Segmentation

Market Segmentation is the process of dividing a market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.

WHY SEGMENTATION?
Rather than trying to compete with an

entire market, company must identify parts of market that can serve better than competition Segmentation helps sellers develop the right product and adjust prices, set distribution channels and advertising & promotions strategies effectively

WHY SEGMENT (..contd)

Segmentation strategy

differentiates offerings through styling, packaging, promo appeals, method of distribution Segmentation helps sellers develop the right product and adjust prices, set distribution channels and advertising & promotions strategies effectively

HOW MARKET SEGMENTATION WORKS

Segmentation studies - to discover needs/wants on specific

consumer gaps - to guide repositioning of existing products and add new market segment

Types of Segmentation

BASE FOR SEGMENTATION

Demographic segmentation - identifiable, measurable states of a population -

i.e Age : Choronological age, Cohort age Gender marital status: Married, Single, Divorce, Single parent Income Education, Occupation easier to measure, to assess size of target

BASE FOR SEGMENTATION (..contd)

Geographic segmentation - market divided by location/localizing the

marketing strategy - usually people in the same area share the same needs and wants - different spending patterns/demands

BASE FOR SEGMENTATION (..contd)

Psychological segmentation - intrinsic qualities of the individuals

desires: Motivation: shelter, safety, affection, self esteem Personality: extrovert, introvert Perception: Low risk, High risk Learning: Low Involvement, High Involvement Attitude: Positive or negative

BASE FOR SEGMENTATION (..contd)

Psychographic segmentation - lifestyle analysis - Activity: How the consumer spends

time - Interest: Preferences and priorities - Opinion: How a consumer feels about a variety of events

BASE FOR SEGMENTATION (..contd)

Socio-cultural segmentation - family life cycle i.e passing through similar

phases in their formation - social class: education, occupation, income - culture/subculture and cross-culture affiliation

BASE FOR SEGMENTATION

Use-related segmentation - categorizes consumers in term of product,

brand or service usage characteristics, - Rate of usage: Super heavy, heavy, Moderate, Light and non users - Awareness: Unaware, aware, interested, enthusiatic - Degree of brand loyalty: None, some, strong

BASE FOR SEGMENTATION

User-situation segmentation - Usage of product depends on occasion; i.e

greeting cards, drinks, airlines

BASE FOR SEGMENTATION

Benefit segmentation - Rewarding consumers with product

benefits

BASE FOR SEGMENTATION (..contd)

Hybrid segmentation - Combination of two or more exciting

segmentation variables, commonly done by marketers

Hybrid Segmentation
Marketers commonly segment markets by

combining several segmentations variables rather than relying on a single segmentation base. Types of Hybrid segmentation covered Psychographic-Demographic Profile

Geo-demographics VALS

Psychographic-Demographic Segmentation
Widely used in advertising campaigns to answer three questions
Whom should we target What should we say and When should we say it.

E.g.. Newsweek audience profile-Newsweek Asia .doc

offering media buyers such carefully defined dual profiles of their audiences, mass media publishers and broadcasters make it possible for advertisers to select media whose audiences most closely resemble their target markets.

Geo-Demographic Segmentation
This type of hybrid segmentation scheme based on the notion that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles,a and consumption habits.

 Clusters are created based

on consumer lifestyles, and a specific cluster includes pin codes that are composed of people with similar lifestyles widely scattered throughout the country. This cluster data is useful for direct mail campaigns, selecting retail sites, appropriate merchandise mixes, to locate banks and restaurants, designing marketing strategies.

VALS
Draws on Maslows

Need Hierarchy and concept of social character Three major self-orientations Principle oriented consumers whose choices are driven by their beliefs rather than their desires Status oriented- consumers whose choices are guided by the actions, approvals and opinion of others Action oriented-consumers who are driven by a desire for social or physical activity, variety and risk taking

 Each of these self-

orientations represent distinct attitudes,and lifestyles, decision making style. Resources include the range of psychological, physical, demographic and material means the consumer has to draw upon.

Criteria for Effective Targeting of Marketing Segments

Identifiable Sufficient Stable or growing Accessible

(reachable)in terms of both media and cost.

THANK YOU