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INTRODUCTION

Introduction to the Topic


What is Market Segmentation?
Market segmentation is the identification of portions of the market that are
different from one another. Segmentation allows the firm to better satisfy the
needs of its potential customers. In order to be a true market segment, the
people or organizations in each segment must respond differently to variations
in the marketing mix compared with those in other segments. This implies that
for any classification scheme to qualify as market segmentation, the segments
must exhibit these behavioral response differences.
The Need for Market Segmentation
The marketing concept calls for understanding customers and satisfying their
needs better than the competition. But different customers have different needs,
and it rarely is possible to satisfy all customers by treating them alike.
Mass marketing refers to treatment of the market as a homogenous group and
offering the same marketing mix to all customers. Mass marketing allows
economies of scale to be realized through mass production, mass distribution,
and mass communication. The drawback of mass marketing is that customer
needs and preferences differ and the same offering is unlikely to be viewed as
optimal by all customers. If firms ignored the differing customer needs, another
firm likely would enter the market with a product that serves a specific group,
and the incumbent firms would lose those customers.
Target marketing on the other hand recognizes the diversity of customers and
does not try to please all of them with the same offering. The first step in target
marketing is to identify different market segments and their needs.
Advantages of Market Segments
In addition to having different needs, for segments to be practical they should be
evaluated against the following criteria:
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.
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Substantial: the segments should be sufficiently large to justify the


resources required to target them.
Unique needs: to justify separate offerings, the segments must respond
differently to the different marketing mixes.
Durable: the segments should be relatively stable to minimize the cost of
frequent changes.
A good market segmentation will result in segment members that are internally
homogenous and externally heterogeneous; that is, as similar as possible within
the segment, and as different as possible between segments.
Methods and Bases for Market Segmentation
Consumer markets can be segmented on the following customer characteristics.

Geographic
Demographic
Psychographic
Behavioralistic

When a decision is made to explore a market segmentation policy, two


immediate questions must be addressed. First, what method is to be used to
segment the market, and second, on what basis will the market be segmented?
Broadly speaking, there are only two methods for segmenting a mar-ket: a priori
and post hoc methods. Each will be discussed in greater detail later.
The bases available for segmenting a market are nearly unlimited and can
include such things as:
Product class behaviors
Product class preferences
Product class-related attitudes
Brand selection behavior
Brand-related attitudes

Purchasers' attitudes toward themselves and their environment


Demographics
Geographic and Socioeconomic status

Demographic Segmentation
Some demographic segmentation variables include:

Age
Gender
Family size
Family lifecycle
Income
Occupation
Education

Many of these variables have standard categories for their values. For example,
family lifecycle often is expressed as bachelor, married with no children
(DINKS: Double Income, No Kids), full-nest, empty-nest, or solitary survivor.
Some of these categories have several stages, for example, full-nest I, II, or III
depending on the age of the children.

Psychographic Segmentation
Psychographic segmentation groups customers according to their lifestyle.
Activities, interests, and opinions (AIO) surveys are one tool for measuring
lifestyle. Some psychographic variables include:

Activities
Interests
Opinions
Attitudes
Values

Age and life-cycle segmentation


The consumers needs and wants change with age. Therefore some companies
use age and life-cycle segmentation, where age and the life-cycle determine the
marketing approach. Using telephones (landline and mobile) as an example the
marketers must take into consideration that although some 70-years-old use a
landline telephone, e.g. due to the lack of technological knowledge, others may
only use a mobile telephone. Thus, marketers using the age and life-cycle
segmentation must be careful to guard against stereotypes. (Armstrong and
Kotler, 2005: 188)
Furthermore the age and life-cycle segmentation are associated with
behavioural characteristics and buying patterns. An example of this is single
people who have a tendency of purchasing new fashionable items due to the fact
that they have no other economic obligations. This is opposed to married
people, who have a large economic obligation and thereby they prioritize their
economy different (Gunter and Furnham, 1992: 11).

References
Allenby, G. M., & Rossi, P. E. (1999). Marketing models of heterogeneity.
Journal of Econometrics, 89, 57 78.
Andrews, R. L., Ansari, A., & Currim, I. S. (2002). Hierarchical
Bayes versus finite mixture conjoint analysis models: a comparison
of fit, prediction, and partworth recovery. Journal of Marketing
Research, 39, 87 98 (2002, May).
Smith,W. (1956). Product differentiation and market segmentation as
alternative marketing strategies. Journal of Marketing, 21, 38.
Wedel, M., & Kamakura, W. A. (2000). Market Segmentation: Conceptual
and Methodological Foundations. Dordrecht: Kluwer.
Wedel, M., Kamakura, W. A., Arora, N., Bemmaor, A., Chiang, J.,
Elrod, T., Johnson, R., Lenk, P., Neslin, S., & Poulsen, C. S.
(1999). Discrete and continuous representation of heterogeneity.
Marketing Letters, 10, 217 230.
Wind, Y. (1978). Issues and advances in segmentation research.

AIMS AND OBJECTIVES OF THE PROJECT WORK


The main aims and objectives of this project work are as follows: (i) To become familiar with the corporate environment.
(ii) To study the importance of Market Segmentation.
(iii) To get a field on experience to prepare a project on the awareness of general
mass about the market segmentation strategies of Godrej Interio.
(iv) To find out probable limitations of these segmentation strategies.

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