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PRESENTATIONON

MARKET SEGMENTATION

Submitted to: Submitted by:

Miss. Surbhi mam Ritu

MBE 1st SEM.

Roll. No- 8122


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What is MARKET?A market is a place which allows the purchaser and the seller to invent and gather

informations and lets them carry outexchange of various products and services. In

other words the Meaning of Market refers to a place where the trading of goods takes

place. The place can be a market place or a street market. A market is thus by

definition comprises people or business with potential interest, purchasing power and

willingness to spend the money to buy a product or service that satisfies need. The

following diagram illustrates this concept.

Example: Tatas have started producing a Mercedes Benz car here in India. Many

individuals have a need for car but they may not need a luxury car like Mercedes.

They are happy with a santro or Chevy spark or Maruti. Some might be interested in

a luxury car, but may not be interested in Mercedes as it may attract the attention of

tax authorities. They may prefer luxury cars like Honda city, Ford Fiesta, Octavia andso on. Some may be interested in Mercedes but they are not able to afford a price of

Rs.32lakh. Thus, the market for Mercedes is a very small portion of luxury car

markets, which is a small portion of the total car markets

MARKET SEGMENTATION-

Market segmentation can be defined as the process of dividing a market into differenthomogeneous groups of consumers.
http://www.economywatch.com/market/overview/meaning-of-market.htmlhttp://www.economywatch.com/market/overview/meaning-of-market.htmlhttp://www.economywatch.com/market/overview/meaning-of-market.html


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According to Philip kotlermarket segmentation is the subdividing of market

into homogenous sub set of customers, where any subset may conceivably be selected

as market target to be reached with distinct marketing mix.

Benefits of Market segmentation-

Market segmentation offers the following potential benefits to a business:

Better matching of customer needs: Customer needs differ. Creating separate productsfor each segment makes sense.

Enhanced profits for business: Customers have different disposable incomes and varyin how sensitive they are to price. By segmenting markets, businesses can raiseaverage prices and subsequently enhance profits

Better opportunities for growth: Market segmentation can build sales. For example,customers can be encouraged to trade-up after being sold an introductory, lower-priced product

Retain more customers: By marketing products that appeal to customers at differentstages of their life, a business can retain customers who might otherwise switch tocompeting products and brands.

Target marketing communications: Businesses need to deliver their marketing messageto a relevant customer audience. By segmenting markets, the target customer can bereached more often and at lower cost.

Bases for segmentation-

Geographical bases. Demographic bases. Psychographic bases. Behaviour bases


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Geographical segmentation-

This is the most common form of market segmentation, wherein companies segmentthe market by attacking a restrictedGeographic area. Potential customers are in a local, state,Regional or national market place segment. If a firm selling a product such as farmequipment, geographic location will remain a major factor in segmenting your targetmarkets since their customers are located in particular rural areas.

Example: Geographic decides the product consumption pattern. Southern are found of

coffee and north Indians like Tea. People down south use talc excessively, and apply it

even on face, perhaps aspiring to fairer like their counter part in the north. When we

sale our product to international market. Products are made according to their need.

Rasna international gives instant syrup when dissolves in glass of water, and does not

contain a lot of sugar. Complexion creams like fair and lovely sells only in India.

Segmentation of customers based on geographic factorsare:

1. Region-Segmentation by continent / country / state / district / city.

2. Size-Segmentation on the basis of size of a metropolitan area asper its population size.


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3. Population density-Segmentation on the basis of population density such as urban / sub-urban / ruraletc.

4. Climate-Segmentation as per climatic condition or weather.

Demographic Segmentation-

Demographic segmentation uses various population measures including age, sex,income, nationality, education, and occupation as the basis for dividing people intospecific markets. Demographic segmentation is easy to measure and is widely used.

The following four variables are examples of demographic factors used in marketsegmentation:


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Age-This demographic variable is often used to divide markets. For clothingdepartment store, demographic segmentation based on age works well.E.g. - Amul has segmented his product in different age group.

For kids: Amul kool, chocolate milk, Nutramul energy drink.

For Youth: Amul cool kafe.

For womens and older people: Amul calci+, Amul Shakti energy drink

Gender-Dividing a market into different groups based on sex, has long beencommon for many products including cosmetics, clothing and magazines.

Example: Emami segmented its product in gender. ,

Womens: Naturally fair

Men: Fair and handsome

Occupation-Market segmentation by occupations is also effective because ofassociated lifestyles.
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For example, business people are targeted by the travel and clothing industriessince they do more traveling and purchase more business clothing.

Life cycle stage- Dividing a market into different groups based on which stagein the life cycle, presented in the table below, reflects the fact that peoplechange the goods and services they want and need over their lifetime.

Life-cycle stagesBachelor Stage young, single people not living at homeNewly Married Couplesyoung, no childrenFull Nest I youngest child under sixFull Nest II youngest child six or overFull Nest III older married couples with dependent childrenEmpty Nest I older married couples, no children living with

them

Empty Nest II older married couples, retired, no children livingat home

Solitary Survivor I in labour forceSolitary Survivor II Retired

Psychographic segmentation-

Psychographic segmentation divides the market into groups based on social class,lifestyle and personality characteristics. It is based on the assumption that the types ofproducts and brands an individual purchases will reflect that persons characteristicsand patterns of living.

Example-

Consider a company that manufactures high end luxury cars. This is a product thatcannot be afforded by people from every income group. Only individuals falling in


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high income groups are realistic customers of this specific product. That is the

primary basis of segmentation for the car manufacturer, that forms the basis of their

marketing plan.

Within the high income bracket, the car manufacturer must now decide how heshould go about the segmentation process. He will analyze the habits and lifestyles of

his existing customers, and even those of the customers of his direct rivals. Soon he

will see that some customers use these luxury cars as status symbols, some use them

as utility vehicles, and some use them for long distance drives. Understanding the

usage of a particular vehicle will provide the basis for the marketing of a product.

Users who prefer long drives will be shown the highlighted fuel efficiency of the

vehicle, people who use the car sparingly just for prestige purposes will be told about

the excellent looks and prestige of the car model and the brand, and people who use

them for other purposes will be informed about the interior space, the handling, thebraking system etc.

The art of marketing is such that the marketer needs to highlight that part of the

commodity that appeals most to a particular customer, and tell him the features of

the product and how it will benefit him, as a part of the advertising process.

Social class- Social class is a strong determinant of individual purchasingpreferences in consumer goods as well as in services such as education, traveland tourism. Social class ranges from the lower class, to middle to the upperclass. The classes can be further stratified into upper lower, upper middle andupper.

Personality traits- This is a method of segmenting markets based on aperception of how differences in consumer personalities affect buying behavior.Products and services will be marketed in a manner which will appeal to thesepersonality traits.For example, those who are considered more conservative areperceived as desiring products having darker colours and more reserved stylesof dress.

Lifestyle- A person`s lifestyle can best be defined as how that person adapts toand interacts with the environment. Some people may be more artistic orentrepreneurial than others.

Example:


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Caf Coffee DayCCD has estimated that presently 60% of the footfalls in its 300 outlets

belong to students between the ages of 15 to 24 years. The CCD are targeting

students and trying to establish a space in their lives.

Behavioural segmentation-

Behavioural segmentation is possibly the most useful way to segment the market as it

is based on consumers' knowledge of, attitude towards, uses for, and response to a

product (Kotler). After all, marketing is about finding out what people need and want

and then developing a product that satisfies those needs.

Behavioural bases for segmentation include:

Purchase occasion- Markets can be segmented on the basis of when and why peoplebuy.

For example, you might purchase a bottle of wine for an evening meal at home, for adinner party, to take to a BYO restaurant, for cooking, for cellaring, or for a gift. No

doubt you would buy a different type and quality of wine for each occasion or

purpose.

Benefits sought- Benefit segmentation as 'the process of grouping customers intomarket segments according to the benefits they seek from the product'.
http://netgautam.com/wordpress/wp-content/uploads/2008/Anythingcanhappenovercoffee_106EB/coffeeday.jpg


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Example- Nestle has found a separate segment Atta noodles as distinct from theMaida noodles.

Usage rate and user status- Usage-rate segmentation as 'dividing a market by theamount of product bought or consumed'.

Example- newer products such as light beers and premium beers are targeted at non-traditional markets, such as younger people and females.

Loyalty status- Completely loyal consumers are those that would not consider buyinganother brand or visiting a different outlet.

Example- I tend to be more loyal for service products, such as my hairdresser and mydoctor.

Attitude- An attitude as a 'learned tendency to respond consistently towards a givenobject'. People's attitude toward the product can be 'enthusiastic, positive, indifferent,and negative. Frankly, it is a waste of time trying to convince people with a negative

attitude toward the product to buy it.

Example- Shampoos, soap and all FMCG products buying behavior segmentation isused.

Advantages of market segmentation-

Various advantages of market segmentation are:-


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Helps distinguish one customer group from another within a given market. Facilitates proper choice of target market. Facilitates effective tapping of the market. Helps divide the markets and conquer them.

Helps crystallize the needs of the target buyers and elicit more predictableresponses from them ; helps develop marketing programmers on a more

predictable base; helps develop market offer that are most suited to each

group.

Helps achieve the specialization required in product; distribution, promotion,and pricing for matching the customer group and develop marketing offers and

appeal that match the need of each group.

Makes the marketing effort more efficient and economic. Helps concentrate efforts on the most productive and profitable segment,

instead of frittering them over irrelevant, or unproductive, or unprofitable

segment.

Helps spot the less satisfied segments and succeed by satisfying such segments. Brings benefits not only to the marketer but also to the customer as well. When segmentation attains high sophistication, customers and companies can

choose each other and stay together.

Disadvantages

- Costs in actually finding out who to target.


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- Increased costs to develop variations of the product.

- Higher stock holding costs.

- Higher advertising and other costs.

- increase market segmentation.

- Consumer backlash

- Limits general popularity anonymous.

References

From book ofMarketing management by Philip kotler, Mithileshwar jha

From internet- Slideshare.com Wikipedia.

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