1. Market segmentation is the process of dividing the total market into relatively
distinct homogeneous sub-groups of consumers with similar needs or
characteristics that lead them to respond in similar ways to a particular
marketing programme.
A market segment is a portion of a larger market in which the individuals,
groups, or organisations share one or more characteristics that cause them to
have relatively similar product needs.
2. Requirements for Effective Segmentation
Five conditions must exist for segmentation to be meaningful:
1. A marketer must determine whether the market is heterogeneous. If the
consumers’ product needs are homogeneous, then it is senseless to
segment the market.
2. There must be some logical basis to identify and divide the population into
relatively distinct homogeneous groups, having common needs or
characteristics and which will respond to a marketing programme.
Differences in one market segment should be small compared to
differences across various segments.
3. The total market should be divided in such a manner that comparison of
estimated sales potential, costs, and profits of each segment can be done.
4. One or more segments must have enough profit potential that would justify
developing and maintaining a marketing programme.
5. It must be possible to reach the target segment effectively. For instance, in
some rural areas in India, there are no media that can be used to reach the
targeted groups. It is also possible that paucity of funds prohibits the
development required for a promotional campaign.
3. How Segmentation Helps
Segmentation studies are used to uncover needs and wants of specific groups
of consumers for whom the marketer develops especially suitable products
and services to satisfy their needs.
4. Bases for Segmentation
A segmentation variable is a characteristic of individuals, groups or
organisations that marketers use to divide and create segments of the total
market.
Segmentation descriptors fall under four major categories and include
geographic variables, demographic variables, psychographic
variables, and behaviouristic variables.
Geographic variables focus on where the customers are located.
Demographic variables identify who the target customers are.
Psychographic variables refer to lifestyle and values.
Behaviouristic variables identify benefits customers seek, and product
usage rates.
5. Geographic variables Demographic variables
Region Nation Gender Family size
Urban, Rural State Age Occupation
Race Family life cycle
City size Climate
Religion Income
Terrain Market density Social class Education
Psychographic variables Behaviouristic variables
Personality attributes Usage volume, Occasion
Motives End use
Lifestyle Benefits sought
Brand loyalty
Price sensitivity
Segmentation Variables
7. Demographic Segmentation
Demographic characteristics are commonly used to segment the market.
Factors such as age, sex, education, income, marital status, household life
cycle, family size, social class, etc., are used singly, or in a combination, to
segment a market.
9. Behaviouristic Segmentation
Dividing the market on the basis of such variables as use occasion, benefits
sought, user status, usage rate, loyalty status, buyer readiness stage and
attitude is termed as behaviouristic segmentation.
11. Segmentation Variables for
Organisational Markets
Main approaches to segment organisational markets can be grouped under
four heads:
Geographic Location
Customer Size
Product Use
Type of Organisation
Buying Behaviour and Situation
12. Targeting Market Segments
Instead of aiming a single product and marketing programme at the mass
market, most companies identify relatively homogeneous segments and
accordingly develop suitable products and marketing programmes matching
the wants and preferences of each segment.
13. Segment Attractiveness and Business
Strength Factors
The attractiveness of a market segment can be evaluated based on the
company’s current business strength and market potential assessment.
14. Product Positioning
Product positioning is a decision reached by a marketer to try to achieve a
defined brand image relative to competition within a market segment. Product
positioning decisions are strategic decisions and have an impact on long-term
success of the brand.
15. Common bases used for positioning include:
Features
Benefits
Usage
Parentage
Manufacturing process
Ingredients
Endorsements
Comparison
Pro-environment
Product class
Price/quality
Country or geographic area
16. The Process of Determining the
Positioning Strategy
Steps Need to be Taken to Reach a Decision about Positioning
Identify Competitors
Assessment of Consumers’ Perceptions of Competition
Determining Competitor’s Position
Analysing the Consumers’ Preferences
Making the Positioning Decision
17. Writing a Positioning Statement or a Value
Proposition
It is a statement expressed clearly and in few words that identifies the
target market for which the product is intended. It also specifies the product
category in which it competes and highlights the unique benefit it offers.
18. How Many Differences to Promote?
Successful positioning depends on effectively communicating the brand’s
differential advantage.
A USP is an outstanding advantage and the best strategy to create a product’s
position, provided it is not only persuasive for the consumers but also
sustainable.
20. Some popular positioning approaches are:
Positioning by Corporate Identity
Positioning by Brand Endorsement
Positioning by Product Attributes and/or Benefits
Positioning by Use Occasion and Time
Positioning by Price-Quality
Positioning by Product Category
Positioning by Product User
Positioning by Competitor
Repositioning
