Segmentation

MARKET SEGMENTATION
Agenda
Definition
Segmenting Consumer Markets
Segmenting Business and

International Markets
Requirements for effective

Segregation
2
Agenda
Definition


Segregation
3
Definition
 Market segmentation is the process of dividing a market of potential

customers into groups, or segments, based on different characteristics.
The segments created are composed of consumers who will respond similarly
to marketing strategies and who share traits such as similar interests, needs, or
locations
4
Definition
A market is composed of individuals with dissimilar needs & wants & for this reason it is
called a heterogeneous market.
“Market segmentation is the process of dividing the total heterogeneous

market into relatively distinct homogenous sub groups of consumers with
common needs or characteristics & selecting one or more segments to
target with distinct marketing programme…”
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Need for market segmentation
Most efficient Most effective
Many Groups
of One
One Mass
Market
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The importance of market segmentation
 Markets have a variety of product

needs and preferences.
 Marketers can better define
customer needs.
 Decision makers can define objectives
and allocate resources more accurately.
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Segmentation Process
• Marketers follow two methods to determine the bases on which to identify

markets:
– Segments are predefined by managers based on their observation of the
behavioral and demographic characteristics of likely users
– Segments are defined by asking customers which attributes are important
and then clustering the responses
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Criteria for effective segmentation
Responsiveness
Accessibility
Measurability /
Identifiability
Substantiality
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Agenda
Definition


Segregation
10
Types of Market Segmentation
Geographic segmentation.
Demographic segmentation.
Psychographic segmentation.
Behavioral segmentation.
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Geographic Segmentation
 Geographic segmentation divides the market on the basis of geography. This

type of market segmentation is important for the marketers as people belonging
to different regions may have different requirements. For example, water might
be scarce in some regions which inflates the demand for bottled water but, at
the same time, it might be in abundance in other regions where the demand for
the same is very less.
 People belonging to different regions may have different reasons to use the
same product as well. Geographic segmentation helps marketer draft
personalized marketing campaigns for everyone.
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TYPES OF MARKET SEGMENTATION.

Geographic segmentation refers to the classification of market into various geographical
areas.
A marketer can’t have similar strategies for individuals living at different places.
Nestle promotes Nescafe all through

the year in cold states of the country
as compared to places which have well
defined summer and winter season…
McDonald’s in India does not sell beef

products as it is strictly against the religious
beliefs of the countrymen, whereas
McDonald’s in US freely sells and promotes
beef 13
Geographic Segmentation variables
World Region City or

or Country Metro Size
U.S. Region Neighborhood
State Density
City Climate
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Demographic Segmentation
 Demographic segmentation divides the market on the basis of demographic

variables like age, gender, marital status, family size, income, religion, race,
occupation, nationality, etc. This is one of the most common segmentation
practice among the marketers. Demographic segmentation is seen almost in
every industry like automobiles, beauty products, mobile phones, apparels, etc
and is set on a premise that the customers’ buying behaviour is hugely
influenced by their demographics.
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Gender
 Gender is one of the most simple yet important bases of market segmentation.
The interests, needs and wants of males and females differ at many levels.
Thus, marketers focus on different marketing and communication strategies for
both. This type of segmentation is usually seen in the case of cosmetics,
clothing, and jewellery industry, etc.
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Segmented by gender
 The marketers divide the market into smaller segments based on gender.
 Both men and women have different interests and preferences, and thus the need for
segmentation.
 Organizations need to have different marketing strategies for men which would obviously not
work in case of females.
 A woman would not purchase a product meant for males and vice a versa.
 The segmentation of the market as per the gender is important in many industries like
cosmetics, footwear, jewellery and apparel industries.
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No Market Segmentation
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Segmented by Gender
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Age Group
 Segmenting market according to the age group of the audience is a great

strategy for personalized marketing. Most of the products in the market are not
universal to be used by all the age groups. Hence, by segmenting the market
according to the target age group, marketers create better marketing and
communication strategies and get better conversion rates.
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Segmented by age
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Segmented by age
Division on the basis of age group of the target audience is also one of the ways of market
segmentation.
The products and marketing strategies for teenagers would obviously be different than kids.
Age group (0 - 10 years) - Toys, Nappies, Baby Food, pram
Age Group(10 - 20 years) - Toys, Apparels, Books, School Bags
Age group (20 years and above) - Cosmetics, Anti-Ageing Products, Magazines, apparels and
so on
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Income
Income decides the purchasing power of the target audience. It is also one of the
key factors to decide whether to market the product as a need, want or a luxury.
Marketers usually segment the market into three different groups considering
their income. These are
 High Income Group
 Mid Income Group
 Low Income Group
 This division also varies according to the product, its use, and the area the
business is operating in.
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Segmented by income
 Marketers divide the consumers into small segments as per their income. Individuals are
classified into segments according to their monthly earnings.
The three categories are:
High income Group
Mid Income Group
Low Income Group
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Place
 The place where the target audience lives affect the buying decision the most. A
person living in mountains will have less or no demand for ice cream than the
person living in a desert.
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Occupation
 Occupation, just like income, influences the purchase decision of the audience.
A need for an entrepreneur might be a luxury for a government sector
employee. There are even many products which cater to an audience engaged
in a specific occupation.
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Usage
 Product usage also acts as a segmenting basis. A user can be labelled as

heavy, medium or light user of a product. The audience can also be segmented
on the basis of their awareness of the product
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Lifestyle
 Other than physical factors, marketers also segment the market on the basis of
lifestyle. Lifestyle includes subsets like marital status, interests, hobbies,
religion, values, and other psychographic factors which affect the decision
making of an individual.
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Psychographic Segmentation
 Psychographic Segmentation divides the audience on the basis of their

personality, lifestyle and attitude. This segmentation process works on a
premise that consumer buying behaviour can be influenced by his personality
and lifestyle. Personality is the combination of characteristics that form an
individual’s distinctive character and includes habits, traits, attitude,
temperament, etc. Lifestyle is how a person lives his life.
 Personality and lifestyle influence the buying decision and habits of a person to
a great extent. A person having a lavish lifestyle may consider having an air
conditioner in every room as a need, whereas a person living in the same city
but having a conservative lifestyle may consider it as a luxury.
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Psychographic Segmentation
When the segmentation is based on personality or life style characteristics.

 Every consumer has a self image & this describes their personality.
There are different types of people such as :
 ambitious
 confident
Some motorcycle manufacturers segment the
 aggressive
 impulsive market on the basis of personality such as macho
image, independent & impulsive.
 modern
 conservative
Some producers of liquor, cigarettes & apparel
segment the market on the basis personality &
 gregarious
self image.
 loners
 extroverts or introverts
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Behavioural Segmentation
 The market is also segmented based on audience’s behaviour, usage,

preference, choices and decision making. The segments are usually divided
based on their knowledge of the product and usage of the product. It is believed
that the knowledge of the product and its use affects the buying decision of an
individual. The audience can be segmented into –
 Those who know about the product,
 Those who don’t know about the product,
 Ex-users,
 Potential users,
 Current Users,
 First time users, etc.
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Other segments
Marital Status
Market segmentation can also be as per the marital status of the individuals.
Travel agencies would not have similar holiday packages for bachelors and married couples.
Occupation
Office goers would have different needs as compared to school / college students.
A beach house shirt or a funky T Shirt would have no takers in a Zodiac Store as it caters
specifically to the professionals.
32
Thank you
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Segmentation

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MARKET SEGMENTATION

Segmenting Consumer Markets

Segmenting Business and

Requirements for effective

Segmenting Consumer Markets

Segmenting Business and

Requirements for effective

 Market segmentation is the process of dividing a market of potential

“Market segmentation is the process of dividing the total heterogeneous

Most efficient Most effective

 Markets have a variety of product

• Marketers follow two methods to determine the bases on which to identify

Segmenting Consumer Markets

Segmenting Business and

Requirements for effective

 Geographic segmentation divides the market on the basis of geography. This

TYPES OF MARKET SEGMENTATION.

Nestle promotes Nescafe all through

McDonald’s in India does not sell beef

World Region City or

 Demographic segmentation divides the market on the basis of demographic

 Segmenting market according to the age group of the audience is a great

 Product usage also acts as a segmenting basis. A user can be labelled as

 Psychographic Segmentation divides the audience on the basis of their

When the segmentation is based on personality or life style characteristics.

 The market is also segmented based on audience’s behaviour, usage,

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