MARKET SEGMENTATION

According to Stanton, as the process of taking the total hetrogeneous market for a product and dividing it into several submarkets or segments, each of wich tends to be homogeneous in full significant aspects. According to R.S.Darvar, Grouping of buyers or segmenting the market is described as market segmentation.

NEED FOR MARKET SEGMENTATION

Mass marketingTreating market as homogeneous group

Target marketingRecognizing diversity of customers

The marketer is in a better position to find out and compare the marketing potentialities of his products in each segment. It helps in determining the strength or weakness of the marketing strategies. It helps the producer to face the competition of his rivals effectively. It is on the basis of market segmentation that marketing budget is adjusted for particular region or locality.

The organization could allocate and appropriate its efforts in most useful manner. It helps in determining the kinds of promotional devices that are effective and also helps to evalute their results. It is often difficult to increase prices for the whole market. Nevertheless, it is possible to develop premium segments in which customers accept a higher price level. Such segments could be distinguished from the mass market by features like additional services, exclusive points of sale, product variations and the like. By segmenting markets, organizations can create their own niche products and thus attract additional customer groups Customers change their preferences and patterns of behavior over time. Organizations that serve different segments along a customers life cycle can guide their customers from stage to stage by always offering them a special solution for their particular needs. For example, many car manufacturers offer a product range that caters for the needs of all phases of a customer life cycle: first car for early twens, funcar for young professionals, family car for young families, etc. Skin care cosmetics brands often offer special series for babies, teens, normal skin, and elder skin.

It is possible to satisfy a variety of customer needs with a limited product range by using different forms, bundles, incentives and promotional activities. Eg:-The computer manufacturer Dell, for instance, does not organize its website by product groups (desktops, notebooks, servers, printers etc), but by customer groups (privates, small businesses, large businesses, public/state organizations). They offer the same products to all customer groups. Nevertheless, they suggest product bundles and supporting services that are individually tailored for the needs of each particular group. As an example, Dell offers to take on all IT-administration for companies. This service provides a huge potential for savings for corporate customers. However, it would be absolutely useless for private customers. Thus, segment-specific product bundles increase chances for cross selling.
Partner Advocate Supporter Clients Customers Prospects Suspects

CRITERIA FOR SEGMENTATION

MEASURABILITY ACCESSIBILITY MARKET RESPONSIVENESS EFFECTIVE DEMAND ADEQUATE POTENTIAL ACTIONABILITY

CRITERIA FOR SEGMENTATION

A single company cannot cover an entire market. hence, it has to select few market segments which will suit its products. the conditions essential for successful market segmentation are: MEASURABILITY: The segment Measurable: Demographic Socio economic market characteristics. non-measurable: . Psychological eg:perception

ACCESSIBILITY: The segment which is identified must be accessible. Distribution

Market

Communication MARKET RESPONSIVENESS: The identified market must respond favorably to the marketing efforts. market is segmented on the basis of normal reaction of members to price change.

EFFECTIVE DEMAND: The segment must have sufficient buying power.the buyer in this segment should have the willingness as well as ability to purchase.when the purchasing power is adequate,even a segment with less buyers will prove to be profitable. ADEQUATE POTENTIAL: Marketers should develop programnes for substantial segments. The ability to measure the intensity of need. Strength of purchasing power. ACTIONABILITY: marketer should determine their own ability of implementing the market programmes.

BASIS FOR MARKET SEGMENTATION

M B P E G D O P e o g L E r a p A S O h A I S R ic I E R K F O E T R S M E A G R M K E E N T T S A E T G N H I O M T E N

N P T R E O D D AU P C P T R O O R A I C E m e nU t sa e t i o p n a t t e r n

s e g

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o g r a p h ic s e g m B e e n n t ae t f i i ot np d e r , a g e a n d lif e - c y c l e I n c o m e e lig io n , R a c e a n d c u lt u r e o g r a p h ic c ia l c la s s f e s t y le r s o n a lit y

a t t e r n

s y c h S o L i P e

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PEOPLE ORIENTED APPROACH

GEOGRAPHIC SEGMENTATION

Geographic location is the usual and popular basis for market segmentation.This divides the market on the basis of urban and rural markets and is further divided into nations,states,regions,countries and cities.
BREAKFAST IN DIFFERENT COUNTRIES

DEMOGRAPHIC SEGMENTATION This is the segmentation that is done on the basis of demographical characteristics which is the study of the population.The demographical characteristics are sex,age,marital status,number and age of children,place of residence and mobility of a household.
BASED ON GENDER, AGE AND LIFE-CYCLE

PSYCHOGRAPHIC SEGMENTATION

This is a basis of segmentation where buyers are divided into different groups on the basis of social class lifestyle and personality characteristics.
UNDER SOCIAL CLASS

The upper Class The middle class The lower class A survey on the following aspects of a consumer will help the seller understand his target customer. Interests Activities Opinions Behavioral patterns Habits Lifestyle

MARKET SEGMENTATION ON THE BASIS OF PRODUCT ORIENTED APPROACH

INTRODUCTION
Product-benefit segmentation is based on the perceived value or advantage consumers receive from a good or service over alternatives. Markets can be partitioned in terms of the quality, performance, image, service, special features, or other benefits prospective consumers seek. A wide spectrum of businessesfrom camera to shampoo to athletic footwear to automobile marketersrely on this type of segmentation to match up with customers. Many companies even market similar products of different grades or different accompanying services to different groups on the basis of product-benefit preference.

 They are grouped along different lines than those used for consumer markets. Some are very different; some are similar. Industrial markets are often divided on the basis of organizational variables, such as type of business, company size, geographic location, or technological base. In other instances, they are segmented along operational lines such as products made or sold, related processes used, volume used, or end-user applications. In still other instances, differences in purchase practices provide the segmentation base. These differences include centralized versus decentralized purchasing; policy regarding number of vendors; buyer-seller relationships; and similarity of quality, service, or availability needs.

Factors used to segment industrial markets

WHY PRODUCT ORIENTED APPROACH IS THE BEST?

Although demographic, geographic, and organizational differences enable marketers to narrow their opportunities, they rarely provide enough specific information to make a decision on dividing the market. Psychographic data, operational lines, and, in particular, perceived consumer benefits and preferred business practices are better at pinpointing buyer groupingsbut they must be considered against the broader background. Thus, the key is to gather information on and consider all pertinent is product based segmentation.

THREE ASPECTS OF PRODUCT ORIENTED APPROACH

USE PATTERN

BENEFIT PATTERN

STORE/BRAND LOYALTY

STORE LOYALTY AS PRODUCT ORIENTED APPROACH

Brand loyalty, in marketing, consists of a consumer's commitment to repurchase or otherwise continue using the brand and can be demonstrated by repeated buying of a product or service or other positive behaviors such as word of mouth advocacy. Brand loyalty is more than simple repurchasing, however. Customers may repurchase a brand due to situational constraints (such as vendor lock-in), a lack of viable alternatives, or out of convenience. Such loyalty is referred to as "spurious loyalty". True brand loyalty exists when customers have a high relative attitude toward the brand which is then exhibited through repurchase behavior.

BASIS FOR SEGMENTING INDUSTRIAL MARKETS

*DEMOGRAPHIC FACTORS *OPERATING FACTORS *PURCHASING APPORACH FACTOR *SITUATIONAL FACTORS *PERSONAL CHARACTERISTICS

Demographic Segmentation Variables

Segmentation variables are basically factors which help the organization to determine the target group. In demographic segmentation, variables mainly consist of demographic factors such as age, ethnicity, occupation etc. Below we have given a list of demographic segmentation variables which are commonly used to divide the market into smaller segments.
Age Gender Family size Family life cycle Income Occupation Education Nationality Religion Social standards

Operating variables: Company technology, product/brand use status, customer capabilities. Purchasing approaches: Purchasing function, power structure, buyer-seller relationships, purchasing policies, purchasing criteria.

Situational factors: Urgency of order, product application, size of order.

Buyers personal characteristics: Within a chosen target industry Within the chosen customer size

SEGMENTATION PROCEDURE

3 STRATEGIC OPTIONS

1.Unidentified marketing 2.Differentiated marketing 3.Concentrated marketing

UNIDENTIFIED MARKETING When it is not reliable, organizations do not permit the division of market into segments, they conceive of the total market concept. No differentiation in case of fully standardised products and those with no substitutes. Here, mass advertising is done. Eg: Coca Cola.

DIFFERENTIATED MARKETING Here, a firm operates in all segments of the market and devises separate marketing programmes. Therefore, consumers demand is diversified. For eg, cigarettes. Even though this method is salesoriented, it is quite costly for the organization.

CONCENTRATED MARKETING Here, instead of spreading itself thin in many parts of the market, it concentrates its forces to gain a good market position in a few areas. This is normally adopted when new products are introduced in the market and test marketing is conducted. The principle involved is specialization in markets. Also, one segment is never off-set by the other.

MARKET SEGMENTATION OF VIDEOCON COMPANY A BRIEF INTRODUCTION

The Videocon group has an annual turnover of US$ 2 billion, making it one of the largest consumer electronic and home appliance companies in India. Since 1998, it has expanded its operations globally, especially in the Middle East. Today the group operates through six key sectors: Consumer electronics In India the group sells consumer products like Colour Televisions, Washing Machines, Air Conditioners, Refrigerators, Microwave ovens and many other home appliances, selling them through a Multi-Brand strategy with the largest sales and service network in India. Videocon Group brands include Akai, Electrolux, Hyundai, Kelvinator, Kenstar, Kenwood, Next, PlanetM, Sansui, Toshibha, Philips (TV Products) etc.
VIDEOCON PRODUCTS

Consumer Electronics Home Appliances Televisions Refrigerators VCD players Washing Machines Mobile Phones Microwave Ovens Audio Systems Air Conditioners LCDs , LEDs

Geographic Segmentation In the colder regions sales of the refrigerators is much less than the colder regions so geographic conditions play a very vital role in product segmentation. Similarly other products are influenced by the climatic conditions, different locations and regions. Demographic segmentation This part of segmentation is done on the basis of age .gender, income, family size income, etc.. For egthe Sale of LCDs and LEDs depend upon income of the customer and also sale of Air Conditioners also depend upon the purchasing power of the customer. Behavioral Segmentation It totally depends upon the usage rate of the customer and the loyalty of the customer towards the company. For example washing machines shows the best example for the consumer loyalty towards the videocon. Psychographic Segmentation In this segment luxurious goods, personality and lifestyle of the customer effects totally Goods like air conditioners and plasma panels, home theaters are segmented