MARKET SEGMENTATION

CONCEPT AND DEFINITION

• The concept of market segment is based on the fact that the market of commodities are not homogeneous but they are heterogeneous.

• Market represent a group of customer having common characteristics but two customer are never common in their nature, habits, hobbies income and purchasing techniques.

• According to Philip Kotler , “ Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.”

LEVELS OF MARKET SEGMENTATION

1. SEGMENT MARKETING Consists of a group of customers who share a similar set of needs and wants.

Identifiable Group with in a Market with Similar

• Wants• Purchasing Power• Geographical Location• Buying Attitudes

FLEXIBLE MARKET OFFERING

• Even in segments 100 % needs are not same – consists of two parts

1.Naked Solution :- products and services that all members of the segment values.

2.Discretionary options :- that some segment members value. Each option might carry an additional charge.

Example: Automobile industry – basic model is same but for A.C in the Car , power steering, power window buyer

has to pay extra price. Delta Airlines offers all economy

passengers a seat and soft drinks. It charges economy passengers extra for alcoholic beverages.

Market Segments can be defined in many different ways. One way to carve up a market is to identify Preference segments

Suppose ice cream buyers are asked how much they value sweetness and creaminess as two product attributes. Three different patterns can emerge.

Homogeneous preference : – where all the consumer have roughly the same preferences.– We would predict that existing brand would be similar and

cluster around the middle of the scale in both sweetness and creaminess.

Diffused preference :– consumers vary greatly in their preferences

Clustered preference :

creaminess

sweetness

Homogeneous Preference -no natural segments -all buyers have same preference

creaminess

sweetness

Diffused Preference -no pattern (…or poor research) -take center position

creaminess

sweetness

Clustered Preference -natural segments -increases as number of competitors increases

2. NICHE MARKETING Group of customers seeking a distinctive mix of benefits who are

ready to pay extra premium. Niche = segment sub – segments

Eg. Washing detergents hard & gentle washes . Surf excel for tough stains ( hard on clothes) & Ezee from Godrej for delicate clothes.

--- Astha , Sanskar , Q TV – focus on religion & spiritualism. DISTINCT NEEDS PAY PREMIUM SPECIALIZATION LESS COMPETITION POTENTIAL

3. LOCAL MARKETING

• Marketing programs tailored to the needs & wants of local customer groups in trading areas, neighborhoods , etc.

• This trend is called grass roots marketing.

Ex. – Spiderman 3 was released in 5 different language in India including bhojpuri.

ChitlePune sarees

Kashmiri silk

4. INDIVIDUAL MARKETING

• Ultimate segmentation – segments of 1 or customized marketing or one to one marketing.

• Customization – empower the consumers to design the product or service offering of their choice.

• Ex. Paint companies have started doing this- Asian Paint , Nerolac , Berger Paints, Dell.

GEOGRAPHIC SEGMENTATION

Divide the market into different group based on :• Region – South India , North , Western Region, East• City – metro cities, cities with population more than 1

million• World• Density• Climate• States

Ex.- McDonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chili sauce is added and so on.

DEMOGRAPHIC SEGMENTATION

No Market Segmentation

Segmented by Gender

Segmented by Age

•As people age their needs and wants change, some organizations develop specific products aimed at particular age groups for example  nappies for babies, toys for children, clothes for teenagers and so on.   

•Gender segmentation is commonly used within the cosmetics, clothing and magazine industry.

•In UK we have also seen the introduction of Maxim, (www.maxim-magazine.co.uk)  a male lifestyle magazine covering male fashion, films, cars, sports and technology.

 Income segmentation • It is another strategy used by many organizations.• Daewoo aim their vehicles at price sensitive buyers who

require a bundle of benefits for the price. • In today's globally competitive environment brands are

specifically developed and positioned within particular income segments in order to maximize turnover.

• Products and services are also aimed at different lifecycle segments. Holidays are developed for families, the 18-30's singles,  and for those in their 50's.      

PSYCHOGRAPHIC SEGMENTATION

• Lifestyle groups 

• Mobile• High valued house/flat• Good Salary• Young branded car. Third Agers Associations.• 50's• Retired early from profession.• Time to spare• Adventure Seekers

BEHAVIOURAL SEGMENTATION

OCCASIONS - Archies and Hallmark cards, Monaco at tea time.

BENEFITS – Shampoo for hair conditioning, cleaning , hair fall defence dandruff control

USER STATUS- light – medium – heavy user

LOYALTY STATUS- hardcore loyal , split loyal- loyal to 2-3 brand ,shifting loyal, switcher

Segmentation

• The most important base for segmentation is the Lifestyle as travelling decisions can be greatly influenced by the same.

• Other factors such as Level of Income, Availability of leisure time, etc.

are secondary.

Targeting• Mass Market:

– Consists of Vacationists that travel in large groups

– They prefer all-inclusive tours– Generally Conservative

• Popular Market:– Smaller Groups going for inclusive or

semi-inclusive tours– Groups include pensioners, retired

people• Individual Market:

– Consists of Chairmen, Sr. Executives, people on business visits.

• As lifestyle changes, preferences might change

Strengths:

•Geographical Diversity – Desert, Mountains, Forests and Beaches•Cultural Diversity•Wealth of archaeological sites and historic monuments•Manpower costs are low•World class hotels present

Weaknesses:

•Lack of adequate infrastructure•Xenophobic attitude among certain sections•No proper marketing tools used

SWOT Analysis

• Opportunities:– Proactive role of govt. in framing

proper policies– Allowing entry of more

multinational companies– Growth of Domestic Tourism

• Threats:– Economic Conditions of the other

countries– Political turbulence in Kashmir,

Gujarat– Aggressive strategies approached

by other countries for tourism

SWOT Analysis