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Market Segmentation & Targeting

Dr. NEETI MATHUR


ADAMAS UNIVERSITY
Market Segmentation
A process of
dividing the market
into distinct groups
of customers
according to their
needs,
characteristics or
behaviors
Why Segmentation?

• Generate greater customer satisfaction


• Create savings
• To identify strategic opportunities and niches
• Increase marketing effectiveness
• Allocation of marketing budget
• Adjustment of product to the market need
• To estimate the level of sales in the market
• To overcome competition effectively
• To develop effective marketing programmers
• To contribute towards achieving company goals
• To develop marketing activities
Goals of Segmentation
The two main goals that any segmentation methodology should be able
to address are:

1) At a strategic level, segmentation should be able to help an


organization rapidly evaluate new business opportunities
 Geographical expansion: Should the retail chain expand to north east?
 Product expansion: Should the electronic manufacturer launch a
Smartphone?
2) At an operational level segmentation should yield information to
help craft successful marketing offers for specific prospects.
 Product: What product features are must haves vs. nice to haves?
 Price: What is the price point that customers are willing to pay?
 Communication: How to message to the target customers.
 Distribution: Where do the target customers live?
Requirements 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.
• Measurable: It has to be possible to determine the values of the
variables used for segmentation with justifiable efforts. This is
important especially for demographic and geographic variables.
For an organization with direct sales (without intermediaries),
the own customer database could deliver valuable information
on buying behavior (frequency, volume, product groups, mode of
payment etc).
• 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.
Segmenting Consumer Markets
Types of segmentation
Geographic Segmentation

When a population is divided on the


basis on geographies i.e. country,
state, city, village, region, postal code
etc, it is referred to as geographic
segmentation. This market
segmentation type helps form clusters
based on location, topography, location
etc.

The following are some examples of


geographic variables often used in
segmentation.
• Region: by continent, country, state, or
even neighborhood.
• Size of metropolitan area: segmented
according to size of population.
• Population density: often classified as
urban, suburban, or rural.
• Climate: according to weather patterns
common to certain geographic regions.
Demographic Segmentation
Slicing the market into groups
based on demographics like age,
gender, income, family members,
educational qualification, socio
economic status, occupation religion,
race & nationality etc called
Demographic segmentation.

Demographic factor are the most


popular bases for segmenting
customer groups. Because customer
needs, wants & usage often very
closely with demographic variables &
are easier to measure than other types
.
Psychographic Segmentation
Divides the customers based on:

 Lifestyle
 Social Class
 Personality

Based on the different expectation that


customers have about what a
product/service can do for them
Behavioural Segmentation
Behavioral segmentation
divides buyers into groups
based on their knowledge,
attitudes, uses or responses to
a product.
Steps in segmenting markets

Market Segmentation
1. Identify bases for segmenting the market
2. Develop segment profiles

Market Targeting
3. Develop measure of segment attractiveness
4. Select target segments

Market Positioning
5. Develop positioning for target segments
6. Develop a marketing mix for each segment
Limitations of market segmentation
Targeting multiple segments increases marketing costs.
Segmentation can lead to proliferation of products.
Narrowly segmenting a market can hamper the development of
broad-brand equity.
Market Targeting
The process of evaluating each market segment’s attractiveness
and selecting one or more segments to enter.
Levels of Target Marketing
Undifferentiated Marketing (very broadly)

Differentiated Marketing (somewhere in between)

 Concentrated Marketing (somewhere in between)


Undifferentiated Marketing
A market-coverage strategy in which a firm decides to ignore market
segment differences & go after the whole market with one offer.
Differentiated Marketing

A market-coverage strategy in which a firm decides to target


several market segments and designs separate offers for each.
Concentrated Marketing
 A market coverage strategy in which a
firm goes after a large share of one or a
few segments or niches.

 Normally used when company resources


are limited

 Company gains a better understanding


of the niches it caters & special reputation
may be gained.

Products can be “Fine-Tuned” to assure


“effective marketing” focused upon
specific customers.

 Can be highly profitable but also


involves higher risk levels.
Importance of target marketing
Positioning
The way the product is define by consumers on important
attributes ----
The place the product occupies in consumers minds relative
to competing products.
Steps to Choosing and Implementing a
Positioning Strategy
• Step 1. Identifying Possible Competitive

• Step 2. Selecting the Right Competitive

• Step 3. Communicating and Delivering the Chosen Position.


Product positioning process
Importance of product positioning

To Make Entire Organization Market oriented.


To Meet Expectation of Buyers
To Promote Consumer Goodwill and Loyalty
To Design Promotional Strategy
To Win Attention and Interest of Consumers
To Attract Different Types of Consumers
To Face Competition
To Communicate New Feature Added Later on

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