MARKET SEGMENTATION

MARKET SEGMENTATION SUDHIR K. SINHA KV SEONI MALWA

Learning Objectives 1. Segmenting the Market 2. Benefit/Purpose and Limitation of market segmentation. 3. Market Segmentation Procedure. 4. Basis for market segmentation. SUDHIR K. SINHA KV SEONI MALWA

Segmenting means dividing markets into homogenous groups based on similar characteristics or traits. • To divide a market into segments, firms use segmentation variables that describe the characteristics of each part of the market. SUDHIR K. SINHA KV SEONI MALWA

Market People or organizations with needs or wants and the ability and willingness to buy Market Segment A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Market Segmentation The process of dividing a market into meaningful, relatively similar, identifiable segments or groups. Market Segmentation SUDHIR K. SINHA KV SEONI MALWA

Market Market Segment Market Segmentation Market Segmentation SUDHIR K. SINHA KV SEONI MALWA

The Importance of Market Segmentation • Markets have a variety of product needs and preferences • Marketers can better define customer needs • Decision makers can define objectives and allocate resources more accurately SUDHIR K. SINHA KV SEONI MALWA

Heterogeneous Actionable Substantial Measurable Accessible Criteria for successful segmentation: SUDHIR K. SINHA KV SEONI MALWA

Heterogeneous • Clear differences in consumer preferences for a product must exist. SUDHIR K. SINHA KV SEONI MALWA

Measurable • Difference preferences for a product must be identifiable and capable of being related to measurable variables. SUDHIR K. SINHA KV SEONI MALWA

Substantial • The proposed market segment must have enough size and purchasing power to be profitable. SUDHIR K. SINHA KV SEONI MALWA

Companies must be able to respond to difference preferences with an appropriate and profitable marketing mix. Actionable SUDHIR K. SINHA KV SEONI MALWA

Accessible • The proposed market segment must be readily accessible and reachable with targeted programs. SUDHIR K. SINHA KV SEONI MALWA

Market Segmentation Procedure Survey Stage Analysis Stage Profiling Stage SUDHIR K. SINHA KV SEONI MALWA

Survey Stage • Interview with the consumers to take the response relating to motivation, attitudes and behaviour. Analysis Stage Profiling Stage SUDHIR K. SINHA KV SEONI MALWA

Survey Stage • Turning the responses into meaningful forms. Analysis Stage Profiling Stage SUDHIR K. SINHA KV SEONI MALWA

Survey Stage • Each homogeneous cluster is now profiled in terms of its distinguished attitudes, psychographic, geographic, demographic habits. Analysis Stage Profiling Stage SUDHIR K. SINHA KV SEONI MALWA

Segmentation Variables Demographic Segmentation Benefits-Sought Segmentation Geographic Segmentation Situation Segmentation Psychographic Segmentation Behavior/Usage Segmentation SUDHIR K. SINHA KV SEONI MALWA

Age Demographic Segmentation Income Level Family Ethnicity Education SUDHIR K. SINHA KV SEONI MALWA

Demographic Segmentation SUDHIR K. SINHA KV SEONI MALWA

Segmentation Variables Demographic Segmentation Benefits-Sought Segmentation Geographic Segmentation Situation Segmentation Psychographic Segmentation Behavior/Usage Segmentation SUDHIR K. SINHA KV SEONI MALWA

Geographic Segmentation • When an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions SUDHIR K. SINHA KV SEONI MALWA

Geographic Segmentation Tailor-Made Mobile Keypads SUDHIR K. SINHA KV SEONI MALWA

Segmenting Consumer Markets Demographic Segmentation Benefits-Sought Segmentation Geographic Segmentation Situation Segmentation Psychographic Segmentation Behavior/Usage Segmentation SUDHIR K. SINHA KV SEONI MALWA

Psychographic Segmentation • Grouping customers together based on social class, lifestyles and psychological characteristics (attitudes, interests and opinions) SUDHIR K. SINHA KV SEONI MALWA

Psychographic Targeting • Psychographics represents a combination of consumers’ activities, interests and opinions (AIO items) • Useful but more difficult to identify and measure compared to demographic variables SUDHIR K. SINHA KV SEONI MALWA

Psychographic Targeting SUDHIR K. SINHA KV SEONI MALWA

Benefits-Sought Segmentation • Markets can be segmented based on the benefits that consumers desire from using a specific product SUDHIR K. SINHA KV SEONI MALWA

Situation Segmentation • Purchase situation or occasion • Physical surroundings • Social surroundings • Temporal perspective • How much time to make a purchase? • Task definition • Prepurchase attitude SUDHIR K. SINHA KV SEONI MALWA

Behavior/Usage Segmentation • Markets can be segmented by how often or how heavily consumers use a specific product • 80/20 Principle - 80% of revenue generated by 20% of customers Light Users 80% Heavy Users 20% SUDHIR K. SINHA KV SEONI MALWA

The 80/20 Principle A principle holding that 20 percent of all customers generate 80 percent of the demand. 80/20 SUDHIR K. SINHA KV SEONI MALWA

Learning Objective List the steps involved in segmenting markets. SUDHIR K. SINHA KV SEONI MALWA

Select a market for study Choosebasesfor segmen-tation Selectdescrip-tors Profileandanalyzesegments Selecttargetmarkets Design,imple-ment,maintainmktingmix Steps in Segmenting a Market SUDHIR K. SINHA KV SEONI MALWA

Market Segmentation of Toothpaste Market in India • Benefit sought: Decay prevention • Demographic characteristics: Big Families • Behavioral characteristics : Heavy users • Psychographic characteristics: Traditional Health conscious SUDHIR K. SINHA KV SEONI MALWA

Market Segmentation of Toothpaste Market in India • Benefit sought: Good Flavour • Demographic characteristics: Children • Behavioral characteristics : Mint lovers • Psychographic characteristics: Self involvement SUDHIR K. SINHA KV SEONI MALWA

Market Segmentation of Toothpaste Market in India • Benefit sought: Mouth wash • Demographic characteristics: Youngster; teenagers • Behavioral characteristics : Want intimacy; Togetherness • Psychographic characteristics: Self Involvement SUDHIR K. SINHA KV SEONI MALWA

Market Segmentation of Toothpaste Market in India • Benefit sought: Low price • Demographic characteristics: Male • Behavioral characteristics : Heavy users • Psychographic characteristics: price conscious; independent SUDHIR K. SINHA KV SEONI MALWA

Market Segmentation of Toothpaste Market in India • Benefit sought: Medical • Demographic characteristics: Teenagers ; Youngster • Behavioral characteristics : Smokers • Psychographic characteristics: Outgoing; Fun Loving; Active SUDHIR K. SINHA KV SEONI MALWA

MARKET SEGMENTATION