Market Segmentation PDF

IMTIAZ ALI
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M.USAMA
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M. ABDULLAH
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Represent SYED FURQAN

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By AZMAT MUMTAZ
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ABDUL REHMAN
INTRODUCTION
Market segmentation was first introduced by Smith (1956), who defined it as “Market
segmentation consists of viewing a heterogeneous market as a number of smaller
homogeneous markets, in response to differing preferences, attributable to the desires of
consumers for more precise satisfaction of their varying wants”.
Marketing segmentation is a process of grouping the customers into number of different
divisions on the bases of similar characteristics. It is a customer oriented philosophy. A
market segment consists of a identifiable group with in a market. Every product is not
required by everybody. Therefore marketer must group the customers on the basis of
similar characteristics or uniform response to a concentrate either on one or more
groups depending upon his capability instead of launching his product in the open
market.
Market segmentation
● Market segmentation is the process of dividing
a broad consumer or business market, normally
consisting of existing and potential customers,
into sub-groups of consumers based on some
type of shared characteristics.
Market Segmentation Definitions
● According to Philip Kotler: “Market Segmentation is the
sub-dividing of a market into homogeneous subsets of
customers, where any subset may conceivably be selected on a
market target to be reached with a distinct marketing mix.”
● William J. Stanton: “Market Segmentation consists of taking
the total heterogeneous market for a product and dividing
into several sub-markets or segments, each of which tends to
be homogeneous in all significant aspects.”
BENEFITS OF MARKET SEGMENTATION
● PROPER CHOICE OF TARGET MARKET
● HELPS DISTINGUISH ONE CUSTOMER FROM THE OTHER
● EFFECTIVE TAPPING OF MARKET
● HELPS CRYSTALISE THE NEED OF TARGET AUDIENCE
● BECOMES PRODUCTIVE AND PROFITABLE
● BRINGS BENEFITS TO CUSTOMER AS WELL
● WHEN SEGMENTATION ATTAINS HIGH SOPHISTICATION,
CUSTOMERS AND COMPANIES STAY TOGETHER
Diversity In Marketing Segmentation
● Consumer diversity is growing quickly and organizations have prolonged how to
make a distinction between their products and services and that of the competition.
This is where marketing segmentation plays a key role. The United States will
undergo a major transformation in its cultural and ethnic composition over the next
20 years.
● Economic factors will be the cause of these changes. Today’s shrinking labor
market is mostly comprised of low to middle class citizens. This creates a
slower-responding consumer market than if it was made up of upper class workers.
However, the organization that is willing to begin segmenting and targeting the
right products and services to match all of today’s diverse cultures will create a
competitive edge over their competitors.
Types Of Market Segmentation
Geographical Segmentation
● The geographic segmentation signifies a market divided by location. Geographic
segmentation is based on the belief that consumers who live in the same region
share some related wants and needs and those wants and needs could be very
different from the consumers who are living in other regions of the world.
● For example, some products and services have high demand in one region but not
demanded in other regions. Despite its meaning, geographic segmentation may
differ from area to area. Geographic biases may depend on the different brands
available. In a number of areas, one brand may be very well liked and accepted but
it may not be known by a majority of the consumers.
Demographical Segmentation
● Demographic segmentation consists of demographic factors such as age, ethnicity,
nationality, occupation, etc.
● Therefore, with these variables in mind, an organization can choose which
consumer they will accommodate.
● For example, an organization dealing with the younger generation will have to
target the consumers between the ages of 18 and 45 years, while an organization
dealing the older generation will have to concentrate on consumers between 46
and up.
● Demographic segmentation aids an organization in understanding its consumers
and satisfying their wants and needs. In today‟s global market, competition is
driven by a strong competition causing demographic marketing analysis to be a
great advantage to any organization.
Behavior Segmentation
● A variety of strategies for segmentation is available. However,
previous studies show recommendations that behavior-based strategies
work well for most organizations.
● Segmentation based on consumer behavior variables normally included
a sub-segment of consumer segmentation.
● Organizations often collect this data to see the segment that best fits
their consumer behavior. Behavioral segmentation can be the answer
for a great deal of organizations on where to lavish their next marketing
dollar.
Psychographic Segmentation
● Psychographic segmentation was developed by marketing researchers to
correlate personality with brands. Psychographics is classified as “the
study of personality, values, attitudes, interests, and lifestyles.”
● Organizations need to know their consumers‟ habits to effectively connect
with them and for the consumer to identify the organization‟s products or
services.
● Psychographic segmentation acts on the psychology of the prospective
consumer and helps the merchant decide how he or she must manage their
consumer that belongs to any specific segment.
VALS Model
VALS Model
Innovators
Innovators are successful, sophisticated, take-charge
people with high self-esteem. Because they have such
abundant resources, they exhibit all three primary
motivations in varying degrees. They are change leaders
and are the most receptive to new ideas and technologies.
Their purchases reflect cultivated tastes for upscale, niche
products and services.
VALS Model
Thinkers (Motivated by ideals; high resources)
Thinkers are mature, satisfied, comfortable, and reflective. They tend to be
well educated and actively seek out information in the decision-making
process. They favor durability, functionality, and value in products.
Believers (Motivated by ideals; low resources) Believers are

strongly traditional and respect rules and authority. Because they are
fundamentally conservative, they are slow to change and technology
averse. They choose familiar products and established brands.
VALS Model
Achievers (Motivated by achievement; high resources)
Achievers have goal-oriented lifestyles that center on family and career. They
avoid situations that encourage a high degree of stimulation or change. They
prefer premium products that demonstrate success to their peers.
Strivers (Motivated by achievement; low resources)

Strivers are trendy and fun loving. They have little discretionary income
and tend to have narrow interests. They favor stylish products that
emulate the purchases of people with greater material wealth.
VALS Model
Experiencers(Motivated by self-expression;high resources)
Experiencers appreciate the unconventional. They are active and
impulsive,seeking stimulation from the new, offbeat, and risky. They
spend a comparatively high proportion of their income on fashion,
socializing, and entertainment.
Makers (Motivated by self-expression; low resources)
Makers value practicality and self-sufficiency. They choose hands-on
constructive activities and spend leisure time with family and close
friends. Because they prefer value to luxury, they buy basic products.
VALS Model
Survivors
Survivors lead narrowly focused lives. Because they have
the fewest resources, they do not exhibit a primary
motivation and often feel powerless. They are primarily
concerned about safety and security, so they tend to be
brand loyal and buy discounted merchandise.
Decision Role of Market Segmentation
● Market segmentation is the act of identifying and profiling
distinct groups of buyers who might prefer or require varying
products and marketing mixes. It is a process of dividing the total
market for a good or service into several groups, such that the
members of each group are similar with respect to the factors
that influence demand. It plays a vital role in marketing
decision-making. Market segmentation plays the following roles
in marketing decision making. They are:
Identification of market opportunities
Without segmentation organization cannot find the needs of customer
easily. Organization can identify the market opportunities like most
profitable sectors, through well segment
Understanding of the customer
A segmentation perspective leads to more precise definition of the market
in terms of consumer needs. Segmentation thus improves management’s
understanding of the customer and more importantly, why he/she buys
To direct marketing programs
Management, once it understands consumer needs, is in a much better
position to direct marketing programs that will satisfy these needs
and hence parallel the demands of the market.
Strengthen management capabilities
A continuous program of market segmentation strengthens
management capabilities in meeting changing market demands.
To assess competitive strengths and weakness
Management is better able to assess competitive strengths and weakness
of greatest importance; it can identify those segments where competition
is thoroughly entered. This will save company resources by forgoing a
pitched battle of locked-in competition, where there is little real hope of
market gain.
Systematic planning
It is possible to assess a firm’s strengths and weakness through
identifying market segments. Systematic planning for future markets is
thus encourages.
Efficient Allocation of Market Segmentation
Segmentation leads to a more efficient allocation of marketing resources. For
example, product and advertising appeals can be more easily coordinated. Media
plans can be developed to minimize waste through excess exposure. This can result
in a sharper brand image, and target consumers will recognize and distinguish
products and promotional appeals directed at them.
Market objectives
Segmentation leads to a more precise setting of market objectives. Targets
are defined operationally, and performance can later be evaluated against
these standards.
Criteria for Effective Market Segmentation
Effective segmentation should be:
● Measurable
● Accessible
● Substantial
● Differentiable
● Actionable.
When a company has segmented their market accordingly, there is a higher chance
that it will become more profitable and successful in the long run.

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IMTIAZ ALI

Represent SYED FURQAN

Believers (Motivated by ideals; low resources) Believers are

Strivers (Motivated by achievement; low resources)

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