PRESENTATION ON:

MARKET
SEGMENTATION
WHAT IS SEGMENTATION?

 Division of mkt into homogenous gps which

respond differently to Mktg mix
Variables.(Advertising,
promotions,communications etc).
 In short it is a Mkt divided into distinct group of
Buyers / Decision makers.
 BLAST FROM THE PAST – M.S. first described in
1950’s where Pdt differentiation was the primary
Mktg strategy.
 In 1970’s & 80’s M.S. was used a s a medium to
expand sales & obtain competitive advantages.
 In 1980’s Direct marketers used many
sophisticated methods,to reach potential buyers
with the most customized offering.
WHY USE MARKET
SEGMENTATION?
 EASIER MKTG- To address the needs of
small gps of customers.
 FIND NICHES- Identify under-served /
unserved mkts.It allows a new company / new
pdt to target less contedted buyers & helps a
mature pdt seek new buyers.
 EFFICIENT- Efficient use of Mktg resources.
Segmentation helps you avoid sending wrong
messages and sending your message to the
wrong customers.
WHEN DO YOU USE
SEGMENTATION?
When there is measurable / significant difference in the
Mkt.
Identified segments should be:
 BIG ENOUGH – Don’t try to split a small mkt.
 DIFFERENT – Differences must exist b/w the
members of the mkt.
 RESPONSIVE – Effective Mktg
communications to address the needs of the
desired segments.
 REACHABLE – Your message must reach
the right segment for it to be effective.
CONT’D ----------
 INTEREST IN DIFFERENT BENEFITS –
Suppose benefits / attributes sought are
same then there is no use in segmenting
potential buyers.
 PROFITABLE – Expected profits should
exceed the cost incurred in Multiple Mktg
programs, Redesigning pdts / creating new
pdts to reach those sgments.
HOW TO SEGMENT A
MARKET?
 A PRIORI – Dividing mkt into segments without
primary research.Eg’s are:
 Heavy vs Moderate & light users.
 Men vs Women
 North vs south regions
 Buyers vs Non buyers.
 Younger vs older users.
 POST HOC SEGMENTATION- Primary mkt research
is important for the target mkt.Without primary data
collection / analysis the segments are not defined.
 INFORMATION REQUIRED TO
SEGMENT A MARKET
CLASSIFICATION VARIABLES – Used to classify

survey respondents into mkt segments. Variables
are:
DEMOGRAPHIC Age, gender, income, marital status, education,
Occupation, household size etc.
GEOGRAPHIC City, state, zip code,region, metro/rural,climate,
Population density etc.
PSYCOGRAPHIC Attitudes, lifestyles,personality,leadership traits,
Hobbies,magazines read etc.
BEHAVIORAL Brand loyalty, usage level, benefits sought, Dist,
Readiness stage, attitude towards pdt etc.
CONT’D……
 DESCRIPTOR VARIABLES – They effectively
segment the mkt thru primary research effort
which can be appended to customer records in
customer databases.
Variables are:
 Geographic characteristics / regions.
 Panel/scanner data on buying habits & usage
levels.
 Customer data collected by companies for
internal use.
 TOOLS USED TO SEGMENT A
MARKET
3 Categories of Analytical techniques:
 DATA PREPARATION-
• Factor analysis
• Correspondence analysis
• Conjoint analysis
 DATA PREPARATION-
• Cluster analysis
• Chi-square
• ANN
• LCSM
 CLASSIFICATION-
• Discriminate analysis
• Multiple regression
• MDS
DATA PREPARATION
 Factor analysis – Reduces the no of
variables.
 Correspondence analysis – Can be clustered
to produce mkt segments.
 Conjoint analysis – The relative value that
individuals place on all key attributes for the
product.Most effective basis as they are
derived from respondents preferences.
DATA ANALYSIS
 Cluster analysis – Clusters produce gps of
respondents having similar responses.Segmentation
finds gps of respondents having similar behavior
when purchasing pdts from the mkt.
 Chi – Square – These methods divide respondents
into gps who are further subdivided into subgps
based on relationship b/w segmenting variables and
some dependent variable.This method create true
segments and these segments are based on only
one dependent variable.
 ANN – This groups respondents based on their
similarities.Avoids noisy data.
 LCS – To find underlying constructs which motivate
people to buy a product/desire certain features in that
pdt.
CLASSIFICATION ALGORITHMS

 When a limited set of information can

be used to accurately predict which mkt
segment each individual belongs you
have a successful classification
algorithm.
HOW MUCH MARKET
SEGMENTATION COSTS?
 Veryexpensive as huge amount of
information and extensive analysis has
to be done to identify segments.
RECAP
 M.S.-The process of partitioning markets into
groups pf potential customers with similar
needs who exhibit almost similar purchase
behavior.
 It is the foundation on which all marketing
actions are based.
 OBJ-To improve the company’s competitive
position and better service the needs of the
customers.
3 STEP PROCESS FOR M.S.
 SEGMENT IDENTIFICATION- Customer
focus, justifiable size, accessible, profitable
etc.
 MARKET SELECTION- Customer
needs,competitive opp, corporate obj, & firms
financial,technical & Mktg resources.
 POSITIONING – Carving out a Mkt niche for
your firm.
SEGMENTATION IN THE
ONCOLOGY MARKET
SEGMENTATION FROM OUR
COMPANY’S PERSPECTIVE
 On psycho graphic & behavioral
variables.
Prescribing decision process of doctors:
3. First time prospects.
4. Novices.
5. Sophisticates.
SEGMENTATION IN A MATURE
MARKET
Doctors can be viewed as:
1.Programmed prescribers-
 Prescribe as a routine process.
 Not price sensitive.
2.Relationship doctors-
 Knowledge about competitive offerings.
 Little discount on brands
 Average service to these doctors.
3. Transaction doctors-
 Product is very important.
 Price sensitive.
 Additional service.
 Ready to switch over for a better price offering
 Knowledge about competitive offerings.
4. Bargain Hunters-
 Pdt is very important.
 Look for heavy discounts and great service.
 Ready to switch even at the slightest dissatisfaction.
ONCOLOGY SEGMENTATION

SEG A SEG B SEG C

Heavy user Mod user Light user
Brand loyal Split loyal Changer
Less service Identify Dr’s B.Conv
But retain him behavior. Spon for
conf.
(Concentrated Corrupt Other needs Retain for B.L.
Marketing) Satisfy Satisfy

Generation of sales (Diff Mktg)

EVALUATING MARKET
SEGMENTS
 Evaluation is done on target Mkt activity.
5 Steps:
a)Single segment strategy.
b)selective specialization.
c)Pdt specialization.
d) Mkt specialization.
e) Full Mkt coverage – Undifferentiated Mkt.
Differentiated Mkt.