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Market Segmentation

Unit 2

Introduction
When

whole market is divided into different

customers

groups

according

to

their

homogeneous needs and wants is known as


Market segmentation.
The main objective of market segmentation is

better

understanding

of

the

customer

and

producing the product and service accordingly


and

achieving

successfully.

the

marketing

objective

Definitions
The process of taking the total heterogeneous market for

a product and dividing it into several segments, each of


which tends to be homogeneous in all significant aspects.
W. J. Stanton
Market

segmentation is subdividing a market into

distinct and homogeneous subgroups of customers,


where any group can be selected as a target market to be
met with distinct marketing mix.
Philip Kotler

REQUIREMENTS FOR EFFECTIVE


SEGMENTATION
1. Measurable: - it should be possible to determine the values of
the variable used for the segmentation.
2. Relevant: - it should justify the expected profits and the
growth potential.
3. Accessible: - the target customers must be reachable and
servable for the organization.
4. Distinguishable: - the target audiences must be diverse and
able to show different reactions to different marketing mix.
5. Feasible: - the firm must have an ability to draw an effective
marketing program for its customers

Advantages of Market Segmentation


Helps in better understanding of the customers needs and wants.
Better targeting and position of the product.
Encourages two-way communication among the potential buyer

and the organization.


Maintaining effective relationship with the customers.
Retaining the existing customers and attracting new ones.
Improving service delivery standards.
Better understanding of the consumer.
Better marketing mix
Better Distribution channel

A true Market Segment meets all of the


following criteria:
It is distinct from other segments (heterogeneity

1.

across segments),
2. It is homogenous within the segments (exhibits
common attributes),
3.

It

requires

customers needs.

thorough

understanding

of

the

Market Segmentation Basis


Geographic segmentation
Demographic segmentation
Psychographic
Behavioral segmentation

Geographic segmentation

Country regions : south, east, west and north


Size of the city: under 5000, 5000- 50000,

more
Density: urban, sub urban, rural
Climate: hilly areas, plain areas

Demographic segmentation
Age
Family Size
Life Cycle Stage
Gender
Income
Occupation
Education
Religion
nationality

Behavioral segmentation
Occasion: regular occasion, special occasion
Benefits: quality, economy, service, speed, status
User status: non user, ex user, potential user,

first time user and regular user


Usage rate: light, medium, heavy
Buyers

readiness

stage:

unaware,

aware,

informed, interested, desirous, intending to buy

Psychographic Segmentation
Life Style
Personality

Single Segment
Concentration
M1

Volkswagensmall cars
Porsche----sports car

P1

Can be Risky at
Times

P2
P3

M2

M3

Selective Specialization

M1
No of Segments
Type Of Cars

Risk is divided

P1
P2
P3

M2

M3

Product Specialization

M1

Several Segments
Microscope-colleges, labs
P1
P2
P3

M2

M3

Market Specialization

Particular Customer Group


Different Products to
Universities
Books, labs, Computers,
sports goods.

M1
P1
P2
P3

M2

M3

Full Market Coverage

General Motors-Cars for


every purse,purpose
and
personality

M1
P1
P2
P3

M2

M3