Lecture 6

Market segmentation

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.

Market Segmentation is a method of dividing a
market (Large) into smaller groupings of consumers
or organisations in which each segment has a
common characteristic such as needs or behaviour.
Purpose of segmentation
Identifying group of customers with similar wants.
Analyze their buying behavior and characteristics.
Providing products matching with needs.
Satisfying needs while meeting organizations
objectives.

MARKET-SEGMENTATION PROCEDURE
(1) Survey Stage : The researcher conducts
exploratory interviews and focus groups to gain
insight into consumer motivations, attitudes, and
behavior. Then the researcher collects data on
attributes and their importance ratings; brand
awareness and brand ratings; product usage
patterns; and geographics, demographics and
psychographics of the respondents.

(2) Analysis Stage : The researcher applies factor
analysis to the data to remove highly correlated
variables, then applies cluster analysis to create a
specified number of maximally different segments.
(3) Profiling Stage : Each cluster is profiled in
terms of its distinguishing attitudes, behavior,
demographics, psychographics, and media patterns.
Each segment is given a name based on its dominant
characteristic.

Basis for Segmenting
Consumer Markets


1) Geographic Segmentation ( Where they live
? )
2) Demographic Segmentation ( Who they are
? )

3) Psychographic Segmentation(How they
behave )
4) Behavioural Segmentation(Why they buy ? )


GEOGRAPHIC SEGMENTATION

Divide the market into different group based on :
Region South India , North , Western Region, East
City metro cities, cities with population more than 1 million
World
Density
Climate
States

Ex.- Mcdonalds globally, sell burgers aimed at local markets, for
example, burgers are made from lamb in India rather then beef
because of religious issues. In Mexico more chilli sauce is added and
so on.

DEMOGRAPHIC SEGMENTATION

AGE:As people age their needs and wants change, some
organizations develop specific products aimed at
particular age groups for example nappies for
babies, toys for children, clothes for teenagers
and so on.
Gender: Segmentation is commonly used within the
cosmetics, clothing and magazine industry.
DEMOGRAPHIC SEGMENTATION
In the UK we have also seen the introduction of Maxim,
(www.maxim-magazine.co.uk) a male lifestyle magazine
covering male fashion, films, cars, sports and technology.
\

INCOME: is another strategy used by many
organisations. Stores like Harrods, Harvey Nicohals are
predominantly aimed at the affluent market. Daewoo aim
their vehicles at price sensitive buyers who require a
bundle of benefits for the price. In today's globally
competitive environment brands are specifically
developed and positioned within particular income
segments in order to maximize turnover.
LIFECYCLE: Products and services are also aimed at
different lifecycle segments. Holidays are developed
for families, the 18-30's singles, and for those in their
50's.

PSYCHOGRAPHIC SEGMENTATION

Group customers according to their life-style and
buying psychology.
The desire for status, enhanced appearance and
more money are examples of psychographic
variables.
E.g. femina magazines for women who are having a
broad & progressive thinking about this modern
world

BEHAVIOURAL SEGMENTATION

OCCASIONS : - Archie's and Hallmark cards,
Monaco at tea time.
BENEFITS :- Shampoo for hair conditioning,
cleaning , hair fall defense dandruff control
USER STATUS :- light medium heavy user
LOYALTY STATUS :- hardcore loyal , split loyal-
loyal to 2-3 brand, shifting loyal, switcher
ADVANTAGES OF MARKET
SEGMENTATION
It improves a companys understanding of why
consumers do or do not buy certain products.
Therefore prepares a company to meet changing
market demands.
Information gained from segmentation allows the
organization to plan a systematic and effective
marketing programme to satisfy the consumer
needs.
Better assessment of the strengths and weaknesses of
the competition.
Better allocation of marketing resources
HOW TO RATE SEGMENTS ?
(CRITERIA FOR SELECTING SEGMENTS)
MEASURABILITY

SIZE

ACCESSABILITY

RESPONSIVENESS