Market Segmentation

By Aditi Thapar
Lecturer – Marketing
Rayat &Bahra
Concept

 Process of dividing a market

into distinct subsets of
consumers with common needs
or chractertics and selecting one
or more segments to target with
a distinct marketing mix
Mass Media

 Offering same product and

marketing mix to all the
customer
 This concept was given by
Henry Ford
 Example large Refrigerator
taken by grandmother for her
use only
Uses of market segment

 Allow producer to avoid head on

competition by differentiating
their offering not only on the
basis of price but through style ,
package , promotion
Three phases of marketing
strategy
 Market segmentation
 Select one or more segment to
larger by designing on specific
marketing mix
 Positioning of product
Who uses market segment?

 Consumers
 Marketer’s
 Hotels eg hotel Hilton
 Industrial firms
Bases of segmentation

 Select the most appropirate

base on which to segment the
market
 Nine major catagories provide
most popular base for the
market
Bases are as following

 Geographic segmentation
1. Region
2. City size
3. Density of area
4. Climate
Contd…

 Demographic segmentation
1. Age
2. Sex
3. Marital status
4. Income
5. Education
6. Occupation
Contd..

 Psychological segmentation
1. Needs motivation
2. Personalities
3. Perception
4. Learning involvement
5. Attitude
Contd…

 Socio –cultural segtmentation

1. Culture
2. Religion
3. Sub-culture
4. Social class
5. Family life cycle
 Use Related Segmentation
1. Usage rate
2. Awareness stability
3. Brand loyalty
Contd..

 Use situation segment

1. Time
2. Objective
3. Location
4. Person
Contd…

 Benefit segmentation
1. Convienience
2. Social acceptance
3. Long lasting
4. Economy
5. Value for money
Hybrid segmentation

 Combination of several segment

provide richer and more
accurately defined customer
segment
 Eg Psychographic and
Demographic
Criteria for effective targeting
of market segment
 Identification
 Suffiency
 Stability- avoid Fickle segment
that are unpredictable Eg
teenage
 Accessibilty – marketers reach
segment in economical way
Implementation of
segmentation strategy
 Concentration strategy
 Multi mix strategy
Concentration strategy

 Org focus attention on one

market segment and develop
market mix for segment
Advantages – concentration
strategy
 Can thoroughly research the
segment’s wants and run a
much lower risk of not being
able to satisfy its target market
 Long product runs may be
possible
 Distribution , promotion and
prices can be keyed to satisfy
one segment
Disadvantages
 Organisation can not spread its risk
 Decline in selected segment’s buying
power or change in tastes or entry of
rival can have negative impact
 Concentration on more segment by
firm may result in directing efforts in
directing efforts to other segment
The Multi segment Strategy
 Involves developing of two or more
strategies for two or more market
segment
 Some firms start with concentration
strategy and once successful begun
to bexpand in other segment
 IBM first focussed on main frame
computer market , entered personal
computer with PC
Advantages

 Can serve greater number of

potential customer
 Can utilize excess capacity to
serve addittional segment
Disadvantages
 Product cost may go up as shorter
production runs are necessary to
produce a large number of product
 Decission is based on research that
shows
1. Potential customer chractertics and
wants are hetrogeneous
2. Segment can be identified and
compared in terms of relative
attraction
Contd….

 Atleast one segment to be large

enough to be served profitably