Market Segmentation

BY:
MANSI AHUJA
ASSISTANT PROFESSOR
SGTBIM&IT
What is Market Segmentation?

The breaking down or building up of

potential buyers into groups called
Market Segments
Fundamental-Buyer Related
Questions
4-4

Who are they?

What do they want to buy?
How do they want to buy?
When do they want to buy?
Where do they want to buy?
Why do they want to buy?
Each Market Segment should
4-5 be…

Measurable

Differentiable Substantial

Accessible
 Defining Marketing Segmentation

According to Philip kotler , “ Market segmentation is sub-

dividing a market into distinct and homogeneous
subgroups of customers, where any group can
conceivably be selected as a target market to be met with
distinct marketing mix.”
CONCEPT
The concept of market segment is based on the fact that
the market of commodities are not homogeneous but
they are heterogeneous. Market represent a group of
customer having common characteristics but two
customer are never common in their nature, habits,
hobbies income and purchasing techniques.
No Market Segmentation
Segmented by Gender
Segmented by Age
 Age

Age –  One of the first variable of

demographic segmentation is
age. This is because consumer
needs and wants change with
their age. A youngster might
want a mobile phone but an
earning professional will want a
communicator with lots of extra
features such as email and file
editing support. Thus even
though the basic functionality of
the product is same, the wants
are different. This is the primary
reason for using age as a variable
in demographic segmentation.
 Life cycle stage

Life cycle stage –  Closely connected to age, the life

cycle stage of a consumer group defines what will be
the need of that particular customer. Example –  a
toddler will need infant food, a child will need dolls
and toys, a middle age customer will need insurance
and investment plans and finally an old age person
might need retirement plans. This demographic
segment cannot be said as an “Age” segment because
these customers are in specific phase of their “Life”.
 Gender

 Gender–  Men are from mars

and women are from Venus. So
naturally their preferences differ.
Where men might want the latest
in technology, women might
desire the latest in Fashion (point
is debatable nowadays) There are
several products which are
gender focused such as
deodorants, clothing, accessories,
footwear and even automobiles.
Women are gaining acceptance
even in under developed
economies and this has seen an
increasing focus on women along
with men as customers.
 Income Level

 When companies develop pricing

strategies for their brands and
products, they consider the income
levels of their target markets. Salary, or
income level, is an example of a
demographic segmentation businesses
use when they prepare to introduce a
product to the market or initiate a sale.
  Income –  BMW, Mercedes, Ferrari,
these cars have customers who are
much more quality and luxury
conscious then others. So what would
be the target group of such products?
The high income customer.
 Similarly, in FMCG, you will see many
brands and products which are targeted
towards the Sec B and Sec C customers.
Thus, income too can be used to define
a customer group from a population.
These customers are generally divided
as Sec, Sec B and Sec C customers
depending on their income and
purchasing power.
Occupation
Businesses who offer products and services to
individuals and businesses in specific professions or
industries may use their demographic data to
segment their markets by occupation. For example, if
you sell a marketing e-book targeted to C-level
marketing executives, you can segment them from
your overall list of customer occupations then focus
your advertising activities around reaching the chief
marketing officers who make up your target market.
Marital Status
A company might discover that married individuals
are more willing to pay higher prices than single
individuals, or that single customers purchase a
certain product more frequently than married
people. A jewelry store can target married customers
with promotions for anniversary bands, for example,
while targeting unmarried women with "right-hand"
rings, which are often worn as a signal of
independence.
Religion, Race, Nationality –  Ever seen the
advertising of a mass brand like Coca cola or Pepsi.
Although these two brands have their own global
advertising, but they also have specific advertising in
each country which they enter. The messages of
these advertisements are completely different and
are based on the local customs, religions as well as
nationality. With the tremendous increase in
international business, there is also an increase in
the usage of demographic segmentation on the basis
of religion, race and nationality.
 DEMOGRAPHIC SEGMENTATION

•As people age their needs and wants change, some

organizations develop specific products aimed at
particular age groups for example  nappies for babies,
toys for children, clothes for teenagers and so on.   

•Gender segmentation is commonly used within the

cosmetics, clothing and magazine industry.

•In the UK we have also seen the introduction of

Maxim, (www.maxim-magazine.co.uk)  a male lifestyle
magazine covering male fashion, films, cars, sports and
technology.
 GEOGRAPHIC SEGMENTATION
Divide the market into different group based on :
• Region – South India , North , Western Region, East
• City – metro cities, cities with population more than 1
million
• World
• Density
• Climate
• States

Ex.- Mcdonalds globally, sell burgers aimed at local markets,

for example, burgers are made from lamb in India rather
then beef because of religious issues. In Mexico more chilli
sauce is added and so on.
 GEOGRAPHIC SEGMENTATION

Examples:
 World Region or Country: North America, Western
Europe, European Union, Pacific Rim, Mexico, etc.
 Country Region: Pacific, Mountain, East Coast, etc.
 City or Metro Size: New York, San Francisco
 Population Density: rural, suburban, urban
 Climate: northern, southern, tropical, semi-tropical
PSYCHOGRAPHIC SEGMENTATION
 PSYCHOGRAPHIC SEGMENTATION

• Lifestyle groups
 
Early 30’s
• Mobile
• High valued house/flat
• Good Salary
• Young branded car.

Late 50's
• Retired early from profession.
• Time to spare
• Adventure Seekers
 PSYCHOGRAPHIC VARIABLES

 - personalities and lifestyles

 used when segmentation by age and gender is not sufficient

  involves family criteria
  focuses on attitudes and values

Have values changed in the past 10 years?

How has this influenced marketers?
What are some of the value changes?
BEHAVIOURAL SEGMENTATION
 PRODUCT BENEFITS

Segmenting the market by what does the product do for you.

Oily, dry, normal, dandruff,

Are product benefits.
 Behavioral Segmentation
Loyalty Status
Occasion
 Nonusers, ex-users,
 Special promotions & potential users, first-time
labels for holidays. users, regular users.
 Special products for
special occasions.
Usage Rate
Benefits Sought
 Light, medium, heavy.
 Different segments desire
different benefits from the
same products.
Loyalty Status Segmentation

Hard-core

Split loyals

Shifting loyals

Switchers
 BASIS FOR MARKET SEGMENTATION
30

Volume segmentation
Bulk buyers, small scale buyers, regular buyers, one time buyers
etc

Value based segmentation

Segment customers on the basis of their contribution to
profits.
Net present value of customer = Annual revenue
from customer x Number of years of association
– Cost of acquiring the customer
Targeting Segments - Overview
Market Preference Patterns
 Undifferentiated (Mass) Marketing

 Ignores segmentation opportunities

 Differentiated (Segmented) Marketing

 Targets several segments and

designs separate offers for
each.

 Coca-Cola (Coke, Sprite, Diet Coke,

etc.)
 Procter & Gamble (Tide, Cheer,
Gain, Dreft, etc.)
 Toyota (Camry, Corolla, Prius,
Scion, etc.)
 Niche Marketing

 Targets one or a couple small

segments
 Niches have very specialized interests
 Micromarketing

Tailoring products and marketing programs to suit

the tastes of specific individuals and/or locations.
 Flexible Marketing Offerings

“Naked”/Core solution Discretionary options

 Productand service  Some segment
elements that all members value
segment members  Options may carry
value additional charges
Patterns of Target Market Selection:
Product x Market Matrices
 Socially Responsible Targeting

Controversies and concerns

 Targeting the vulnerable and

disadvantaged
 Cereal, Cigarettes, Alcohol, Fast-food

 The “Catch-22” of Targeting

 Psychological Reactance
 Failure to target seen as prejudice
 Positioning

The place a product occupies in consumers’ minds

relative to competing products.
Positioning Example

eBay’s positioning: No
matter what “it” is,
you can find “it” on
eBay!
 Positioning Example

To (target segment and need) our

(brand) is a (concept) that (point-of-
difference).
“To busy mobile professionals who need to
always be in the loop, Blackberry is a wireless
connectivity solution that allows you to stay
connected to people and resources while on
the go more easily and reliably than the
competing technologies.”
 FAIR AND LOVELY
43

In the initial stages it positioned itself as fairness cream for the young
women who wants to attract a better looking husband.

"Get noticed by the man of your life.“

Later Emotional benefits for

achievers who actively seek solutions
and do not look at marriage as the ultimate source of personal
achievement.

Fairness leading to Beauty leading to Good husband to Fairness leading

to Self-confidence leading to Good career.

The basic approach is not to create something new or different but

manipulate what’s already in the mind of the consumer
 44
 Fair and Lovely would not be a commercial success if it
was not advert its not “ being known” would not change
the class structure the Indian society and high societal
value it place slighter skin tones
 Cream that fulfilled one’s Dreams and desires
 Has been maintaining its millions of young customers
trust and perceived value toward brand and ruling the
fairness cream market in India
 3 Types of Positioning
 Value Positioning
 Benefits driven Positioning
 Problem L Solution Positioning
 BALM: VICKS VAPOURRUB
45
 It is a tool to differentiate different
brands by the consumer in their own
way
 Initially targeted at children as a rub for child’s cold
 Balms VICKS Vapourub
Multi-purpose Colds
Adult Child
Day-time Night
Forehead(colds) Nose, Throat
Specific area of pain Chest and Back

 Two way action : inside and outside action

 Positioned along Mothers Love platform
46
 Vaporub pioneered the concept of "Touch therapy" linking it to
the rubbing of vaporub on the child's chest.

 The recent ad campaign also involves "father" in to the picture.

The ad shows a father taking care of the child using Vaporub
when the mother is away

 The smart positioning and campaigns has ensured the brand

retaining the top position in the market

 Marketed by P&G as “the only thing more powerful than a

mother’s touch”
 Product Positioning Dimensions

 Positioning by Product Attributes-One Plus

 Positioning by Product Benefits –Fair & Lovely

 Positioning by Use/application- Horlicks (health drink)

 Positioning by Price/quality-Apple

 Positioning by Product/class- BMW

 Positioning by Geographical area of origin- Darjeeling Tea, Banarsi Silk Sari

 Positioning by Competitors- Wheel against Nirma

 Positioning by ingredients- Patanjali

 By cultural symbol-Humara Bajaj

Positioning Maps: Luxury SUVs
Price vs. Orientation Dimensions
 Positioning Strategy

Competitive advantages
Points of Parity
Points of Difference => Differentiation

Positioning results from differentiation and

competitive advantages.

Positioning may change over time.

 Sources of Differentiation
6-50

– Product Design
– Quality
– Additional Services
– Image
– People (Staff)
– Price
– Other
Choosing the Right Competitive Advantages

 The best competitive advantages are…

 Important
 Distinctive
 Superior
 Communicable
 Pre-emptive
 Affordable (to company and consumer)
 Profitable

Moral: Avoid meaningless differentiation.

 Positioning Errors

Under-positioning:
 Not positioning strongly enough.

Over-positioning:
 Giving buyers too narrow a picture of the product.

Muddled Positioning:
 Leaving buyers with a confused image of the product.
Generic Product Positions
& Value Propositions
 Question du Jour

Which is more important:

Product or Positioning?