MARKET SEGMENTATION

DEFINITION
• Market segmentation is the process of
dividing the entire heterogeneous market for
goods and services into several segments,
each of which tends to be homogeneous in all
significant aspects.
 Segmentation variable
1. Geographic variable – region, state, district or even
village with certain population parameters.
2. Demographic variables – age, gender, buying
behaviour, occupation, education and family life cycle.
3. Psychographic variables – social class, personality
and lifestyle.
4. Product related variables – types of usage, amount of
usage and benefit sought.
5. Behavioural variables –occasion, benefit sought, user
status, usage rate, loyalty status, place-retail outlet,
product possessed.
 Conditions for effective market
segmentation
• Measurable
• Accessible
• Profitable
• Data availability
 Benefits of market segmentation
• Customer-oriented philosophy
• Enables tailoring of marketing programme
• Enables development of strong positioning of
brand
 Approaches for segmenting the rural
market of India
• Based on the size of village population
Population No. of villages
Less than 200 114,267
200-499 155,123
500-999 159,400
1000-1999 125,758
2000-4999 69,135
5000-9999 11,618
10000 & above 3,064
Total no.of villages 638,365
• Based on the location with respect to nearby
town
1. Village near urban centres
2. Villages in developing districts
3. Immobile and self-sufficient Asiatic villages.
• Based on the size of the farmland
1. Marginal farmer holding up to 1.0 hectare
2. Small farmer holding 1-2 hectares
3. Semi-medium farmer holding 2-4 hectares
4. Medium farmer holding 4-10 hectares
5. Large farmer holding 10 hectares and above.
• Based on sociological characteristics
1. Proprietors of land
2. Rich farmers
3. Small peasants or marginal farmers
4. Tenant farmers
5. Agricultural labourers
6. Artisans and others
• Based on income
1. Concentrated rich consumers
2. Scattered rich consumers
• Rural consumers around urban area
• Rural consumers above poverty line
• Rural consumers below poverty line
• Based on the propensity of consumption
1. Destitudes – income < Rs.16000 per annum, market
for basic, economical and essential commodities.
2. Aspirants – income Rs.16000-Rs.22000, market for
basic durables
3. Climbers – income Rs.22000 – Rs.45000, market for
consumables and consumer durables.
4. Consumers – income Rs.45000 – Rs.2,15,000 per
annum, market for consumables and consumer
durables.
5. Very rich –income >Rs.2,15,000 per annum
• Based on development level
1. Developed state
2. Developing state
• Based on Age Group Perspectives
1. pre-Independence
2. Post Independence
3. Before liberalisation – 1985 onwards
4. After liberalisation – 1990 onwards
5. Millennium – 1997 onwards
• Based on distribution and internal structure
of villages
1. Nuclear
2. Linear villages
3. Irregularly clustered villages
4. Scattered homesteads
 Rural market segmentation tools
• Thompson rural market index
• Mica rural market rating
• Linquest
• Indian market demographics
• Business intelligence unit
• Lincompass
• ARCVIEW
 Thompson Rural Market Index (TRMI)
• Hindustan Thompson Associates Ltd. Developed TRMI as a guide to segment
markets in the rural areas in 1972 and improved it in 1986.
• They compiled a data out of 335 districts, based on 26 variables.
• Further they collected the value of agricultural output data for each district.
• It is considered to be the overall indicator of rural market potential as it has strong
correlation with 10 selected agriculture-related variables viz.
1. Agriculture labourers
2. Grossed cropped area
3. Gross irrigated area
4. Area under non-food crops
5. Pump sets
6. Fertilizer consumptions
7. Tractors
8. Rural credit
9. Rural deposits
10. Village electrified.
 MICA rating
• MICA has developed MICA Rural Market Rating.
• It is available in a CD-ROM with digital maps and provides
the relative market potential of a particular district. The
ratings have been arrived at by using six parameters
1. Total value of agricultural output
2. Bank advances
3. Cropped area
4. Irrigated area
5. Number of cultivators
6. Fertilizer consumption
It also highlights the village haats when and where they are
held and the proximity to the centre by road and rail.
 Lin : Quest
• Initiative media developed Lin:Quest, a soft ware package
that provides marketers with data on rural India.
• The data can be sorted on five parameters
1. Demographic
2. Agricultural
3. Income
4. Literacy
5. Civic amenities
The software allows marketers to assign a weighted average
on each of these. The package then lists all the places
that satisfy the marketer’s criteria. Lin:Quest provides a
list of districts and villages within the district.