Market Segmentation

Introduction

Market segmentation is basically dividing the market into a group of customers who have similar; 1. Characteristics

2. Behaviors
3. Needs and 4. Can be served with a mix This mix is Product or the Marketing Mix

Market consists of buyers/consumers and they differ in more than one way. They differ in their;
1. Wants 2. Resources

3. Locations
4. Buying attitudes and 5. Buying practices

Market Segmentation

Introduction

SEGMENTING CONSUMER MARKETS The consumer markets can be segmented on the basis of following; GEOGRAPHIC To divide markets on geographical basis and then to decide if the company needs to operate in all or a few markets or put different resources in different markets depending upon the needs and requirements of: 1. Sales efforts Market identification, market potential, fixing territory, quotas, own offices, agents, distributors, sales force etc 2. Advertising The selection of media, language, message 3. Sales Promotions what promotional measures will make the product acceptable to trade / consumers 4. Distribution channels the choice of business partners, and if has to be direct selling, single channel or multiple channels, depending upon the reach and the market size, the company may decide 5. Competition in the region or segment

Market Segmentation

Introduction

DEMOGRAPHIC Divides markets on the basis of; 1. Age and Life Cycle Stage wants and needs change with age

e.g. kids, younger children, employed youth, middle aged or the senior members

2. Gender whitening cream, hair shampoo or soaps, apparels etc. for different genders 3. Family size number of members in the family 4. Family Income 5. Occupation 6. Education 7. Religion etc.

Market Segmentation

Introduction

PSYCHOGRAPHIC Divides markets based on the basis of: 1. Social Class people belong to different social groups e.g. political, based on membership of some club, morning walkers, 2. Life Style casual and formal dresses, fresh or cooked or packaged food items etc. 3. Personality Characteristics etc moped for students, sedan car for senior executives, luxury cars for CEOs & Businessmen

Market Segmentation

Introduction

BEHAVIOR Divides based on; 1. Knowledge

2. Attitudes
3. Uses 4. Response to product etc. OCCASIONS The buyers buy products according to occasions or festivals;

1. New Year, Xmas

2. Purchases for marriages, Purchases for gifting 3. Some snacks for afternoon / breakfast cereals for morning etc BENEFITS - sought from a product

USER status ex-users, potential users, first time user, regular user,
USAGE rate light, medium or heavy usages

Market Segmentation
SEGMENTING BUSINESS MARKETS DEMOGRAPHICS Type of industries Company size Location OPERATING VARIABLES Company technology Product/Brand usage status Customer capabilities financial, technical, operational, skills PURCHASING HABITS Organised

Introduction

Types of suppliers and purchasing policies

Relationships between buyers and sellers Purchasing characteristics of buyers

Market Segmentation

Introduction

REQUIREMENTS OF EFFECTIVE SEGMENTATION Measurable size & the purchasing power, profiles all must be measurable Substantial adequate number of customers should be there so that it is worth catering to Accessible Differentiable Actionable The results thus obtained should prompt you to take action also e.g. the markets are identified but not enough people are there to take care for the action to be taken based on the study