Market Segmentation

III B.com- A Batch

S.V.S College, Bantwal

Introduction:

Market for most of the goods are heterogeneous, & not homogeneous, because buyers differ from one another in their wants, purchasing power, geographical location, buying habits & buying practices.

So, there arises a need for sub-dividing the total market for a product into a number of sub-markets or segments to capture a wide market.

The process of dividing a market into smaller homogeneous markets with similar characteristics is called market segmentation.

Definition & Meaning

In the words of William J. Stanton,” Market segmentation consists 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”.

In the words of S.R. Davar, “ Grouping of buyers or segmenting

From these definitions, it is quite clear that market segmentation means dividing the total heterogeneous market into several segments or sub-markets, each of which has one or more homogeneous characteristics. In short, market segmentation means grouping of buyers who have common characteristics as

1. Understanding the needs of the consumers.

2. Better Position to spot marketing opportunities.

3. Allocation of marketing budget.

4. Meeting the competition effectively .

5. Effective marketing programs.

6. Choosing of advertising media.

7. Increasing sales volume.

8. Benefits the customers.

9. Better utilisation of marketing resources.

10. Discovering Marketing opportunities.

11. Specialised marketing.

12. Provision of information.

13. Evaluation of marketing activities.

14. Marketing efficiency.

15 Formulation of marketing mix.

16. Making of suitable adjustments.

Disadvantages

If all the sub-markets are not served well, the total volume of sales will be less.

It is very difficult to sell highly specialised products outside their own market segments under market segmentation.

Under market segmentation, a firm has to offer a large variety of goods.

Logistics become more complex with a greater variety of distribution channels & higher inventory requirements.

Market segmentation is a costly process.

It is true that market segmentation

suffers from certain drawbacks, but in

spite of these drawbacks, today the

trend in marketing is towards market

segmentation, which is becoming

popular day-by-day & is considered

necessary for successful marketing

strategy.

Bases for market segmentation

There are several bases for market segmentation. The bases for market segmentation may differ from product to product & from firm to firm. The main bases for market segmentation are:

A) Segmenting the market for Consumer products,

B) Segmenting the market for Industrial products

A) Segmenting the market for Consumer products.

The bases for segmenting the markets for consumers products can be divided as follows:

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Behavioural Segmentation

I. Geographical Segmentation:

On the basis of geographical factors market can be segmented as follows:

Region: North, East, West, South,

Central, Coastal, Hilly.

City Size: Metropolitan cities,

Small cities, Towns.

Density of Area: Urban,

Semi-urban, Rural

Climate: Hot, Humid, Cold, Rainy

II. Demographic Segmentation:

On the basis of demographic factors market can be segmented as follows:

Sex or Gender,

Age,

Income, Educational attainment& Standard, Size of the family, Caste & Religion, Business or profession

III. Psychographic or personality Segmentation:

On the basis of psychographic factors market can be segmented as follows:

Life-style: Conservative, Liberal, Health & Fitness Conscious, Adventuresome

Social-Class: Lower class, Lower-middle class, Middle class, Rich class.

Cultural: Royal, South-Indian, Indian culture.

Personality: Extroverts, Introverts, Aggressive, Complainants.

IV. Behavioural Segmentation:

On the basis of behavioural factors market can be segmented as follows:

a) Behaviour Segmentation:

Needs-Motivation: Shelter, Security, Affection, Self-worth.

Perception: Low risk, Moderate risk, High risk.

Learning Involvement: Low involvement, High involvement.

Attitudes: Positive, Neutral, Negative.

Occasions: Regular, Special.

Benefits: Convenience, Prestige, Economy, Value, Quality, Service.

Readiness Stage: Unaware, Aware, Informed, Interested, Desirous, Intending to buy, Enthusiastic.

b) Use-Situational Segmentation:

Time: Leisure, Work, Rush, Morning, Night.

Objective: Personal use, Gift, Fun, Achievement.

Location: Home, Office, Friend’s Home, In-store.

Person: Self, Friends, Boss, Relatives.

Occasions: Regular, Special.

Place: New, Old.

c) Use-Related Segmentation:

Usage Rate: Heavy user, Medium user, Light user.

Loyalty Status: None, Medium, Strong, Absolute.

User Status: Non-user, Co-user, Potential user, First-time user, Regular user.

A) SEGMENTING THE MARKET FOR INDUSTRIAL PRODUCTS.

The bases for segmenting the markets for industrial products can be divided as

follows:

• Kinds of business: Example – Insurance co. Business can be divided

into fire insurance, life insurance, accident insurance, etc.

• Size of buyer: Large buyers & Small buyers

• Geographical location of buyers

• Purchasing procedure of buyer.

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