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A ‘market’ is the aggregate of consumers of a given product. And, consumer (the end user), who makes a market, are of varying characteristics and buying behavior. There are different factors contributing for varying mind set of consumers. It is thus natural that many differing segments occur within a market. In order to capture this heterogeneous market for any product, marketers usually divide or disintegrate the market into a number of sub-markets/segments and the process is known as market segmentation 2

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we can say that market segmentation is the segmentation of markets into: HOMOGENOUS GROUPS of customers , each of them reacting differently to promotion, communication , pricing and other variables of the marketing mix 3


ATTRIBUTES OF EFFECTIVE SEGMENTATION Identifiable : The differentiating attributes of the segments must be measurable so that they can be identified. Accessible : The segments must be reachable through communication and distribution channels. Sizeable : The segments should be sufficiently large to justify the resources required to target them. A very small segment may not serve commercial exploitation . Profitable : - There is no use in locating segments that are sizeable but not profitable . 4

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5. Unique needs : To justify separate offerings, the segments must respond differently to the different marketing mixes. 6. Measurable : The potential of the segments(purchasing power) as well as the customer size & effect of a specific marketing mix on them should be measurable. 7. Compatible: - Segments must be compatible with firm’s resources and capabilities 5


REASONS FOR MARKET SEGMENTATION Facilitates proper choice of target marketing Higher Profits Facilitates tapping of the market, adapting the offer to the target Example of Ford: - Ford has gained useful insight through segmentation and adapted its offer to suit the Indian target market. The respective changes made for Indian customer were: 1. Higher ground clearance to make the car compatible to the rougher road surface in India. 6


Contd ……. 2 . Stiffer rear springs to enable negotiating the ubiquitous potholes on Indian roads. Changes in cooling requirement, with greater airflow to the rear. Higher resistance to dust. Compatibility of engine with the quality of fuel available in India. Location of horn buttons on the steering wheel. As Indian motorists use horn far more frequently than the European where the horns are located on the lever 7


Contd ……. 4. Stimulating Innovation 5. Makes the marketing effort more efficient and economic 6. Sustainable customer relationships 7. Higher market Shares 8


BASES FOR SEGMENTATION Segmentation is done for consumer market and industrial market CONSUMER MARKET SEGMENTATION :- 1. Geographic Segmentation. 2. Demographic Segmentation. 3. Psychographic Segmentation. 4. Behavioral Segmentation . 9

Geographic Segmentation:

Geographic Segmentation Segmentation of customers based on geographic factors are: Region: - Segmentation by continent / country / state / district / city. Size: - Segmentation on the basis of size of a metropolitan area as per its population size. Population density: - Segmentation on the basis of population density such as urban / sub-urban / rural etc. Climate: - Segmentation as per climatic condition or weather. 10

Demographic Segmentation ::

Demographic Segmentation : Age (dominant factor) Titan’s product segmentation on the bases of age- 1. Fastrack ( youngsters) 2.steel series( professionals) 3. Regala ( ladies) 2. Income (dominant factor) 3. Purchasing power (dominant factor) e.g . a. Budget car segment(1.5-3 lac )- maruti 800, tata nano 11

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b. Compact car segment(3-4.5 lac )- Maruti Zen, Fiat Uno, Tata Indica, Santro , c. Family car segment (4.5 to 6 lac )- accent, swift d. Premium car segment(6-8 lac )- Honda City 4. Occupation. 5. Gender (dominant factor) :- Product can be segmented for male and female 12

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6. Family Size. 7. Family life cycle. 8. Nationality. 9. Religion. 13

Psychographic Segmentation:

Psychographic Segmentation Group customers according to their life-style and buying psychology. The desire for status, enhanced appearance and more money are examples of psychographic variables. E.g. femina magazines for women who are having a broad & progressive thinking about this modern world. 14

Behavioural Segmentation:

Behavioural Segmentation On basis of buyer behaviour : Variables of buyer behavior are:- a. Benefit sought: - Quality / economy / service / look etc of the product. b. Usage rate: - Heavy user / moderate user / light user of a product . c. User status: - Regular / potential / first time user / irregular /occasional. 15

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Brand Loyalty: - Hard core loyal / split loyal / shifting / switches. Occasion: - Holidays and occasion stimulate customer to purchase products.( Cadbury celebrations packs) Attitude toward offering: - Enthusiastic / positive attitude / negative attitude / indifferent / hostile. 16

Bases for segmentation in industrial market:

Bases for segmentation in industrial market In contrast to consumers, industrial customers tend to be fewer in number and purchase larger quantities. Industrial markets might be segmented on characteristics such as: 1. Location. 2. Company type. 3. Behavioral characteristics 17


Location industrial markets, customer location may be important in some cases. Shipping costs industries /firms tend to cluster together geographically and therefore may have similar needs within a region. 18



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