Market Segmentation MARKET SEGMENTATION Market segmentation is based

Market Segmentation

MARKET SEGMENTATION ØMarket segmentation is based on fact that markets are heterogeneous & not homogeneous. ØHomogeneous market refer to a market situation where the prospective buyers of any product are found to be uniform in their needs, habits, choices, nature, etc. ØHeterogeneous market refer to a market situation where the prospective buyers of any product are not found homogeneous in their needs, habits, choices, nature, etc.

Cont’d… ØMarket segmentation refers to dividing the heterogeneous markets into smaller customer groups having certain homogeneous characteristics. Such as income, age, sex, etc. ØThey may differ on the basis of income, gender, age, education, profession, religion, social class, family life, style, culture etc.

DEFINITION Acc to William J. Stanton Ø“ Market Segmentation consist of taking the total heterogeneous market for a product & dividing it into several sub markets or segments each of which tends to be homogeneous in all significant aspects. Acc to Philip Kotler ØMarket segmentation is the sub-dividing of a market into homogeneous subset of consumers , where any subset may conceivably be selected as a market target to be reached with a distinct marketing mix.

OBJECTIVES OF M. S ØTo make grouping of customers on the basis of their homogeneous characteristics. ØTo identify the needs, tastes, buying-motives of target customers. ØTo determine marketing strategies, targets & goals of the firm. ØTo make the activities of the firm consumer oriented. ØTo identify the areas where the customers may be created and market area can be expanded. The main aim of market segmentation is to prepare separate marketing programmes or strategies for each segment so that maximum satisfaction to consumers of different segments may be provided.

Reasons for the development of M. S ØCustomer-Orientation ØTechnological Advancement ØUse of cost reducing techniques ØIncrease in purchasing power ØIncrease in competition

Requirement/ Criteria For Effective Segmentation ØIdentifiable ØResponsive ØMeasureable ØSignificant ØAccessible ØSubstantial

APPROACHES OF M. S The marketeers adopt several app. To segment a market. App. To market segmentation Mass Marketing Product Differentiation Marketing Target Marketing

MASS MARKETING ØIn this total market is considered as one segment. Ø Under mass marketing only one product is produced & sold in the market for all customers with help of common marketing programme. ØIt assumes that there is no significant difference amongst Consumers in terms of their need & wants e. g. coca-cola

PRODUCT DIFFERENTIATION MARKETING ØIn this marketing, marketeers uses product differentiation app. ØOnce marketeers learnt that consumers would not accept one quality product, the marketeers try to provide different size, colours, shapes, features & qualities in his product as per the needs & wants of the customer of different segments. ØIt provide different product to different segment ØE. g. maruti udyog ltd.

TARGET MARKETING ØIt defined as a set of actual potential buyers of a product, service or idea. ØTarget marketing help the marketeer to correctly identify the market- the groups of consumers for whom the product is designed. ØIt has 3 steps : 1. Market segmentation 2. Market targeting 3. Product positioning

Segmentation Process Analyse the needs of Customers Analyse the characteristics of customers Disaggregate the customers into suitable segments Formulate different marketing mix for different segments Feedback of various segments Select the higher potential segments

BASIS OR CRITERIA OF M. S ØThe step towards developing a segmentation strategy is to locate the bases or basis for segmenting the market. ØThere are two simple division of product market. I. Consumer market II. Industrial market

On the basis of consumer market 1. Geographical basis 2. Demographic basis 3. Psychological basis 4. Behavioral basis 5. Marketing basis

1) GEOGRAPHICAL BASIS ØIt is the most simple, convenient, popular, and usual base for mkt segmentation. ØIt includes : ØArea ØRegion ØCity size ØDensity ØClimate ØUrbanization

2) DEMOGRAPHIC BASIS ØUnder this basis, a market tries to differentiate between groups of customers on the basis of demographic variables. ØIt includes: ØGender ØAge ØIncome ØEducation ØReligion ØNationality

Cont’d… ØOccupation ØMarital Status ØFamily size ØFamily life-cycle

3) PSYCHOGRAPHIC SEGMENTATION ØIt describe the human characteristics of consumers. It segment the market on the basis that how people act. ØThese include: ØPersonality Ø Life-style Ø Social class ØCulture ØValues ØBeliefs ØAttitude

4) BEHAVIORAL SEGMENTATION ØConsumer behavior may also form the basis of market segmentation. ØIt includes: ØOccasions ØBenefits Ø Quality Ø Service Ø Economy Ø Specially

Cont’d… ØUsers status Ø Non-user Ø Potential user Ø First time user Ø Regular user Ø Ex-user ØBuyer-Readiness Stage Ø Unaware Ø Aware Ø Informed

Cont’d… Interested Ø Desired Ø Intended to buy Ø ØUser Rate ØLoyalty status Hard core loyal Ø Soft core loyal Ø Switchers Ø

5) MARKETING BASIS ØMarketing conditions also form an important basis for market segmentation. ØThere are latest variables used by modern marketeers. ØThis include: ØDegree of competition ØChannels of distribution ØBuyer with price consciousness

ON THE BASIS OF INDUSTRIAL PRODUCT 1. 2. 3. 4. Type of business activities basis Geographical location basis Usual purchasing procedure basis Size of user

IMPORTANCE OF MS Ø Ø Ø Ø Ø Knowledge of marketing opportunities Knowledge of customer needs Adopting effective marketing programme Proper allocation of resources Adjustment in products Increasing sales volume Better assessment of the competition Effective advertising appeals Enhances marketing efficiency Benefits to consumers