MARKETING MANAGEMENT (MAM

620)
TOPIC- MARKET SEGMENTATION AND TARGETS

GUIDED BY:- PRESENTED BY:-

Dr. Jayant Gautam Jahnvi (55293)
Lalit Bohra(48550)
Manish Kumar(55296)
Mukul Pant (55286)
  The Process of defining and subdividing a large
homogenous market into clearly identifiable segments
having a similar need, wants or demand characteristics.
 the world is made up of billions of buyers with their own
sets of needs and behaviour. Segmentation aims to
match groups of purchasers with the same set of needs
What is Market and buyers behaviour. Such group are known as
segmentation.
Segmentation?
 The objective of segmentation:
 to design a marketing mix that precisely matches the
expectation of customers in the target segment.
 1.Geographic segmentation

2. Demographic segmentation

Marketing
segmentation 3. Psychographic segmentation

4. Behavioural segmentation
  Division of the market into geographical units such as
Geographic nations, states, regions, countries, cities or neighborhood.
The company can operate in one or few areas or it can
Segmentation operate in all but pay attention to local variation.
  Region of the country or world
 Market size
Classification  Market density
 Climate
  Demographic Segmentation generally divides a
population based on variables. Thus demographic
segmentation too has its own variables such as Age,
gender, family size, income, occupation, religion, race and
nationality.
 The 4 main types of variables used for Demographic
segmentation
Demographic  Age
Segmentation  Gender
 income
 Generation
 Religion race and nationality
Age and Life-
Cycle Stage
  Differentiation of products by segmenting the
population on the basis of gender, more precisely
Men and Women.
 The best examples include clothing, hairdressing,
magazines and cosmetics.

For Women
Gender

For Men's
  Many companies target affluent consumers with luxury
goods and convenience services.
 Good examples include Cars and various luxury products.

Income
  Same generation share the same culture, political, and
economic experiences and often have similar outlook and
values.
 Marketers choose to advertise to a group of people using
the icons and images .

Generation
  Different races have different cultures, which influence
their needs and wants. This is particularly noticeable in
food and fashion products.

Race and
Culture
 PSYCHOGRAPHIC SEGMENTTION
PSYCHOGRAPHICS
(is the science of using)

PSYCHOLOGY DEMOGRAPHICS

PSYCHOLOGY • To study why consumer wants to buy.

DEMOGRAPHY • To study an individual as well as a group.

VALUES PSYCHOLOGI
CAL TRAITS
Buyers are
divided on
the basis of

PERSONALI
LIFE STYLE TY TRAITS
 VALS NETWORK

• Most popular commercially available classification system based on

Psychographic segmentation developed in 1970 and inaugurated by
Mitchell at SRI INTERNATIONAL.

• VALS classifies U.S. adults into eight primary groups based on

personality traits and key demographics.

• The questionnaire contains 4 demographic and 35 attitudinal

questions.
VALS NETWORK
INNOVATORS
PRIMARY HIGH RESOURCES
MOTIVATION HIGH MOTIVATION

IDEALS ACHIEVEMENT SELF-EXPRESSION

EXPERIENC-
THINKERS ACHIEVERS
ERS

BELIEVERS STRIVERS MAKERS

LOW RESOURCES
LOW MOTIVATION
SURVIVORS
Major Tendencies of the Four Groups with Higher Resources are:

 Successful, sophisticated, active, take-charge people with high self-

INNOVATORS esteem. Purchases often reflect cultivated tastes for relatively upscale,
niche-oriented products and services.

 Mature, satisfied, and reflective people who are motivated by ideals and
THINKERS value order, knowledge, and responsibility. Favour durability,
functionality, and value in products.

 Successful goal-oriented people who focus on career and family.

ACHIEVERS
Favours premium that demonstrate success to their peers.

 Young, enthusiastic, impulsive people who seek variety and excitement.

EXPERIENCERS
Spend a comparatively high proportion of income on fashion.
Major Tendencies of the Four Groups with Lower
Resources are:
 Conservative, conventional, and traditional people with concrete beliefs.
BELIEVERS Favour familiar products and are loyal to established brands.

 Trendy and fun-loving people who are resource constrained. Favour

STRIVERS stylish products that emulate the purchases of those with greater
material wealth.

 Practical, down-to-earth, self-sufficient people who like to work with

MAKERS their hands. Favour products with a practical or functional purpose.

 Elderly, passive people who are concerned about change. Loyal to their
SURVIVORS favourite brands.
Behavioural Segmentation

• Buyers are divided into groups on the basis of their knowledge of, attitude toward,
use of, or responses to a product.

• People showing similar buying behaviour can be clubbed together in a single group
and then they can be targeted.

• This type of segmentation can be better understood by three concepts:

i. Decision Roles.
ii.Behavioural variables.
iii.The Conversion Model.
Decision Roles

People play 5 roles in buying decision

Initiator Influence Decider Buyer

r User
 Occasion
s
Benefits

Usage Behaviour User

rate Variables status

Loyalty Buyer
readiness
status stage
Attitude
Occasions
• Can be defined in terms of the time of day, week, month, year as ell as in terms of
temporal aspect of a consumer’s life.
• Buyers can be distinguished according to the occasions when they develop a need and
purchase of product.
Ex. Florida citrus Growers campaign- “Orange juice. Its not just for breakfast anymore.”

Benefits
• Buyers can be classified according to the benefits they seek.
• Mobil identified five different benefit segments and their sizes:
i. Road Warriors- premium products and quality service.(16%)
ii.Generation F- fast fuel, fast service.(27%)
iii.True Blues- branded products and reliable service.(16%)
iv.Home Bodies- convenience.(21%)
v.Price Shoppers- low price.(20%)
User Status
• Markets can be segmented into non-users, ex-users, potential users,
first-time users, and regular users of a product.
ex. Blood banks.

Usage Rate
• Markets can be segmented into light, medium, and heavy product
users
• Heavy users are often a small percentage of the market but account
for a high percentage of total consumption.
Ex. Heavy beer drinkers accounts for 87% of the beer consumed.
Buyer-Readiness Stage
• A market consists of people in different stages of readiness to buy a product.
• Some are unaware, some are aware, some are informed, some are interested,
some desire the product, and some intended to buy.
Ex. Women’s Pap test for Cervical cancer.

Loyalty Status
Buyers can be divided into four groups according to brand loyalty status:
i. Hard-core loyals- buy only one brand all the time.
ii.Split loyals- loyal to two or three brands.
iii.Shifting loyals- shifts loyalty from one product to another.
iv.Switchers- shows no loyalty to any brand.
 The Conversion Model
• Measures the strength of the psychological commitment between
brands and consumers and their openness to change.

• Also used to determine the ease with which a consumer shifts.

• Assesses commitment based on consumer attitude and satisfaction

with current brand.

• The model segments the both users and non-users of a brand.

Segmentation of users based on strength of commitment(from low to high)

CONVERTIBLE • Users who are most likely to defect.

SHALLOW
• Consumers who are uncommitted to the
brand and could switch.

AVERAGE
• Consumers who are committed to the brand
and are unlikely to switch in short term.

• Users who are strongly committed to the

ENTRENCHED brand and are highly unlikely to switch the
brand in foreseeable future.
Segmentation of non-users based on their balance of deposition and openness to
trying the brand

• Unlikely to switch the brand.

STRONGLY UNAVAILABLE • Preference lies strongly to their current
brand.

• Not available to the brand.

WEAKLY UNAVAILABLE • Preference lies with their current brand, not
strongly.

AMBIVALENT
• As attracted to new brand as attracted to
currently using brand.

AVAILABLE • Most likely to be acquired in short terms.

 TARGET MARKET Behavioural Segmentation
Breakdown

UNAWARE AWARE

NOT TRIED TRIED

FAVOURABLE NOT YET

OPINION NEUTRAL REJECTOR REPEATED
OPINION REPEATED

LOYAL TO LOYAL TO
SWITCHER
OTHER BRAND BRAND

LIGHT REGULAR HEAVY

USER USER USER
MARKET TARGETING
 The term “Market targeting” is defined as - a process of selecting the target market from the entire market. Target
market consists of group/groups of buyers to whom the company wants to satisfy or for whom product is
manufactured, price is set, promotion efforts are made, and distribution network is prepared.

 It involves basically two actions –

a) Evaluation of segments
b) selection of the appropriate market segments.

 Finally, we define market targeting as: Market targeting consists of dividing the total market into segments,
evaluating these segments, and selecting the appropriate segments as the target market.
PROCEDURE OF MARKET TARGETING
 Market targeting procedure consists of two steps:
a) Evaluating Market Segments -
Evaluation of market segments calls for measuring suitability of segments. The segments are evaluated with
certain relevant criteria to determine their feasibility.
To determine overall attractiveness / suitability of the segment, two factors are used:
 Attractiveness of Segment

In order to determine attractiveness of the segment, the company must think on characteristics/conditions which
reflect its attractiveness, such as size, profitability, measurability, accessibility, actionable, potential for growth,
scale of economy, differentiability, etc. These characteristics help decide whether the segment is attractive.
 Objectives and Resources of Company

The firm must consider whether the segment suit the marketing objectives. Similarly, the firm must consider its
resource capacity. The material, technological, and human resources are taken into account. The segment must be
within resource capacity of the firm.
2. Selecting Market Segments
 When the evaluation of segments is over, the company has to decide in which market segments to enter. That is,
the company decides on which and how many segments to enter.
 Target market consists of various groups of buyers to whom company wants to sell the product; each tends to be
similar in needs or characteristics.
 Philip Kotler describes five alternative patterns to select the target market.
Company may opt for any one of the following strategies for market targeting based on the situations:
1. Single Segment Concentration
2. Selective Specialization
3. Product Specialization
4. Market Specialization
5. Full Market Coverage
1. Single Segment Concentration
 The company selects only a single segment as target market and offers a single product. All the product items
produced by the company are meant for only a single segment.
 Here, product is one; segment is one.
 For example, a company may select only higher income segment to serve from various segments based on
income such as high end luxury cars purchased by celebrities and elite class people.

ADVANTAGES DISADVANTAGES

1. Company can gain strong knowledge of segment’s needs 1. Competitor may invade the segment and can shake
and can achieve a strong market position in the segment company’s position.

2. Company can specialize its production, distribution, and 2. Company has to pay high costs for change in fashion,
promotion habit, and attitude. Company may not survive as risk cannot
be diversified.

3. Company, by capturing leadership in the segment, can

earn higher return on its investment.
2. Selective Specialization
 In this option, the company selects several segments and sells different products to each of the segments.

 Here the company selects many segments to serve them with many products.

 All such segments are attractive and appropriate with firm’s objectives and resources. There may be little or no
synergy among the segments and every segment is capable to promise the profits.

 This multi-segment coverage strategy has the advantage - of diversifying the firm’s risk. Firm can earn money
from other segments if one or two segments seem unattractive.
3. Product Specialization
 In this alternative, a company makes a specific product, which can be sold to several segments.

 Here, product is one, but segments are many.

 Company offers different models and varieties to meet needs of different segments.

 For example - Many ready-made garment companies prefer this strategy.

ADVANTAGES DISADVANTAGES
1. The company can build a strong reputation in the specific 1. The product may be replaced by an entirely new
product area. technology.
4. Market Specialization
 This strategy consists of serving many needs of a particular segment.
 Here, products are many but the segment is one.
 The firm can gain a strong reputation by specializing in serving the specific segment.

ADVANTAGES DISADVANTAGES

1. Company provides all new products that the group 1. Reduced size of market, reduced purchase capacity
can feasibly use of the segment, or the entry of competitors with
superior products range may affect the company’s
position.
5. Full Market Coverage
 In this strategy, a company attempts to serve all the customer groups with all the products they need. Here, all
the needs of all the segments are served.

 Only very large firm with overall capacity can undertake a full market coverage strategy.

Philip Kotler identifies two broad ways for full market coverage and they are

a) Undifferentiated Marketing

 Company sells the same products to all the customer groups.

 Product and marketing programme remain common for all the segments.

 The firm relies on mass production, mass distribution, and mass advertising. So, it can considerably reduce
production, distribution, and promotional costs.

 Similarly, reduced costs result into low price and the price-sensitive consumers can be attracted.

For example - This method is followed by pharmaceutical companies.

b) Differentiated Marketing

 Here, company operates in several segments and designs different marketing programmes for each of the

segments.

 It is based on the notion that each group needs different products.

 Following costs are likely to be higher in differentiated marketing strategy - Marketing research cost,

Administrative costs, Manufacturing costs, Inventory costs, Promotional costs, Product modification

costs. This strategy creates more total sales, but costs of doing business also on increase.

 For example - This strategy is used by the most of automobile companies. It is less risky as loss in one

segment can be offset against profitable segments. Most of companies prefer this option and the manager

needs a lot of experience, knowledge, and expertise to take decision on target market.
Thank you