Consumer Behavior - Prof.

Rajesh Satpathy
Market Segmentation:

Market segmentation is the process of dividing the total
market into relatively distinct homogeneous sub-groups of
consumers with similar needs or characteristics that lead them
to respond in similar ways to a particular marketing
programme.

A market segment is a portion of a larger market in which the
individuals, groups, or organizations share one or more
characteristics that cause them to have relatively similar
product needs.
Requirements for Effective Segmentation
Five conditions must exist for segmentation to be meaningful:

1. A marketer must determine whether the market is
heterogeneous. If the consumers product needs are
homogeneous, then it is senseless to segment the market.

2. There must be some logical basis to identify and divide the
population into relatively distinct homogeneous groups,
having common needs or characteristics and which will
respond to a marketing programme. Differences in one
market segment should be small compared to differences
across various segments.
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Requirements for Effective Segmentation
3. The total market should be divided in such a manner that
comparison of estimated sales potential, costs, and profits of each
segment can be done.

4. One or more segments must have enough profit potential that
would justify developing and maintaining a marketing
programme.

5. It must be possible to reach the target segment effectively. For
instance, in some rural areas in India, there are no media that can
be used to reach the targeted groups.
How Segmentation Helps
Segmentation studies are used to uncover needs and wants of
specific groups of consumers for whom the marketer develops
especially suitable products and services to satisfy their needs.
Bases for Segmentation
A segmentation variable is a characteristic of individuals, groups
or organisations that marketers use to divide and create
segments of the total market.
Segmentation descriptors fall under four major categories and
include geographic variables, demographic variables,
psychographic variables, and behaviouristic variables.
Geographic variables focus on where the customers are located.
Demographic variables identify who the target customers are.
Psychographic variables refer to lifestyle and values.
Behaviouristic variables identify benefits customers seek, and product
usage rates.
Segmentation Variables

Region Nation

Urban, Rural State
City size Climate
Terrain Market Density
Geographic variables

Gender Family size

Age Occupation
Race Family life cycle
Religion Income
Social class Education
Demographic variables

Personality attributes

Motives

Lifestyle


Psychographic variables

Usage volume, Occasion

End use

Benefits sought

Brand loyalty

Price sensitivity
Behaviouristic variables
Geographic Segmentation
Geographic segmentation focuses on dividing markets into
different geographic units, such as regions, nations, states, urban,
rural, etc.
Demographic Segmentation
Demographic characteristics are commonly used to segment the
market. Factors such as age, sex, education, income, marital
status, household life cycle, family size, social class, etc., are
used singly, or in a combination, to segment a market.
Age factor: PEPSODENT
Psychographics Segmentation
When segmentation is based on personality or lifestyle
characteristics, it is called psychographic segmentation.
Behaviouristic Segmentation
Dividing the market on the basis of such variables as use
occasion, benefits sought, user status, usage rate, loyalty
status, buyer readiness stage and attitude is termed as
behaviouristic segmentation.
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Segmentation Variables for Organisational Markets
Main approaches to segment organisational markets can be
grouped under four heads:
Geographic Location
Customer Size
Product Use
Type of Organisation
Buying Behaviour and Situation
Demographic-Psychographics Segmentation
Demographic and psychographic profiles work best when
combined together because combined characteristics reveal
very important information about target markets.
Targeting Market Segments
Instead of aiming a single product and marketing programme
at the mass market, most companies identify relatively
homogeneous segments and accordingly develop suitable
products and marketing programmes matching the wants and
preferences of each segment.
Segment Attractiveness and Business Strength Factors
The attractiveness of a market segment can be evaluated
based on the companys current business strength and market
potential assessment.
Thank
You!