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III MARKET SEGMENTATION

Market segmenting is dividing the market into groups of individual markets with similar wantsor needs that a company divides into distinct groups which have distinct needs, wants, behavior

or which might want different products & services. Broadly, markets can be divided according to

a number of general criteria, such as by industry or public versus private. A market segment is asub-set of a market made up of people or organizations with one or more characteristics thatcause them to demand similar product and/or services based on qualities of those products such

as price or function. The term is also used when consumers with identical product and/or serviceneeds are divided up into groups so they can be charged different amount. The people in a given

segment are supposed to be similar in terms of criteria by which they are segmented and differentfrom other segments in terms of these criteria. These can broadly be viewed as 'positive' and

'negative' applications of the same idea, splitting up the market into smaller groups.

Examples: Gender, Price Interests

While there may be theoretically 'ideal' market segments, in reality every organization engagedin a market will develop different ways of imagining market segments, and create Product

differentiation strategies to exploit these segments. The market segmentation and correspondingproduct differentiation strategy can give a firm a temporary commercial advantage.

In ONGC, it is entirely different scenario as far as market segmentation is concerned. Being a

Govt. of India Enterprise, ONGC has no right to decide the quantity, price and distribution of itsproducts as these rights are rights are exercised & controlled by the Government.

DIRECT MARKETING

Direct marketing is a form ofadvertising that reaches its audience without using traditional

formal channels of advertising, such as TV, newspapers or radio. Businesses communicate

straight to the consumer with advertising techniques such as fliers, catalogue distribution,promotional letters, and street advertising.

Direct Advertising is a sub-discipline and type ofmarketing. There are two main definitional

characteristics which distinguish it from other types of marketing. The first is that it sends itsmessage directly to consumers, without the use of intervening commercial communicationmedia. The second characteristic is the core principle of successful Advertising driving a specific

"call to action." This aspect of direct marketing involves an emphasis on track able, measurable,positive responses from consumers (known simply as "response" in the industry) regardless of

medium.

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Direct Marketing Efforts forgas by ONGCGas from several small fields in Gujarat and Southern India was marketed very quickly throughRegional Marketing Offices at Vadodara and Chennai by open tendering involving the respective

State Industrial Development Corporations. After following laid down procedure involvingapproval of GLC, direct gas supplies by ONGC to new consumers commenced from 1999

onwards at the Government-determined APM price.

Gas Supply Agreement with GAIL

Gas supplies to GAIL were continuing as per MOU, without legally enforceable Gas SupplyAgreement (GSA). ONGC conveyed a draft GSA prepared through E&Y to GAIL based on

international best practice. After several rounds of discussion, in order to resolve the contentiousissues, the matter was brought before the MOP&NG. Accordingly, in two meetings held in

November and December 2004, decisions were taken by MOP&NG on various outstandingissues in GSA but two issues remained unresolved - one was that of ONGC relating to premium

for C2+ components in gas supplies, which are extracted for VAPs, and the other was that ofGAIL regarding Marketing Margin. Subsequently, the GSA with GAIL was signed on 7.7.2006

after Govt. of India agreed to pass on surplus amounts accruing in Gas Pool Account towards partial compensation of C2+, while Govt. rejected GAILs demand for marketing margin for

APM gas. However, the surplus amounts in Gas Pool Account have stopped flowing to ONGCfrom March 2007 after Govt. decided to exhaust Gas Pool account to maximize sourcing of non-

APM gas and supply to APM consumers.