Unit 1 - Market Segmentation under Principles of Marketing

Market Segmentation (PPT) is very important topic under Principles of Marketing as it divides the entire market into different segments

1. Market Segmentation Market segmentation can be defined as the process of  dividing a market into different homogeneous groups of consumers . Market consists of buyers and buyers vary from each other in different ways. Variation depends upon different factors like wants, resources, buying attitude, locations, and buying practices. By segmentation , large heterogeneous markets are divided into smaller segments that can be managed more efficiently and effectively with products and services that match to their unique needs. So,  market segmentation is beneficial for the companies serving larger markets .

2. Why Segmentation? To develop marketing activities Increase marketing effectiveness Generate greater customer satisfaction Create savings To identify strategic opportunities and niches Allocation of marketing budget Adjustment of product to the market need To estimate the level of sales in the market To overcome competition effectively To develop effective marketing programmes To contribute towards achieving company goals

3. What segmentation bases are used for business markets? Just like for consumer markets, business or organizational markets should be segmented in order for the firm to effectively develop a successful marketing program. The segmentation bases for business markets vary a little in terminology, but are quite similar in concept and application to the process of segmenting consumer markets. The main segmentation bases used in business markets include: geographic location, business description (sometimes referred to as demographics), operating practices, culture/personality, organizational goals etc...

4. Market Segmentation Segmenting Consumer Markets: There is no single way to segment a market. A marketer has to try different segmentation variables, alone and in combination, to find the best way to view market structure.  The following are the variables that might be used in segmenting consumer markets. Here we look at the major geographic, demographic, psychographic, and behavioral variables. Geographic Demographic Psychographic Behavioural

5. Geographic Segmentation In  geographical segmentation, market is divided into different geographical units  like: 1.Regions (by country, nation, state, neighborhood ) 2.Population Density (Urban, suburban, rural) 3.City size (Size of area, population size and growth rate) 4.Climate (Regions having similar climate pattern) A company, either serving a few or all geographic segments, needs to put attention on variability of geographic needs and wants. After segmenting consumer market on geographic bases, companies localize their marketing efforts (product, advertising, promotion and sales efforts).

6. Demographic Segmentation In  demographic segmentation , market is divided into small segments based on demographic variables like: 1. Age 2. Gender 3. Income 4. Occupation 5. Education 6. Social Class 7. Family size 8. Family life cycle 9. Religion 10. Ethnic group/Race 11. Nationality Demographic factors are most important factors for segmenting the customers groups. Consumer needs, wants, usage rate these all depend upon demographic variables. So, considering demographic factors, while defining marketing strategy, is crucial.

7. In Psychographic Segmentation, segments are defined on the basis of social class, lifestyle and personality characteristics. Psychographic variables include: 1.Interests 2.Opinions 3.Personality 4.Self Image 5.Activities 6.Values 7.Attitudes A segment having demographically grouped consumers may have different psychographic characteristics . Psychographic Segmentation

8. In this segmentation market is divided into segments based on consumer knowledge, attitude, use or response to product. Behavioral variables include: 1.Usage Rate 2.Product benefits 3.Brand Loyalty 4.Price Consciousness 5.Occasions (holidays like mother’s day, New Year and Eid) 6.User Status (First Time, Regular or Potential ) Behavioral segmentation  is considered most favorable segmentation tool as it uses those variables that are closely related to the product itself. Behavioral Segmentation

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