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Market Segmentation


What is Market Segmentation?
Market segmentation is the process of dividing a broad consumer or business market,
normally consisting of existing and potential customers, into sub-groups of consumers
(known as segments) based on some type of shared characteristics.
Levels of market segmentation
•Mass Marketing
In simple words seller offer same product for all the buyers with different needs and
seller engages in the mass production, mass distribution, and mass promotion of one
product for all buyers.

•Niche Marketing
A niche is a more closely defined group, it is dividing the segment in to sub segment
and it can be divided by identifying the distinct trait of consumer which might need
special combination of benefits this sub segments are made for those consumers
whose needs and wants are not satisfied.

•Local Marketing
Local marketing focus on brands and promotion to the needs and wants of local
consumer and design marketing program according to the need of local consumer
groups cities, neighborhoods and even specific stores.

•Individual Marketing
Individual marketing focus on satisfying the needs and wants of individual customer
it’s also known as one-to-one marketing and customized marketing it’s the
segmentation level where seller offer customized product to the consumer in other
words a product according to the needs and preference of consumer.
Benefits of market segmentation
1. Determining market opportunities:
Market segmentation enables to identify market opportunities. The marketer can study
the needs of each segment in the light of current offerings by the competitors. From
such study, the marketer can find out the current satisfaction of customers.

2. Adjustments in marketing appeals:

Sellers can make best possible adjustments of their product and marketing appeals.
Instead of one marketing programmes aimed to draw in all potential buyers, sellers can
create separate marketing programmes designed to satisfy the needs of different
customers. Proper advertising and sales promotional appeals can be made depending on
the target audience.
3. Developing marketing programmes:
Companies can develop marketing programmes and budgets based on a clearer idea of
the response characteristics of specific market segments. They can budget funds to
different segments depending on their buying response.

4. Designing a product:
Market segmentation helps in designing products that really match the demands of the
target audience. Products with high market potential can be designed and directed to
meet the satisfaction of the target market.

5. Helps in fixing prices:

The marketing segmentation also enables to fix prices of the goods and services. Since
different market segments have different price perceptions, it is necessary to adopt
different pricing strategies for the markets. For instance, the prices for lower-income
groups have to be lower and the product and promotional efforts are adjusted
Difference between a market segmentation and
target market
• Mass market refers to treatment of the market as a homogenous
group and offering the same marketing mix to all customers.

• Target marketing is the overall term for directing your marketing

endeavors toward a group of people
• Target market on the other hand recognizes the diversity of the customers and
does not try to please all of them with the sameoffering.
Requirements of marketsegments
• Indefinable:The differentiating attributes of the segments must be
measurable so they can be identified.

• Accessible: The segments must be reachable through

communication anddistribution channels.
• Unique needs: To justify separate offerings, the segments
must respond differently to different marketing mixes.

• Substantial:The segments should be sufficiently large to justify

the resources required to target them.

• Durable: the segments should be relatively stable to minimize

the cost of frequent changes.
Bases for segmentation in consumer markets




Geographic segmentation

Geographicsegmentation tries to divide markets

into different geographical units:
• Regions
• Size of the area
• Population density
• Climate
• Regions : by continent, country, state or even

• Sizeof the area : segmented according to size of

• Population density: often classified as urban,
suburban, or rural .

• Climate: according to weather patterns common

to certain geographic regions .
Demographic segmentation
Demographic segmentation consists of dividing the market into groups based on variables
such as:

• Age • Social class

• Gender • Life style
• Income
• Age : Marketers design, package and promote products differently to
meet the wants of different age groups.

Good examples include the marketing of toothpaste (contrast the

branding of toothpaste for children and adults) and toys (with many
age-based segments).
• Gender : Gender segmentation is widely used in consumer

The best examples include clothing, hairdressing, magazines and

• Income:Many companies target affluent consumers with luxury
goods and convenience services.

Good examples include Coutts bank; Moet & Chandon champagne

and Elegant Resorts -an up-market travel company.
• Social class: Consumers "perceived" social class
influences their preferences for cars, clothes, home
furnishings, leisure activities and other products &
• Lifestyle: Marketers are increasingly interested in the effect of
consumer "lifestyles" on demand. Unfortunately, there are many
different lifestyle categorization systems, many of them designed by
advertising and marketing agencies as a way of winning new
marketing clients andcampaigns.
Psychographic segmentation
Psychographic segmentationgroups customers according to their
lifestyle.Activities, interest, and opinions (AIO) surveysare one tool for
measuring lifestyle.
• Activities
• Interest
• Opinion
• Values
Behavioralistic segmentation

Behavioralistic segmentation is based on actual customer behavior

towards products. Some behavioralistic variable include:
• Opinions, interests and hobbies
• Degree of loyalty
• Occasions
• Benefits sought
• Usage
• Opinions, interests and hobbies :This covers a huge area and includes
consumers’ political opinions, views on the environment, sporting and
recreational activities and arts and culturalissues.
• Degree of loyalty :Customers who buy one brand either
all or most of the time are valuable tofirms.
• Occasions : This segments on thebasis of when a
product is purchased or consumed.
• Benefitssought :This requires marketers to identify and understand the main
benefits consumers look for in a product.
• Usage: Some markets can be segmented into light,
medium and heavy user groups.
To be effective, after suitably researching the market, probably the most
important this is to carry out the process of market segmentation in logical
and systematic manner. If the process of market segmentation is carried out
thoroughly, then the firm should benefit in terms of better competitive
position for its products or services, resulting in greater sales and profitability.
After all, the whole rationale of the marketing concept is increased business
effectiveness through the provision of customer satisfaction.