Presented By

Vikas Rathi

Presentation SchemePresentation Scheme

• What is segmentation

• Need of Segmentation

• Benefits of Segmentation

• Market Segmentation Levels

• Basis of Market Segmentation

What is Segmentation?What is Segmentation?

To divide the Customer base in cluster groups with different needs and behaviours in order to create different and appropriate marketing proposition

Contd…Contd…

Need Examples of Market Segments Created to Meet the Customer Need

To Eat Restaurants; fast-food outlets; grocery supermarkets

To Drink Coffee bars; wine & spirits production; energy drinks

To Exercise

Health & leisure clubs; sport equipment; walking holidays

To Travel Airlines; railways; motor car industry; holiday industry

Need for SegmentationNeed for Segmentation

• customers differ in the…– Benefits they want – Amount they are able to or willing to pay– Media (e.g. television, newspapers, radio

stations) they see– Quantities they buy– Time and place that they buy

Benefits of SegmentationBenefits of Segmentation

• Businesses are successful when they provide things that customers want

• Segmentation allows businesses to develop products that more closely meet customer needs

• Also allows promotional spending to be targeted more effectively– E.g. adverts not put in the wrong kind of newspaper or

magazine– Sales promotions (e.g. price discounts) not offered to

customers who don’t respond to them

Market Segmentation LevelsMarket Segmentation Levels

•Segment marketing

•Individual marketing

•Niche marketing

•Local marketing

Segment MarketingSegment Marketing

• Dividing the market into different segments on the basis of homogenous need.

• Segmented on basis of broad similarity with regard to some attributes

• Segmentation is also sometimes identifying, capturing & retaining potential new markets

Individual MarketingIndividual Marketing

• Extreme marketing in which marketers focus on individual customers.

• Keep track of individual tastes & preferences of individual customers

• Many companies are approaching individuals through e-mails to promote their products.

Niche MarketingNiche Marketing

• Marketers effort to position their product or service in smaller markets that have similar attributes and have been neglected by other marketer

• Segment further divided into sub segments to cater unsatisfied needs of small group is called as niche.

Local MarketingLocal Marketing

• Marketers offer customized products to suit the local markets.

• THINK GLOBAL ACT LOCAL

• McDonald’s introduced Indianized products such as AlooTikka, Chicken, Patties, Paneer Salsa, Chicken Mexican...

Basis of Market SegmentationBasis of Market Segmentation

Market Segementation

GeographicalRegions, cities,

states, countries

DemographicAge,

gender,income,

occupation,religion,

social class,

PsychographicLife style,

personality,values,beliefs

BehavioralOccasions,Benefits,

Usage rate,Loyalty status

GeographicalGeographical

• Where the market is divided by location

• Assumes that people who live in the same areashare some similar needs and wants

• Geographic markets can be easily reached bylocal media

• Some firms use geographic segmentation toadopt a ‘localised’ strategy, however otherfirms adopt a ‘global’ strategy

Possible geographicsegmentation bases

Region•Capital cities

•Towns•Rural

Housing density•High

•Medium•Low

Location•Inner-city•Suburban

•Outer-urban

State•NSW

•Victoria•Queensland

Climate•Hot•Cold•Wet

Demographic segmentation

• Demography refers to the identifiable and measurable characteristics of a population

• Includes characteristics such as: age,income,marital status, education

• Demographic information is very accessible

and cost-effective to obtain

• Demographic segmentation is one of the most popular ways to segment customer groups

Possible demographicsegmentation bases

Age•12-17•18-34

•And so on

Marital Status•Single

•Married•De facto, etc

Occupation•Professional•White-collar•Blue-collar

Income•$20,001-$30,000•$30,001-$40,000

•And so on

Education•Secondary

•TAFE•Bachelors, etc.

AgeAge

• Age is often a strong determinant of product choice

• Health club/gym example...

Aged 18-34Goal is to‘look good’

Aged 35-54To help ‘dealwith stress’

Aged 55 andover

For ‘medicalphysicaltherapy’

Sex/Gender

• Many products have been traditionally targeted at males or females only

• Examples include: Cosmetics, shavers, tools, magazines

• However, traditional male/female roles in the household are not as clearly defined as in the past

Marital status

• Many decisions are made on the behalf of a households

• Therefore, marital status is an important indicator of how household purchases are made

• In recent years, single one-person households have become an attractive segment

Income, education,Occupation

• These three demographics variables tend to be highly interrelated

A high level ofeducationprovides…

The opportunityfor a better job,

which..

Is likely togenerate a

higher income

Contd..Contd..

• Income is important because it provides an indication of the consumer’s ability to purchase the product

• By combining income with education and occupation (a social class measure), an understanding of the consumer’s lifestyle can be determined

• Sometimes the occupation variable is used as a proxy measure of social class

Psychographicsegmentation

• Psychographic research is also referred to as ‘lifestyle analysis’

• Often considers consumers’ AIO’s AIO = activities, interests, opinions

• Used to help structure appropriate marketing messages

Personality•Extrovert•Feeling•Intuitive

Life style•Actualizers•Strugglers•Achivers

Activities•Work

•Internet•Sport

Behavioral SegmentationBehavioral Segmentation

Usage Rate•Heavy

•Medium•Light users

Awareness Status•Enthusiastic•Interested•Unaware

Brand Loyalty•Strong•Some•None

Ocassion•Regular•Special

BenefitBenefit

• Benefit (or needs-based) segmentation is based on providing/communicating the major benefits that consumers are seeking

• A good example is the toothpaste market...

Close-upSocial appealof bright teeth

AimNice taste, sokids will brush

their teeth

Colgate TartarControl

•Healthy, plaguefreeteeth

OccasionsOccasions

• Consumers will often make different decisions in different situations (or occasions)

• Consider... - Wine for self, or as a gift - Food when in a hurry, or when have 1-2 hours free

• Occasions are a key marketing opportunity - Mother’s Day - St Valentine’s Day - Easter

Usage RateUsage Rate

• In the beer market, the group of heavy users account for around 30% of consumers, but over 70% of consumption

• Therefore, heavy users are an attractive (but competitive) target market

• Also need to consider whether non-users are a viable segment - Should we attract new consumers (non-users) , or try to win

heavy users from competition?

Non-users Light Medium Heavy users