in this sector which has 385 outlets across 16 states retailer Other Indian consumer electronics:
Infiniti retail limited Reliance digital Shahs

Rhythm corner
Hyundai electronic India ltd Home solution retail ltd