Modern Marketing Concepts

1. The production concept

Before a business can offer a product to consumers, they must manufacture or produce
said product first. This concept is based on the philosophy of the more something is
produced, the less it costs for consumers and if a business can figure out how to produce
a product on a mass scale (factories), it lessens the costs for them as well. If this concept
could be described in 4 words it would be: Increase profits, reduce costs.

2. The product concept

No matter how high quality a product is, the consumer essentially weighs the cost,
accessibility, and efficiency before deciding to purchase a product. If a business produces
luxury goods that are pricey, then the number of consumers willing to, but the product
will possibly below, making it a niche product.

3. The sales concept

Dealing with the process of actually selling a product, this concept emphasizes the
importance of selling as much of the product as possible no matter if the needs of the
consumer are met or the quality of the product/service. Following this concept alone does
not lead to long-term consumer relationships, satisfaction, or consistent sales of a
product.

4. The marketing concept

As stated earlier, the marketing concept places the consumer as the main priority for
business operations. All motivations for creating a product and creating a marketing
strategy to reach potential consumers is all for meeting their wants and needs to increase
their satisfaction. This can lead to a business being the preferred choice among its
competitors due to putting the consumers’ needs first.

5. Societal marketing concept

While similar to the marketing concept in prioritizing the needs of the consumer, the
concept also urges businesses to put in mind the overall welfare of the consumer and
society as a whole. An example of this might be a business considering an eco-friendly
way of producing its products in order to reduce carbon emissions, making the air
healthier and improving breathing conditions for consumers.

Societal marketing can enhance profits from the sale of products by:

 Making a product is useful enough to meet consumer needs

 Focusing on the well-being of the public at large
 Bettering the consumers’ quality of life
The modern marketing concepts are:

 Knowing who your target consumer is

 Learning and comprehending the wants/needs of the consumer through online interaction
 Creating products that meet the needs of the target consumer
 Leading the competition in customer satisfaction
 Making sure a business’ efforts make a profit for the organization

Characteristics of Marketing Concept

 Customer orientation

The marketing process begins with knowing the customers’ desires until a business can
create a product or offer a service that can meet and satisfy them. Happier customers lead
to higher profits.

 Integrated approach

Coordinated collaboration between various departments within a business (marketing,

production, finance, etc.) is crucial to meeting the customers’ needs.

 Long-term perspective

Creating long-lasting relationships with consumers with consistent service and quality
that they can trust ensures profits, retaining customers, and attracting new customers over
a long period of time. This makes a business into a trusted and well-known brand.

 Profitable sales volume

Earning a profit over a long period of time is a tell-tale sign of whether a business’s
marketing efforts were a success. Not only does a business want to increase profits, but
they want it to happen consistently long-term
 Role of Marketing in Economic Development

Marketing is an important factor in modern business planning and decision making. In the
modern economy, production is planned according to the sales forecast and not according to the
production capacity of the firm

1. Provides Employment

Marketing is an important source of providing employment.

According to an estimate, about, 40% of the labor force in developed countries (such as the
U.S.A., Germany, Japan, etc) is engaged in different marketing processes, such as distribution
channel (wholesale and retail trade), marketing research, storage, warehousing, transport,
communication, publicity, etc.

In a developing country like India, about 3 crore people are engaged in marketing, such as
distribution channels, etc.

2. Delivery of Standard of Living

Marketing is the delivery of a standard of living to society.

Marketing creates and increases the demand for existing and new products and thereby increases
the standard of living of the people.

It provides knowledge about different varieties of goods and services, of means of publicity and
sales promotion to society.

3. Helpful in Increasing Profits

All of us know that the main objective of the business is to earn a profit.

Marketing helps in increasing business profits by reducing distribution costs on one side and
increasing the demand for the product by means of advertising and sales promotion on the other
side.

4. Protection Against Slump

Marketing provides protection to the economy against a slump.

In the case of the slump, marketing helps by discovering new markets, making it customer-
oriented, improving the quality of products, suggesting alternative uses of products, etc.

5. Increases National Income

When different variants of goods are made available according to the needs and tastes of
consumers, there is an overall increase in demand.

Increased demand stimulates production activity in the country, which in turn, increases the
national income of the country, which in turn, an increase in national income brings and all-
round prosperity in the country.

6. Facilitates Choice

In order to satisfy the demand for different types of customers, products of different varieties,
designs, colors, sizes, etc. are produced.

It facilitates the choice of the consumers as they are free to select the product of their own choice
and taste, etc.

7. Increases the Knowledge of Customer

Marketing increases the knowledge of customers by means of salesmanship, advertising, sales

promotion, etc.

8. Customer Satisfaction

Modern Marketing concept is customer-oriented, like maximum satisfaction to consumers.

Goods are produced according to the needs and tastes of the consumers.

Besides production, modern marketing also emphasizes the selection of a suitable channel of
distribution and also makes the goods available at reasonable prices in the market.

9. Helpful in Business Planning and Decision Making

Marketing is an important factor in modern business planning and decision making.

In the modern economy, production is planned according to the sales forecast and not
according to the production capacity of the firm.

A firm will produce what it can sell and in as much quantity as it sells and not what and how
much it can produce.

Thus, business planning and decision making in the business planning firm is based on
marketing.

10. Key Factor in Distribution

Marketing is helpful to the firm in selecting the proper distribution channel that can deliver the
goods to the consumers at the minimum distribution cost and at reasonable prices.

In this competitive age, only that producer can survival who can deliver the goods to the
consumers at a minimum distribution cost.

11. Reduces Distribution Cost

An efficient marketing process is responsible for reducing the cost of distribution to a great
extent.

The advantage of reduction and distribution cost goes to the consumers by marketing the goods
available at lower prices.

If in spite of the reduction in distribution cost, prices do not fall, it will increase the profits of the
manufacturers which will filter down to the shareholders and debenture holders in the form of
dividend and interest.

12. Helpful in Communication Between Firm and Society

Today, marketing is an important source of communication between the firm and society.

Marketing provides information regarding consumer’s behavior and changes therein to the firm.

Today, the Producers and Consumers are situated at s distance of thousands of kilometers from
each other and it is the marketing that is the source of establishing effective communication
between them.

13. Importance in Sellers Market

A seller’s market is one in which there is a shortage of goods and thus the demand for goods
exceeds the supply.

Along with waiting, the line exists in the market.

You may argue that there is no need for marketing in the seller’s market because everybody is
already standing in a queue and eagerly waiting for his return.

For instance, in India whenever there is a shortage of goods, you may see a long waiting queue
before distribution centers.

However, one should not believe that a seller’s market lasts forever. Initial shortages will be
overcome in due course of time.

For instance, there was a time when a seller’s market was in existence in food grains, sugar, etc.
The need for marketing will exist and does exist even now.

A buyer’s market is one in which the supply of goods exceeds the demand. Every firm is eager to
sell the goods but those firms succeed which adopt the modern ways of marketing goods in
accordance with the demand and taste of consumers.

Thus, the importance of marketing exists whether it is the seller’s market or buyers’ market.

Remember that the market is the boss and those companies that are successful are those which
are able to study the markets.

14. Necessary for Developing Country

Marketing is of great importance in developing countries.

Production of goods and services is undoubtedly a major National issue in almost all the
developing countries of the world.

It is so because it is a very potential instrument of rapid economic growth.

In this connection on the increase in production is not enough.

There must also be equitable distribution amongst people so that no one starved to death.

In a vast country, the very thought of equitable distribution cannot be metalized unless there is an
efficient distribution channel.

In order to have an efficient distribution of goods, there is the need and importance of marketing.

.
Marketing Mix

Marketing Mix is a set of marketing tool or tactics, used to promote a product or services in the
market and sell it. It is about positioning a product and deciding it to sell in the right place, at the
right price and right time. The product will then be sold, according to marketing and promotional
strategy. The components of the marketing mix consist of 4Ps Product, Price, Place, and
Promotion. In the business sector, the marketing managers plan a marketing strategy taking into
consideration all the 4Ps. However, nowadays, the marketing mix increasingly includes several
other Ps for vital development.

4Ps of Marketing Mix Product in Marketing Mix:

Product: A product is a commodity, produced or built to satisfy the need of an individual or a

group. The product can be intangible or tangible as it can be in the form of services or goods. It
is important to do extensive research before developing a product as it has a fluctuating life
cycle, from the growth phase to the maturity phase to the sales decline phase.

A product has a certain life cycle that includes the growth phase, the maturity phase, and the
sales decline phase. It is important for marketers to reinvent their products to stimulate more
demand once it reaches the sales decline phase. It should create an impact in the mind of the
customers, which is exclusive and different from the competitor’s product. There is an old saying
stating for marketers, “what can I do to offer a better product to this group of people than my
competitors”. This strategy also helps the company to build brand value.

Price in Marketing Mix:

Price is a very important component of the marketing mix definition. The price of the product is
basically the amount that a customer pays for to enjoy it. Price is the most critical element of a
marketing plan because it dictates a company’s survival and profit. Adjusting the price of the
product, even a little bit has a big impact on the entire marketing strategy as well as greatly
affecting the sales and demand of the product in the market. Things to keep on mind while
determining the cost of the product are, the competitor’s price, list price, customer location,
discount, terms of sale, etc.,

Place in Marketing Mix:

Placement or distribution is a very important part of the marketing mix strategy. We should
position and distribute our product in a place that is easily accessible to potential
buyers/customers.

Promotion in Marketing Mix:

It is a marketing communication process that helps the company to publicize the product and its
features to the public. It is the most expensive and essential components of the marketing mix,
that helps to grab the attention of the customers and influence them to buy the product. Most of
the marketers use promotion tactics to promote their product and reach out to the public or the
target audience. The promotion might include direct marketing, advertising, personal branding,
sales promotion, etc.

7 P of Marketing:

The 7Ps model is a marketing model that modifies the 4Ps model. As Marketing mix 4P is
becoming an old trend, and nowadays, marketing business needs deep understanding of the rise
in new technology and concept. So, 3 more new P’s were added in the old 4Ps model to give a
deep understanding of the concept of the marketing mix.

People in Marketing Mix:

The company’s employees are important in marketing because they are the ones who deliver the
service to clients. It is important to hire and train the right people to deliver superior service to
the clients, whether they run a support desk, customer service, copywriters, programmers…etc. It
is very important to find people who genuinely believe in the products or services that the
particular business creates, as there is a huge chance of giving their best performance. Adding to
it, the organisation should accept the honest feedback from the employees about the business and
should input their own thoughts and passions which can scale and grow the business.

Process in Marketing Mix:

We should always make sure that the business process is well structured and verified regularly to
avoid mistakes and minimize costs. To maximise the profit, Its important to tighten up the
enhancement process.

Physical Evidence in Marketing Mix:

In the service industries, there should be physical evidence that the service was delivered. A
concept of this is branding. For example, when you think of “fast food”, you think of KFC.
When you think of sports, the names Nike and Adidas come to mind.

Marketing Mix Example:

This article will go through a marketing mix example of a popular cereals company. At first, the
company targeted older individuals who need to keep their diet under control, this product was
introduced. However, after intense research, they later discovered that even young people need to
have a healthy diet. So, this led to the development of a cereals product catered to young people.
In accordance with all the elements of the marketing mix strategy, the company identified the
product, priced it correctly, did tremendous promotions and availed it to the customers. This
marketing mix example belongs to Honeycomb, one of the most renowned companies in the
cereal niche. Following these rules clearly has managed to make the company untouchable by all
the other competitors in the market.

This makes Honeycomb, the giant we know and love today to eat as morning breakfast!

Meaning of Marketing Environment:

The marketing environment refers to all internal and external factors, which directly or
indirectly influence the organization’s decisions related to marketing activities. Internal
factors are within the control of an organization; whereas, external factors do not fall
within its control. The external factors include government, technological, economical,
social, and competitive forces; whereas, organization’s strengths, weaknesses, and
competencies form the part of internal factors.
Marketers try to predict the changes, which might take place in future, by monitoring the
marketing environment. These changes may create threats and opportunities for the
business. With these changes, marketers continue to modify their strategies and plans.

2. Features of Marketing Environment:

Today’s marketing environment is characterized by numerous features, which are

mentioned as follows:

2.1. Specific and General Forces:

It refers to different forces that affect the marketing environment. Specific forces
include those forces, which directly affect the activities of the organization.
Examples of specific forces are customers and investors. General forces are those
forces, which indirectly affect the organization. Examples of general forces are
social, political, legal, and technological factors.

2.2 Complexity:
It implies that a marketing environment include number of factors, conditions, and
influences. The interaction among all these elements makes the marketing
environment complex in nature.

2.3. Vibrancy:
Vibrancy implies the dynamic nature of the marketing environment. A large number
of forces outline the marketing environment, which does not remain stable and
changes over time. Marketers may have the ability to control some of the forces;
however, they fail to control all the forces. However, understanding the vibrant
nature of marketing environment may give an opportunity to marketers to gain
edge over competitors.

2.4. Uncertainty:
It implies that market forces are unpredictable in nature. Every marketer tries to
predict market forces to make strategies and update their plans. It may be difficult
to predict some of the changes, which occurs frequently. For example, customer
tastes for clothes change frequently. Thus, fashion industry suffers a great
uncertainty. The fashion may live for few days or may be years.

2.5. Relativity:
It explains the reasons for differences in demand in different countries. The product
demand of any particular industry, organization, or product may vary depending
upon the country, region, or culture. For example, sarees are the traditional dress
of women in India, thus, it is always in demand. However, in any other western
country the demand of saree may be zero.

3. Types of Marketing Environment:

The sale of an organization depends on its marketing activities, which in turn depends
on the marketing environment. The marketing environment consists of forces that are
beyond the control of an organization but influences its marketing activities. The
marketing environment is dynamic in nature.
Therefore, an organization needs to keep itself updated to modify its marketing activities
as per the requirement of the marketing environment. Any change in marketing
environment brings threats and opportunities for the organization. An analysis of these
changes is essential for the survival of the organization in the long run.
A marketing environment mostly comprises of the following types of environment:
1. Micro Environment
2. Macro Environment
The discussion of these environments are given below:

1. Micro Environment:
Micro environment refers to the environment, which is closely linked to the organization,
and directly affects organizational activities. It can be divided into supply side and
demand side environment. Supply side environment includes the suppliers, marketing
intermediaries, and competitors who offer raw materials or supply products. On the
other hand, demand side environment includes customers who consume products.
Let us discuss the micro environment forces in the following points:
i. Suppliers:
It provides raw material to produce goods and services. Suppliers can influence the
profit of an organization because the price of raw material determines the final price
of the product. Organizations need to monitor suppliers on a regular basis to know
the supply shortages and change in the price of inputs.
ii. Marketing Intermediaries:
It helps organizations in establishing a link with customers. They help in promoting,
selling, and distributing products.
Marketing intermediaries include the following:
a. Resellers:
It purchases the products from the organizations and sell to the customers.
Examples of resellers are wholesalers and retailers.
b. Distribution Centers:
It helps organizations to store the goods. A warehouse is an example of distribution
center.
c. Marketing Agencies:
It promotes the organization’s products by making the customers aware about
benefits of products. An advertising agency is an example of marketing agency.
d. Financial Intermediaries:
It provides finance for the business transactions. Examples of financial
intermediaries are banks, credit organizations, and insurance organizations.
iii. Customers:
Customers buy the product of the organization for final consumption. The main goal
of an organization is customer satisfaction. The organization undertakes the
research and development activities to analyze the needs of customers and
manufacture products according to those needs.
iv. Competitors:
It helps an organization to differentiate its product to maintain position in the market.
Competition refers to a situation where various organizations offer similar products
and try to gain market share by adopting different marketing strategies.

2. Macro Environment:
Macro environment involves a set of environmental factors that is beyond the control of
an organization. These factors influence the organizational activities to a significant
extent. Macro environment is subject to constant change. The changes in macro
environment bring opportunities and threats in an organization.
Let us discuss these factors in details:

i. Demographic Environment:

Demographic environment is the scientific study of human population in terms of

elements, such as age, gender, education, occupation, income, and location. It also
includes the increasing role of women and technology. These elements are also
called as demographic variables. Before marketing a product, a marketer collects the
information to find the suitable market for the product.
Demographic environment is responsible for the variation in the tastes and
preferences and buying patterns of individuals. The changes in demographic
environment persuade an organization to modify marketing strategies to address the
altering needs of customers.

ii. Economic Environment:

Economic environment affects the organization’s costs structure and customers’
purchasing power. The purchasing power of a customer depends on the current
income, prices of the product, savings, and credit availability.
The factors economic environment is as follows:
a. Inflation:
It influences the customers’ demand for different products. For example, higher petrol
prices lead to a fall in demand for cars.
b. Interest Rates:
It determines the borrowing activities of the organization. For example, increase in
interest rates for loan may lead organizations to cut their important activities.
c. Unemployment:
It leads to a no income state, which affects the purchasing power of an individual.

d. Customer Income:
It regulates the buying behavior of a customer. The change in the customer’s income
leads to changed spending patterns for the products, such as food and clothing.
e. Monetary and Fiscal Policy:
It affects all the organizations. The monetary policy stabilizes the economy by
controlling the interest rates and money supply in an economy; whereas, fiscal policy
regulates the government spending in various areas by collecting the revenue from
the citizens by taxing their income.
iii. Natural Environment:
Natural environment consists of natural resources, which are needed as raw
materials to manufacture products by the organization. The marketing activities affect
these natural resources, such as depletion of ozone layer due to the use of
chemicals. The corrosion of the natural environment is increasing day-by-day and is
becoming a global problem.
Following natural factors affect the marketing activities of an organization in a
great way:
a. Natural Resources:
It serves as raw material for manufacturing various products. Every organization
consumes natural resources for the production of its products. Organizations are
realizing the problem of depletion of resources and trying best to use these resources
judiciously. Thus, some organizations have indulged in de-marketing their products.

For example, Indian Oil Corporation (IOC) tries to reduce the demand for its products
by promoting advertisements, such as Save Oil, Save India.
b. Weather:
It leads to opportunities or threats for the organizations. For example, in summer,
demand for water coolers, air conditioners, cotton clothes, and water increases while
in winter, the demand for woolen clothes and room heaters rises. The marketing
environment is greatly influenced by the weather conditions of a country.
c. Pollution:
It includes air, water, and noise pollution, which lead to environmental degradation.
Now-a-days, organizations tend to promote environment friendly products through its
marketing activities. For example, the organizations promote the usage of jute and
paper bags instead of plastic bags.
iv. Socio-Cultural Environment:
Socio-cultural environment comprises forces, such as society’s basic values,
attitudes, perception, and behavior. These forces help in determining that what type
of products customers prefer, what influences the purchase attitude or decision,
which brand they prefer, and at what time they buy the products. The socio-cultural
environment explains the characteristics of the society in which the organization
exists. The analysis of socio-cultural environment helps an organization in identifying
the threats and opportunities in an organization.
For example, the lifestyles of people are changing day-by-day. Now, the women are
perceived as an active earning member of the family. If all the members of a family
are working then the family has less time to spend for shopping. This has led to the
development of shopping malls and super markets, where individuals could get
everything under one roof to save their time.
v. Technological Environment:
Technology contributes to the economic growth of a country. It has become an
indispensible part of our lives. Organizations that fail to track ongoing technological
changes find it difficult to survive in today’s competitive environment.
Technology acts as a rapidly changing force, which creates new opportunities for the
marketers to acquire the market share. Marketers with the help of technology can
create and deliver products matching the life style of customers. Thus, marketers
should observe the changing trends in technology.
.
vi. Political and Legal Environment:
Political and legal environment consists of legal bodies and government agencies
that influence and limit the organizations and individuals. Every organization should
take care of the fact that marketing activities should not harm the political and legal
environment prevailing in a country. The political and legal environment has a serious
impact on the economic environment of a country.

Various legislations affecting the marketing activities are as follows:

a. Anti-pollution laws, which affect the production or manufacturing of various
products.
b. Customer legislation, which tries to protect the customer’s interest.
The important acts set by the Indian government, which effect the marketing
environment of an organization:
i. Prevention of Food and Adulteration – 1954
ii. Drugs Control Act – 1954
iii. Company Act – 1956
iv. Standard Weights and Measurement Act – 1956
v. MRTP- Monopoly and Restrictive Trade Practices – 1969
vi. Display of Price Order – 1963
vii. Indian Patents Act – 1970
viii. Packaged Commodities Order – 1975
ix. Environment Act – 1986
x. Consumer Protection Act – 1986

4. Need for Analyzing the Marketing Environment:

The business environment is not static. It is continuously changing with fast speed.
The marketing environmental analysis will help the marketer to:
i. Become well acquainted with the changes in the environment.
ii. Gain qualitative information about the business environment; which will help him to
develop strategies in order to cope with ever changing environment.
iii. Conduct marketing analysis in order to understand the markets needs and wants
so as to modify its products to satisfy these market requirements.
iv. Decide on matters related to Government-legal-regulatory policies in a particular
country so as to formulate its strategies successfully amidst these policies.
v. Allocate its resources effectively and diversify either into a new market segment or
totally into a new business which is outside the scope of its existing business.
vi. Identify the threats from the environment in terms of new competitors, price wars,
competitor’s new products or services, etc.; and prepare its strategies on the
basis of that.
vii. Identify the opportunities in the environment and exploit these opportunities to
firm’s advantage. These opportunities can be in terms of emergence of new
markets; mergers, joint ventures, or alliances; market vacuum occurred due to exit
of a competitor, etc.
viii. Identify its weaknesses such as lower quality of goods or services; lack of
marketing expertise; or lack of unique products and services; and prepare
strategies to convert its weaknesses into strengths.
ix. Identify its strengths and fully exploit them in firm’s advantage. These strengths
can be in terms of marketing expertise, superior product quality or services, or
giving unique innovative products or services.

5. Importance of Marketing Environment:

The study of marketing environment is essential for the success of an organization.
The discussion of importance of marketing environment is as follows:
1. Identification of Opportunities:
It helps an organization in exploiting the chances or prospects for its own benefit. For
example, if an organization finds out that customers appreciate its products as
compared to competitors’ products then it might encash this opportunity by giving
discounts on its products to boost sale.

2. Identification of Threats:
It gives warning signals to organizations to take the required steps before it is too
late. For example, if an organization comes to know that a foreign multinational is
entering into the industry then it can overcome this threat by adopting strategies,
such as reducing the product’s prices or carrying out aggressive promotional
strategies.
3. Managing Changes:
It helps in coping with the dynamic marketing environment. If an organization wishes
to survive in the long run then it has to adapt to the changes occurring in the
marketing environment.

Market segmentation
Market segmentation is one of the most efficient tools for marketers to cater to their
target group. It makes it easier for them to personalise their campaigns, focus on what’s
necessary, and group similar consumers to target them in an effective manner.
The process is being practised by marketers since the late 1900s. Simple though it may
be, it is of vital use to forming any marketing plan.

Market Segmentation
Market segmentation is a process of dividing the market of potential customers into
smaller and more defined segments on the basis of certain shared characteristics like
demographics, interests, needs, or location.
The member of these groups share similar characteristics and usually have one or more
than one aspect common among them which makes it easier for the marketer to craft
marketing communication messages for the entire group.
There are many reasons as to why market segmentation is done. One of the major
reasons marketers segment market is because they can create a custom marketing
mix for each segment and cater them accordingly.

Importance Of Market Segmentation

Companies often deal with customers who belong to different age groups, have varied
interests, and are motivated by different triggers.
Segmenting these potential customers into different groups –
 Makes it easier for the marketer to develop a different marketing mix for each
customer segment which is more likely to bring results.
 Increases the results of the marketing efforts as each of the groups witness
personalised marketing messages according to what stimulates them to do the
task.

Types Of Market Segmentation

Geographic Segmentation
Geographic segmentation divides the market on the basis of geography. This type of
market segmentation is important for marketers as people belonging to different regions
may have different requirements. For example, water might be scarce in some regions
which inflates the demand for bottled water but, at the same time, it might be in
abundance in other regions where the demand for the same is very less. People
belonging to different regions may have different reasons to use the same product as
well. Geographic segmentation helps marketer draft personalized marketing campaigns
for everyone.
Demographic Segmentation
Demographic segmentation divides the market on the basis of demographic variables
like age, gender, marital status, family size, income, religion, race, occupation,
nationality, etc. This is one of the most common segmentation practice among
marketers. Demographic segmentation is seen almost in every industry like
automobiles, beauty products, mobile phones, apparels, etc and is set on a premise that
the customers’ buying behaviour is hugely influenced by their demographics.
Behavioural Segmentation
The market is also segmented based on audience’s behaviour, usage, preference,
choices and decision making. The segments are usually divided based on their
knowledge of the product and usage of the product. It is believed that the knowledge of
the product and its use affect the buying decision of an individual. The audience can be
segmented into –
 Those who know about the product,
 Those who don’t know about the product,
 Ex-users,
 Potential users,
 Current Users,
 First time users, etc.

People can be labeled as brand loyal, brand-neutral, or competitor loyal. They can also
be labeled according to their usage. For example, a sports person may prefer an
energy drink as elementary (heavy user) and a not so sporty person may buy it just
because he likes the taste (light/medium user).

Psychographic Segmentation

Psychographic Segmentation divides the audience on the basis of their personality,

lifestyle and attitude. This segmentation process works on a premise that consumer
buying behaviour can be influenced by his personality and lifestyle. Personality is the
combination of characteristics that form an individual’s distinctive character and includes
habits, traits, attitude, temperament, etc. Lifestyle is how a person lives his life.
Personality and lifestyle influence the buying decision and habits of a person to a great
extent. A person having a lavish lifestyle may consider having an air conditioner in every
room as a need, whereas a person living in the same city but having a conservative
lifestyle may consider it as a luxury.

Examples Of Market Segmentation

Market segmentation is a common practice among all the industries. It is not possible
for a marketer to address the mass with same marketing strategy. Here are some
examples of market segmentation to prove this point.

Beauty Products
While marketing beauty products, marketers often segment the target market according
to the age of the users, the skin type, and also the occasion. A perfect example of this is
Olay.
The company developed its ‘Age Defying’ product range to cater to mature adults and
‘Clearly Clean’ range to cater to young adults and teens.

Fast Food
Fast food chains like McDonald’s often segment their target audience into kids and
working adults and develop different marketing plans for both. Marketing efforts like
distributing a toy with every meal works well for kids and providing the food within 10
minutes, free WiFi, and unlimited refills work well for working adults.

Sports
Sports brands like Nike, Adidas, Reebok, etc. often segment the market based on the
sports they play which help them market the sports-specific products to the right
audience.

Benefits Of Market Segmentation

Segmenting the market offers the following benefits to the businesses –
 Better Matching Of Customer Needs: Different customers have different needs. By
segmenting the target market and developing homogeneous groups, it becomes
easier for the marketer to cater to the customer needs better.
 Identification Of Gaps In The Market: Market segmentation also results in the
identification of target groups that are not targeted well in the market. This opens up
opportunities for the business to exploit and make profits from.
 Increased ROI: Since market segmentation helps serve the customer needs better, it
not only decreases spending unnecessarily but it increases repeated sales, and
customers also return the favour in the form of referrals, word of mouth, etc.
 Customer Retention: Customers retain with a business which understands their
needs and fulfils them as they require. Segmentation helps in this.
 Increased Market Share: Through market segmentation and targeted
communication, a competitive advantage can be built which results in increased
market share.

Disadvantages Of Market Segmentation

Even though there are many advantages of market segmentations, there are some
disadvantages and limitations as well.
 Extensive Research And Development: The process of market segmentation
requires the business to do extensive research which is not feasible for some of the
businesses.
 Expensive Process: Segmentation is an expensive process, both in terms of time
and money. It requires the business to spend a lot to identify different groups and
market to them differently according to their needs.

Market Analysis

Market Analysis is an important tool to study the degree of attractiveness of a market that a
company wants enter in the near future. This tool is used to study the current pattern of the
market and evaluate future opportunities or threats and then decide whether or not it will be
fruitful to enter into that particular market. The results of this analysis, assists an organization in
making investment decisions.

Let’s discuss the dimensions of market analysis as outlined by David Aaker:

1. Market Size:

Market size refers to the current and potential volume of the selected market. The organization
studies the growth potential of a particular market and decides to enter into the market only if the
results match their expectation.

For example, the rise in demand of Smartphone has given a boost to several product
development companies in the electronic industry. Some of the key parameters used by the
organizations to gauge the potential of the industry are number of smart phone users and the
purchasing power of the customers from different locations. The result obtained from this data
can form an important basis for the organization to measure the market size and decide whether
or not to enter into the market.

2. Market Trends:

It is very important for an organization to be updated with the market trends of the industry.
They should keenly observe the behaviour of the customers and the steps taken by the
competitors. Before entering a market, it is very important for an organization to analyze the
direction of the market, whether it is expanding or contracting.

3. Market Growth Rate and Profitability:

Growth projection and profitability is another dimension of market analysis. Companies make
use of tools like Product Diffusion Curves to forecast inflection points in growth projections. On
the other hand, market profitability can be predicted by using Porter’s Five Forces model, i.e.,
the analysis of market trend by taking into account threat of new entrants, a threat of substitutes,
bargaining power of customers, bargaining power of suppliers, and the competitive rivalry.

4. Industry Cost Structure:

This dimension is about reducing costs by identifying and eliminating non value adding
activities. Non-value adding activities can be identified by using value chain analysis. When the
organization focuses and invests only on the activities that are critical for value creation, it can
develop a competitive edge over the competitors in the market.
5. Distribution Channels:

Selecting effective distribution channels and identifying emerging channel partners helps an
organization better understand new and easy ways to reach the customers and gain a competitive
edge.

6. Key Success Factors:

Patents, technological superiority, channel partners, accessibility to resources may be some of

the strengths of an organization. These success factors must be identified to utilize opportunities
and remain competitive.

Proper analysis prior to entering a new market prevents an organization from wasting resources.
It also helps an organization to understand what they need to accomplish before entering a new
market.