SEGMENTATION

 “Market Segmentation 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.”
Selecting & attracting market involves 3 key
decisions: segmenting, targeting & positioning
 Steps in Market Coverage & Attraction
process
Decisions Actions
Segmentation 1) Identification of various bases for
segmenting markets.
2) Developing profiles of the market
segments
Targeting 1) Evaluating the market segments
for their attractiveness
2) Deciding the market coverage
strategy
Positioning 1) Identify a set of possible
competitive advantages of the
brand
2) Selecting the right competitive
advantage
3) Communicating the chosen
competitive advantage to the target
customers
Basis of Segmentation
1) Geographic
segmentation
Demographic
Segmentation
Age
Sex
Family size
Religion
Marital Status
Income
Education
Occupation
Land Ownership.
Psychological
Segmentation

Segmentation based on
specific psychological
variables such as
motivation, personality,
perceptions, learning
and attitude.
Psychographic
Segmentation
This type of segmentation
is done on the basis of
specific psychological
variables, especially
personality and attitude.

This helps in identifying

segments that are
responsive to specific
marketing messages.
This type of segmentation is often done on the basis of
the psychographic profile of the consumer which
includes consumers’ activities, interests and opinions.
It seeks to find out how the consumer spends his time,
what are his interests and what is his opinion on a wide
variety of topics.
Based on the findings the consumer’s psychographic
profile I prepared.
Socio-cultural
Segmentation
This type of
segmentation is
based on
Sociological
(group) and
anthropological
(cultural) variables.
Segments can be made
on the basis of :
- Family life cycle stage
Social Class
- Core Cultural Values
- Sub-cultural
membership
- Cross-cultural
affiliations
Use Related
Segmentation
This type of
segmentation
characterizes consumers
in terms of product or
brand usage such as
- rate of usage
- level of awareness
- brand loyalty
Usage situation
Segmentation.
This type of
segmentation is based
on the usage situation
because it has been seen
that the occasion or
situation often
determines what the
customer will buy or
consume.
Benefit Segmentation :
This type of segmentation
seeks to segment the
market on the basis of
benefits the product can
give.
Marketers seek to identify
the most important benefit
sought from the product
and then highlight it in
their communication.
 Hybrid Segmentation Approaches
It is generally experienced by marketers that relying on
a single approach to segment the market may not serve
the purpose.
Marketers, therefore segment their markets by
combining two or more segment variables.
This approach gives a richer and a more accurately
defined customer segment.
These types of hybrid segments include
Psychographic-demographic profiles,
geodemographics, and VALS.
Demographic – psychographic Segmentation :
This is a combination of Lifestyle and demographic
profiling.
These two when combined together provide powerful
information to marketers about their target markets.
This type of profile helps in the design of an
appropriate advt. program because it gives an idea
about whom to target, what should be said and where
to say.
Geodemographic Segmentation :
This is based on the notion that people who live close
to each other are likely to have similar financial
means, tastes, preferences, lifestyles, and consumption
habits.
 Under Behavioral segmentation Questions
need to understand a consumer

When do ppl buy?- ocassion

Why do ppl buy?- benefits sought
How often do they buy?- user status
How much do they buy?- usage rate
Do they repeat the buy?- loyalty status
What do they buy?- products possessed
Benefits Sought
Different customers seek different benefits from the same
product.
The benefits sought form a product depends on the need of
customers.
The benefits sought can be classified into economic, aesthetic,
emotional, rational and moral.
The behavior of consumers can reveal valuable insights into
which benefits, features, use cases, or problems are most
applicable to them.
And when a customer places a higher value on certain benefits
over others, these primary benefits are the driving factors for
that customer.
Benefits sought
Usage Rate- ammt
Usage-based segments include:
Heavy users ( Super users) — Your most avid and
engaged customers that spend the most time using
your product or service, and purchase most frequently
Medium users ( Average users/Mid-level users) —
Customers that semi-regularly, but not very frequently,
use or purchase your products (often time- or event-
based)
Light users — Customers that use or purchase much
less than other customers, sometimes even only once
This category can be a strong
predictive indicator of loyalty
or churn and, therefore,
lifetime value. It looks at:
How customers are using
your product or service
How often they use it
How much time they spend
with it
What features they use
How many users from the
same account use it?
User Status-frequency
User status is another way to segment customers behaviorally. Some
of the most common include:
Non-users — May need to be made aware that they have a problem
in the first place
Prospects — Need to learn why your product or service is their best
option
First-time buyers — Might need further instruction on how to use
your product-trial purchase
Regular users — Should be introduced to supplemental products or
services you offer
Defectors — Former customers who have switched to a competitor
who might come back to your brand if you’ve fixed the issue that
caused them to leave.
Brand Loyalty
It’s important to segment by customer loyalty because
these people generate the bulk of your revenue, cost
less to retain than acquiring new customers, and have
the highest lifetime value.
Customer Loyalty can be divided into three categories:
Strong
Weak
Non-loyal
In rural areas, brand loyalty is higher as decisions are
collectively made.
Readiness to Buy
Customers can be divided into the following categories
based on their readiness to buy a product:
Leads: they are the customers who are potential buyers,
but have not shown any interest in the product as yet.
Cold Prospects: are the customers who have shown
interest in the product and have the intention to buy, but
not immediately.
Hot Prospects: these are the customers who have felt the
need for the product and are either actively seeking
information about the different options or have already
decided on the option.
Occasion
Occasion and timing-based behavioral segments typically
refer to both universal and personal occasions:
Universal occasions — Purchasing patterns that apply to the
majority of your customers or target audience within a certain
demographic (Diwali, Rakshabandhan,etc.)
Recurring-personal occasions — Purchasing patterns for an
individual customer that repeat consistently over a period of
time-based on their personal life (birthdays, anniversaries,
regular monthly purchases, etc.)
Rare-personal occasions — Purchasing patterns for an
individual customer that are more irregular, spontaneous, and
difficult to predict (weddings, road trips, etc.)
VALS FRAMEWORK
This system draws from Maslow’s hierarchy of needs and
was developed by SRI International to explain the
dynamics of societal change.
As per this scheme people can be divided into three
types, depending on what motivates them primarily.
The Ideals Motivated: They are guided by knowledge
and principles.
The achievement Motivated: they are guided by
demonstration of success to their peers.
The Expression Motivated: They are motivated by
social or physical activity, variety and risk.
INNOVATORS: They are
successful people with
high sophistication and
high esteem.
Since they have abundant
resources, they are
motivated by all three
primary motivations.
They are change leaders.
Eg: Amway Products,
Mercedes
THE IDEALS MOTIVATED
THINKERS : They are
motivated by ideals and
have high resources.
They are mature and
actively seek out
information for making
decisions.
They look for durability,
functionality and value in
products.
Eg: Blackberry, I Phone,
Laptops
BELIEVERS: They are
also motivated by ideals
but have low resources.
They are conservative
and slow to change and
technology averse.
They choose familiar
products and established
brands.Eg: Bata Shoes,
Philips Music Systems
THE ACHIEVEMENT
MOTIVATED
ACHIEVERS: They are
motivated by achievement
and have high resources.
They have goal oriented
life styles that are centered
around family and career.
They prefer premium
products that will
demonstrate their success to
their peers.
Eg: LCD TV, Diamond
Jewellry,
STRIVERS: They are
motivated by
achievement but have
low resources.
They are trendy and fun
loving.
They purchase stylish
products that will
emulate the purchases of
wealthy people.
Eg: Counterfeit
products,
THE SELF-EXPRESSION
MOTIVATED
EXPERIENCERS: They
are motivated by self-
expression and have
high resources.
Since they are not
averse to risk taking,
they always go for the
unconventional.
They are enthused by
the new , offbeat and
risky.
MAKERS: They are
motivated by self
expression, but have low
resources.
They prefer value to
luxury and buy basic
products.
They typically spend
leisure time with family
and close friends.
SURVIVORS: Since
they have lowest of
resources, they do not
show any primary
motivation.
They are primarily
concerned about safety
and security and tend to
be brand loyal and quite
often buy discounted
merchandise.
CRITERIA FOR SEGMENTATION
To be an effective target, the market segment needs to
be
- identifiable
- sufficient
- stable or growing
- accessible ( in terms of both media and cost)
 ADVANTAGES OF MARKET
SEGMENTATION
1.Segmentation keeps the consumers most satisfied
because they get exactly what they need.
2. It facilitates the firm to identify and find out the
additional benefit desired by the people, the
willingness to pay for the additional benefit and the
source and place from where they would like to buy it.
3. It enables the marketer to distinguish one customer
form another group within a given market.
This facilitates better understanding of the specific
needs and characteristics of the prospective buyers.
It will also help marketers to better position their
product and device suitable promotional strategy.
4. Segmentation acts as a precursor to all marketing
activities.
It helps the marketer to form a mental picture of the
prospective customer and then plan marketing
activities around that person.
Since firms have to operate within limited resources,
through marketing segmentation, the marketing efforts
will be more efficient and economical.
This will increase the profitability of the firm.
 IMPLEMENTING SEGMENTATION
STRATEGY
There are basically two ways in which segmentation
strategies can be implemented.
1. Differentiated – targeting several segments using
individual marketing mixes.
2. Concentrated – targeting just one segment with a
unique marketing mix.
 COUNTERSEGMENTATION
Sometimes marketers find that the segments to which
they have been targeting have contracted and therefore
they do not merit individual concentration.
In such a case marketers combine two or more
segments, try to find a single generic need or consumer
characteristic common to both and target that
recombined segment with a product or promotional
campaign.
This is known as countersegmentation.
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