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 The Foundation For Relationships :

Market Segmentation
= Is the process of aggregating customers with
similar wants, needs ,preferences or buying
behavior.
= Market Targeting involves evaluating the
attractiveness of the segments and selecting
ones the firm will serve.
= Market Positioning involves establishing the
competitive position for the service in the
mind of the customer and creating or
adapting the service mix to fit the position.
 

  
  





 
 
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 Market Segmentation and Market
Targeting
± Bases for Market segmentation
± Demographic
± Geographic
± Psychographic
± Behavioral
± Requirements for Effective Segmentation
± Measurability
± Accessibility
± Substantiality
± Actionability
± Criteria for evaluating Market Segments for Market
Targeting
± Segment size and growth
± Segment structural attractiveness
± Company objectives and resources
 STEP 1: Identify Bases for
Segmenting the Market

= By grouping customers who share common

characteristics that are in some way meaningful to
the design, delivery, promotion, or pricing of the
service.
= Bases for Market Segmentation
± Demographic
± Geographic
± Psychographic
± Behavioral
 Step 2.

= Develop Profiles of Resulting

Segments.
= Involve demographic characterizations
of psychographic or usage segments.
= Clearly understanding how and
whether the segments differ from each
other in terms of their profiles.
 Step 3
Develop Measures of Segment
Attractiveness
= Must be evaluated in terms of their
attractiveness.
= Profitable in the long run
= The size and purchasing power of the
segments must be measurable .
= Segments are worth the investment in
marketing and relationship costs.
= Not a disproportionate drain on the firm¶s
time /human energy.
= Segment to be accessible
 STEP 4.
Select the Target Segments

= Large enough and trending toward growth.

= Market size estimated, demand Forecast determine
whether segment provides strong potential
= Competitive Analysis-an evaluation of current and
potential competitors ,substitute product and
services, relative power of buyers and relative power
of suppliers
= Serving the segment is consistent with company
objectives and resources.
 Step 5:

= Ensure that the Target Segments are

Compatible.
= More critical for service companies.
= Eg: Non peak Season-Hotel chooses to
serve two segments incompatible with
each other.
= families attracted by the discounted
prices and college students on their
spring break
 Individualized Service : Segments of one
= Customizing the service around a standardized
core.
= Eg: Airline transportation or hotel accommodation
= Creating Customizable services
= Interactive computer Services, ATM ,SELF SERVICE
SALAD BARS, Disney World.
= Offering point ±of-delivery customization
= Professional services, health care, counseling, and
personal care services.
= Offering Standard modules that can be
combined in unique ways.
= Eg: Tour companies-vacation components-hotels,
airlines, destinations, length of stay MBA Core courses-
Service Marketing, service operations, human resources.
 









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Most Profitable What segment spends more with

Customers us over time, costs less to maintain,
Best
Customers spreads positive word of mouth?

Other
Customers
What segment costs us in
time, effort and money yet
does not provide the return
we want? What segment is
Least Profitable difficult to do business with?
Customers
 
 



Most Profitable
Platinum What segment spends more with
Customers us over time, costs less to maintain,
spreads positive word of mouth?
Gold

Iron

What segment costs us in

Lead time, effort and money yet
does not provide the return
Least Profitable we want? What segment is
difficult to do business with?
Customers
 
 

Identify markets with unfulfilled needs

Determining market segmentation

Selecting market to target

Positioning through marketing strategies

Target market identification isolates
consumers with similar lifestyles, needs, and
the like and increases knowledge of their
specific requirements.
Marketers competing in nearly all product and
service categories are constantly searching
for ways to segment their market ,in an
attempt to better satisfy customers¶ needs
Market Segmentation- ³dividing up a
market into distinct groups that
1) have common needs
2) 2) will respond similarly to a
marketing action

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Process of Segmenting a market*


 

 




  


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Two steps

1)Determining how many segments to enter

Three market coverage alternatives available
1.Undifferentiated marketing- ignoring segment
differences and offering just one product or service
to the entire market
Ford, Coca- cola
2.Differentiated marketing- involves marketing in a
number of segments, developing separate marketing
strategies for each.
3.Concentrated marketing ±selects one segment and
attempts to capture a large share- eg: Volkswagen
2) Determining which segments offer the
most potential
Determining the most attractive segment.
Examine the sales potential
Opportunities for growth
The competition and its own ability to
compete.
  




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