Segmentation

Flow of presentation

Market segmentation
Steps in segmentation process
Segmenting in consumer market
Segmentation business market

What Is a Market Segment?

A market segment consists

of a group of customers who
share a similar set of needs
and wants.

What Is a Market Segment?

Market segmentation divides a market into well-

defined slices.
A market segment consists of a group of
customers who share a similar set of needs and
wants.
The
marketers task is to identify the
appropriate number and nature of market
segments and decide which one(s) to target.
We use two broad groups of variables to
segment consumer markets.

Steps in Segmentation Process by

Roger Best
1. Need-based segmentation
Group customers based on need or benefits sought by
customers
2. Segment identification
For Each need based segments, determine which
demographics, lifestyle, and usage behaviour makes the
segment distinct and identifiable (actionable)
3. Segment attractiveness
Using criteria (market growth, competitive scenario, market
access) determines the overall attractiveness.
4. Segment profitability
Determine segment profitability

Steps in Segmentation Process by

Roger Best
5. Segment positioning
For each segment, create a Value proposition and

product, price positioning strategy based on

segments
unique
customer
needs
and
characteristics.
6. Segment acid test
To test attractiveness of the segments positioning
strategy.
7. Market mix strategy
Expand segment positioning strategy to include all
aspects of the marketing mix product, price,
place, and promotion

Segmenting Consumer Markets

Geographic
Demographic
Psychographic
Behavioral

Geographic Segmentation

Region
City
Rural, Urban, and Semi- Urban Area
Marketing Implications

Geographic Segmentation
Example:
Tea and Coffee market In India
Taste in Tea and Coffee is also different
Weather

conditions
makes
different
opportunities for product categories like AC,
etc
Consumption of food pattern and habit also
different in different geographic market.

Demographic Segmentation

Age
Family Size
Gender
Income
Occupation
Education
Marketing Implications

Demographic Segmentation
Example:
Consumption in food categories like chocolates,

Biscuits, etc (Age)

Purchasing all FMCG products in bulk quantities,
Singer Machines, AC and Washing Machines
(Family Size)
Beauty care products, Jewellery items, etc and
Insurance, Home, ( gender)
Luxury Products (Income)

Psychographic Segmentation

Lifestyle
Personality
Marketing Implications

Psychographic Segmentation
Psychographics is the science of using
psychology and demographics to better
understand consumers.
In psychographic segmentation, buyers are
divided into different groups on the basis of
psychological/personality traits, lifestyle, or
values.
People within the same demographic group
can exhibit very different psychographic
profiles.

Behavioral Segmentation Based on

Needs and Benefits

Needs and Benefits

Decision Roles
User and Usage
1.
2.
3.
4.
5.
6.

Occasions
User Status
Usage Rate
Buyer-Readiness
Loyalty Status
Attitude

Segmenting Business Markets

Demographic
Operating Variables
Purchasing Approaches
Situational Factors
Personal Characteristics

Segmenting for Business Markets

Demographic

Industry: Which industry we should serve?

Company Size: What size of company should we

serve?
Location: What geographical area(s) should we
serve?
Operating variable

Technology: What customer technologies should we focus

on?
User Or Nonuser Status: Should we serve heavy users,
medium users, light users, or non-users?
Customer Capabilities: Should we serve customers needing
many or few services?

Segmenting for Business Markets

Purchasing approaches
Purchasing Function: Should we serve companies having
centralized or decentralized purchasing organization?
Power structure: Should we serve companies that are
engineering dominated, financially dominated, and so on?
Nature of Existing relationships: Should we serve
companies with which we have strong relationship or simply go
after the most desirable companies?
General Purchasing Policies: Should we serve companies
that prefer leasing? Service contract? System purchase? Sealed
Bidding?
Purchasing criteria: Should we serve companies that are
seeking quality? Service? Price?

Segmenting for Business Markets

Situational factors
Urgency: Should we serve companies that need quick and
sudden delivery or service?
Specific Application: Should we focus on a certain
applications of our product rather than all applications?
Size or Order: Should we focus on large or small orders?
Personal characteristics

Buyer Seller Similarity: Should we serve companies

whose people and values are similar to us?
Attitude toward Risk: Should we serve risk taking or risk
avoiding customers?
Loyalty: Should we serve companies that show high loyalty to
their suppliers?

THANK YOU