1 Principles of Marketing SESSION:16-19

Market Segmentation Market Segment: is a portion of a larger market in which the individuals, groups, or organisations share one or more characteristics that cause them to have relatively similar product needs A market segment consists of a group of customers who share a similar set of needs and wants. Market Segmentation: Market Segmentation is the process of dividing the total heterogeneous market into relatively homogenous sub-groups of consumers with common needs or characteristics and selecting one or more segments to target with distinct marketing programme 2

3 Market Segmentation Need For Segmentation Needs and wants are heterogeneous Consumers differ by age, sex, income, attitude, lifestyle Segmentations helps marketers to select target market and develop distinct marketing program Segmentation also helps the marketer to redesign, reposition and to target new segments for existing product

4 Market Segmentation Categories of Segmentation : Segmentation falls under the following categories 1. Geographic Segmentation 2. Demographic segmentation 3. Psychographics segmentation 4. Behaviouristic segmentation

5 Market Segmentation 1. Geographic segmentation: Segmenting on the basis of geographic location Geographic units may be continents, Nations, Region, state, city, town, area etc Assumption is that people who belong to a certain geographic location share homogenous needs People in north India have homogenous food habits than the people in south India Hotel chains offering different menus according to the location they are present in

6 Market Segmentation 2. Demographic segmentation: Segmentation on the basis of demography Demographic characteristic such as age, sex, education, income, marital status, family size, social class etc are used to segment Toy manufacturers segment on the basis of the age of children Bicycle manufacturers segment mainly on the basis of the school goers, auto on the basis of income

7 Market Segmentation 3. Psychographics segmentations Segmentations on the basis of personality or lifestyle Characteristics of personality – confident, aggressive, conservative, modern, extrovert, introvert etc What people do in their spare time is a good indicator of lifestyle – two lifestyle segments that were most likely to drink and drive 1. Good Timers – partygoers 2. Problem Kids – display troublesome behaviour

8 Market Segmentation Lifestyle of Indian women – are home focused, less likely to visit restaurant, more price sensitive, spend time preparing meals at home and fond of movies Lifestyle of adult students --- ……… ?

9 Market Segmentation 4. Behaviouristic segmentation: Segmentation on the basis of use occasion, user status, user rate, loyalty status, buyer readiness stage and attitude Use occasion of greeting cards are different. User status could be non-users, potential users or first time users User rate can be light, medium or heavy users

10 Market Segmentation Buyer-Readiness Stage Aware Ever tried Recent trial Occasional user Regular user Most often used

11 Market Segmentation Loyalty Status Hard-core Split loyals Shifting loyals Switchers

12 Market Segmentation Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable

13 Market Segmentation 4. Behaviouristic segmentation: Segmentation on the basis of use occasion, user status, user rate, loyalty status, buyer readiness stage and attitude Use occasion of greeting cards are different. User status could be non-users, potential users or first time users User rate can be light, medium or heavy users

Four levels of Micromarketing Segments Niches Local areas Individuals 14