Retail Market

Segmentation

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Introduction
 A market is a group of potential customers with
similar needs who are willing to exchange something
of value with sellers offering goods and services that
can satisfy these needs.

 Mass marketing has the highest market potential.

 With increase in the competition, mass marketing

approach may not be feasible.

 Hence retailers are required to use segmentation

strategy.

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Market Segmentation

Market segmentation is the process of

dividing the heterogeneous total
market into small homogeneous
groups of customers who share
similar set of wants.

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Benefits of Market Segmentation

1. Development of marketing mix

2. Store location decision
3. Understand customer behaviour
4. Merchandising decisions
5. Promotional campaigns
6. Positioning

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Criteria for effective market
segmentation
An effective Market segmentation must
satisfy the following criteria –

 Homogeneous – customer within the segment

should have similar needs and want and follow
similar buying behaviour.

 Heterogeneous – the customers in different

segments should be as different as possible.

 Substantial – the selected segment should

have significant potential.

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Criteria for effective market
segmentation
 Substantial – the selected segment should
have significant potential. Segment should be
profitable one.

 Actionable – the segmenting dimensions

should be useful for identifying customers and
deciding on marketing mix variables.

 Accessible – the target market segment must

be reachable so as to serve them effectively.

 Measurable – the size, purchasing power and

characteristics of the market segment must be
measurable.
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Dimensions for segmentation
 Geographic segmentation

 Demographic segmentation

 Family

 Psychographic segmentation

 Lifestyle segmentation

 Behavioural segmentation

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Customer Profile
 The customer profile may contain following
information
 Customer demographics
 Role of family members in decision making
 Psychographics
 Purchase behaviour of the target population
 Purchase motivation
 Purchasing process
 Source of purchase
 Time utility
 Place utility

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Thank You, All!