MARKET

SEGMENTATION
Uses and bases of
segmentation

MARKET SEGMENTATION

It can be defined as the process of dividing a

market into distinct subsets of consumers with
common needs or characteristics and selecting
one or more segments to target with a distinct
marketing mix.
Market segmentation consist of group of
customers who share a similar set of wants.

USES OF SEGMENTATION

Useful to the marketers

Useful to the consumers
Better matching of consumer needs
Enhanced profits for business
Better opportunities for growth
Retain more customers
Target marketing communication
Gain share of market segment
Reduction in expenses
Improved cash flow
Improved productivity
Improved manufacturing quality

USES OF SEGMENTATION

Useful to the marketers

Useful to the consumers
Better matching of consumer needs
Enhanced profits for business
Better opportunities for growth
Retain more customers
Target marketing communication
Gain share of market segment
Reduction in expenses
Improved cash flow
Improved productivity
Improved manufacturing quality

USES OF SEGMENTATION

Useful to the marketers

Useful to the consumers
Better matching of consumer needs
Enhanced profits for business
Better opportunities for growth
Retain more customers
Target marketing communication
Gain share of market segment
Reduction in expenses
Improved cash flow
Improved productivity
Improved manufacturing quality

Improved service delivery

Improved employee working conditions
Improvement in market share
Satisfaction of social esteem
Identifies untapped consumer markets
Identifies untapped consumer needs

BASES OF SEGMENTATION
Demographics
Consumers can be grouped on the basis of
characteristics such as age or household composition.
This is easy to do and it is easy to reach such segments
with media. But age and other demographics are only
loosely related to behaviour.
Socioeconomic Characteristics
Similarly, characteristics such as income, occupation and
education can be used to derive segments that are easy
to reach. Such segments are indicators (although not
perfect) of behaviour such as lifestyle, price sensitivity,
and brand preference.

 Psychographics
Personality, attitudes, opinions, and life styles are often
used a segmentation bases. These characteristics have
some relationship to behaviour and provide insight into
how to communicate with chosen segments.
Generation
Generation, or cohort, refers to people born in the same
period of time.
For example, the Baby Boomer
generation can be defined as those people born between
1946 and 1955. Such cohorts share much in common.
Not only are they of a similar age, but they experienced
similar economic, cultural, and political influences in
formative years. Thus generation is probably a better
segmentation basis than age and just as easy to reach.

 Geography
There are two reasons why people who live in the same area may
share similar characteristics. First, some areas have more
expensive properties than others and so people with similar
socioeconomic characteristics may cluster together. Second, they
have similar transport and shopping options. It is easy to reach
particular areas by using local newspapers, cinema, outdoor, and
selective direct mail but mass media is less effective.
Geo demographic
There are several commercial geo demographic segmentation
schemes available, that combine demographics and geography as
a segmentation basis. This approach aims to identify groups of
small geographic areas that have similar demographic profiles.
These tend to suffer from the fallacy of averages. Some areas
may be genuinely relatively homogenous but many are not and
this can be very misleading

 Product Usage
Potential to use the firms product is a behaviourally
based segmentation basis.
Potential could be
determined by administering questions about disposition
to use (such as awareness, used in the past, would
consider using) in a survey and respondents grouped
accordingly. The problem is then how to reach the most
attractive segments. This is done either by using a
large-scale single source survey that asks consumers
about product disposition and media usage or by relating
product disposition to demographics.

 Benefits Sought
Some people are price sensitive, others seek quality or
service. Some people are brand loyal, while others
frequently switch brands.
It is possible to group
consumers on the basis of these factors. Note that
price/quality sensitivity can vary by category. Some
people are very concerned about the quality of the food
they eat but will buy cheap laundry detergent. Others
will feed themselves any rubbish but are fastidious about
cleanliness.
This is a very powerful basis for
segmentation.

 Psychological segmentation: need motivation- safety,

security, shelter etc, personality-extrovert, introvert etc

Socio-cultural segmentation: cultures, religion

Use-situation segmentation: morning, evening, work,
leisure etc