What is Market Segmentation? Market segmentation can be defined as the process of dividing a market into distinct subsets of consumers with common needs or characteristics, so as to select one or more segments to target with a distinct marketing mix.

Bases of Segmenting Consumer Market Geographic Segmentation Psychological Use-Related Demographic Psychographic Use-Situation Socio cultural Benefit Hybrid

Geographic Segmentation Region: North, West, East, South City Size Density: Urban, Sub-urban, rural Climate: Rainy, Dry, Cool

Demographic Segmentation Demography refers to the vital and measurable statistics of a population. Demographics help to locate a target market, whereas psychological and socio-cultural characteristics help to describe how its members think and how they feel.

Life Development Stages Pepsi Youngistan target young generation Product needs and interests often vary with consumer’s age. So marketer target their product to a specific age group Life Development Stages Pepsi Youngistan target young generation

2. Gender Gender is quite frequently a distinguishing segmentation variable. But now a days, sex roles have blurred, and gender is no longer an accurate way to distinguish consumers, as now they are more involved in purchase for opposite sex. Earlier cosmetics were used by females only, but now men have become significant user of cosmetics. Targeted on Females Targeted on Males

3. Marital Status Marketers are interested in the number and kinds of households that buy certain products. They also are interested in determining the demographic and media profile of household decision makers to develop marketing strategies. Singles, divorced, single parents have different buying patterns in comparison to married couple with a family. Targeted on Singles Targeted on Family

4. Income Income is the ability to pay for a product. Marketers launch products for different income categories. Upper Income segment Lower Income segment

5. Education & Occupation Some products are for specific profession. In that case marketers segment the market according to the occupation. Best media for illiterate & less educated Software for pathologists Best media for highly educated Software for Architects

6. Family Life Cycle This segmentation is based on premise that at each phase of life cycle, the family need different products and services. Each stage reflect age, marital status, employment, income etc. (composite variables)

6. Family Life Cycle Financial services industry segments customer in terms of family life cycle stages because it has been found that families financial needs tend to shift as they progress through the various stages of life. Education Plan

For Lower Middle Social Class This segmentation is based on premise that at each phase of life cycle, the family need different products and services. Each stage reflect age, marital status, employment, income etc. (composite variables) For Lower Middle Social Class For Upper Social Class

8. Culture and Sub Culture Members of same culture tend to share the same values, beliefs and customs. Marketers who use cultural segmentation stress specific, widely held cultural values with which they hope consumers will identify.

Psychographic Segmentation Buyers are divided into different groups on the basis of lifestyle or personality and values.

Personality Ford buyers were identified as independent, impulsive, masculine, alert to change, and self confident. Chevrolet owners were conservative, thrifty, prestige conscious, less masculine, and seeking to avoid extremes.

Lifestyle Psychographic refers to lifestyle analysis. There various instruments to measure lifestyle. AIO Inventory (Activities, Interest and Opinions) VALS System (Value and Lifestyle)

Behavioral Segmentation Buyers are divided into groups on the basis of occasion, benefits, user status, usage rate, loyalty status, buyer readiness stage and attitude.

Valentine Celebration Occasion Rakhi Celebration Diwali Celebration Valentine Celebration From Cadbury

2-in-1: Whitening + Mouth Freshener Benefit Segmentation 24-Hour Protection 2-in-1: Whitening + Mouth Freshener

Targeted on Heavy SMS and Web Users Usage Rate Light Medium Heavy Targeted on Heavy SMS and Web Users User Status Nonuser Ex-user Potential user First time user Regular user

Readiness Stage & Loyalty Membership Card for Loyal Customers Campbell seeks to create Awareness and Interest

Readiness Stage Loyalty Status Attitude Unaware Enthusiastic Positive Informed Interested Desire Intend to buy Loyalty Status Hard core loyal Split loyal Shifting loyal Switchers Attitude Enthusiastic Positive Indifferent Negative Hostile

Multi Attribute Segmentation (Geoclustering) Marketers are increasingly combining several variables of segmentation in an effort to identify smaller, better defined target groups. It is known as Multi-attribute segmentation or Hybrid Segmentation or Geoclustering. E.g. PRIZM (Potential Rating Index by Zip Marketers) is one of such hybrid segmentation based on five factors: Education and affluence Family life cycle Urbanization Race and ethnicity Mobility

Summary Segmentation is dividing the market into segments, so that one segment consist of similar type of customers. Segmentation can be done on the basis of four major classes of consumer characteristics. These include geographic, demographic, psychographic and behavioral segmentation. On the basis of type of product, type of potential customer, basis for segmentation is decided. Some companies use hybrid segmentation (geoclustering), where they segment on the basis of two or more criteria rather on single variable. Product, price, promotion and distribution decision all depend upon the segment chosen.

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