Market Segmentation.pptx

A marketing segment is a meaningful buyer group having similar wants. Market segment is the portion of the market defined on the basis of the shared characteristics of people it covers. It the process of grouping buyers into different categories having common desires or needs. It is the strategy that subdivides the target market into sub-groups of consumers with definable, distinct and homogeneous characteristics with a view to develop marketing programmes for each sub-group in order to enhance satisfaction to consumers and profit to the marketer.

1. Market Segmentation Kulbir Singh

2. Introduction A market consists of people or organizations with wants, money to spend, and the willingness to spend it. However, most markets the buyers' needs are not identical. Therefore, a single marketing program for the entire market is unlikely to be successful. A sound marketing program starts with identifying the differences that exist within a market, a process called, market segmentation, and deciding which segments will be treated as target markets. Market segmentation is customer oriented and consistent with the marketing concept.

3. Meaning A marketing segment is a meaningful buyer group having similar wants. Market segment is the portion of the market defined on the basis of the shared characteristics of people it covers. It the process of grouping buyers into different categories having common desires or needs. It is the strategy that subdivides the target market into sub-groups of consumers with definable, distinct and homogeneous characteristics with a view to develop marketing programmes for each sub-group in order to enhance satisfaction to consumers and profit to the marketer.

4. Definition According to William Stanton , “Market segmentation is defined as "the process of taking the total, heterogeneous market for a product and dividing it into several sub markets or segments, each of which tends to be homogeneous in all significance aspects.

5. R eason /Objectives of Segmentation To identify groups of customers with similar requirements. To identify the tastes, preferences, needs and buying motives To increase marketing efficiency To identify the areas where the customers may be created Facilitates proper understanding of the customer

6. Increased market share Technology up-gradation Increase in purchasing power Increase in competition Customer retention

7. Basis for segmenting markets Geographic segmentation: Geographic location is one of the simplest methods of segmenting the market. People living in one region of the country have purchasing and consuming habit which differs from those living in other regions.  Demographic segmentation : Demographic variables such as age, occupation, education, sex and income are commonly used for segmenting markets. Socio-psychological segmentation : Under this method consumers are classified into market segments on the basis of their psychological make-up, i.e., personality, attitude and lifestyle. According to attitude towards life, people may be classified as traditionalists, achievers, etc.

8. Product segmentation : When the segmentation of markets is done on the basis of product characteristics that are capable of satisfying certain special needs of customers, such a method is known as product segmentation. Benefit segmentation : Consumer behaviour depends more on the benefit sought in product/service than on demographic factors. Each market segment is identified by the major benefits it is seeking. Most buyers seek as many benefits as possible. However, the relative importance attached to individual benefits differs from one group to another Volume segmentation : Another way of segmenting the market is on the basis of volume of purchases. Under this method the buyers are purchasers, and single unit purchasers. This analysis is also capable of showing the buying behavior of different groups.

9. Marketing-factor segmentation : The responsiveness of buyers to different marketing activities is the basis for these types of segmentation. The price, quality, advertising, promotional devices, etc., are some of the activities involved under this method. Behavioural Segmentation: Behaviour segmentation refers to why people purchase a product and service. It divides buyers into groups based on their attitude, knowledge, uses or responses to a product.

10. Benefits Of Market Segmentation Better Matching Of Customer Needs : Different customers have different needs. By segmenting the target market and developing homogeneous groups, it becomes easier for the marketer to cater to the customer needs better . Identification Of Gaps In The Market :   Market segmentation also results in the identification of target groups that are not targeted well in the market. This opens up opportunities for the business to exploit and make profits from .

11. Increased ROI : Since market segmentation helps serve the customer needs better, it not only decreases spending unnecessarily but it increases repeated sales, and customers also return the favour in the form of referrals, word of mouth, etc. Customer Retention : Customers retain with a business which understands their needs and fulfils them as they require. Segmentation helps in this. Increased Market Share : Through market segmentation and targeted communication, a competitive advantage can be built which results in increased market share.

12. Proper allocation of resources Better assessment of the competition Knowledge of customers needs Adjustments in products Effective advertisement appeal Enhance marketing efficiency Increase In sales volume Benefits to customers

13. Market segmentation strategies Undifferentiated marketing : When the economies of organization do not permit the division of market into segments, they conceive of the total market concept. In the case of fully standardized products and where substitutes are not available, differentiation need not be undertaken. Under such circumstances firms may adopt mass advertising and other mass methods in marketing, e.g., Coca Cola.

14. Differentiated marketing: A firm may decide to operate in several or all segments of the market and devise separate product-marketing programmes . This also helps in developing intimacy between the producer and the consumer. In recent years most firms have preferred a strategy of differentiated marketing, mainly because consumer demand is quite diversified. Concentrated marketing: Put in another way, 'instead of spreading itself thin in many parts of the market, it concentrates its forces to gain a good market position in a few areas. Then new products are introduced and test marketing is conducted, and this method is adopted. For a consumer product 'Boost' produced by the manufacturers of Horlicks, this method was adopted.

15. Target Marketing It is a market segmentation and market coverage strategy whereby a product is developed and marketed for a very well-defined specific segment of the consumer population. It is particularly effective for small companies with limited resources because it enables the company to achieve a strong market position in the specific market segment it serves without mass production.

16. Target Marketing Strategies Single-market strategy Selective specialization Product specialization Market specialization Full market coverage

17. Single-market strategy : In the simplest case, the company selects a single segment. This company may have limited funds and may want to operate only in one segment, it might be a segment with no competitor, and it might be a segment that is a logical launching pad for further segment expansion. Selective specialization: This strategy of 'multi-segment coverage' has the advantage over 'single-segment coverage' in terms of diversifying the firm’s risk i.e. even if one segment becomes unattractive , the firm can continue to earn money in other segments .

18. Product specialization: Here the firm concentrates on marketing a certain product that it sells to several segments. Through this strategy , the firm builds a strong reputation in the specific product area . Market specialization: Here the firm concentrates on serving many needs of a particular customer group. The firm gains a strong reputation for specializing in serving this customer group and becomes a channel agent for all new products that this customer group could feasibly use. Full market coverage: Here the firm attempts to serve all customer groups with all the products that they might need. Only large firms can undertake a full market coverage strategy. e.g.Philips (Electronics), HLL (Consumer non-durables).

19. Niche Market or concentrate market : A firm is focusing on a single segment so it can concentrate on understanding the needs and wants of that particular market. A niche market is a small part of a larger market that has its own specific needs, which are different from the larger market in some way . Niche marketing is defined as channeling all marketing efforts towards one well-defined segment of the population. There is one important thing to understand that ‘niche’ does not exist, but is created by smart marketing techniques and identifying what the customer wants.