Presented By

Vikas Rathi
 Presentation Scheme
• What is segmentation
• Need of Segmentation
• Benefits of Segmentation
• Market Segmentation Levels
• Basis of Market 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…
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 Health & leisure clubs; sport equipment; walking holidays

Exercise
To Travel Airlines; railways; motor car industry; holiday industry
 Need 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 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 Levels

•Segment marketing

•Individual marketing

•Niche marketing

•Local marketing
 Segment 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 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 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 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 Segmentation

Market
Segementation

Demographic
Age, Psychographic Behavioral
Geographical gender, Life style, Occasions,
Regions, cities, income, personality, Benefits,
states, countries occupation, values, Usage rate,
religion, beliefs Loyalty status
social class,
 Geographical

• Where the market is divided by location

• Assumes that people who live in the same area

share some similar needs and wants

• Geographic markets can be easily reached by

local media

• Some firms use geographic segmentation to

adopt a ‘localised’ strategy, however other
firms adopt a ‘global’ strategy
 Possible geographic
segmentation bases

Region Housing density

•Capital cities •High
•Towns •Medium
•Rural •Low

Location State Climate

•Inner-city •NSW •Hot
•Suburban •Victoria •Cold
•Outer-urban •Queensland •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 demographic
segmentation bases

Age Marital Status

•12-17 •Single
•18-34 •Married
•And so on •De facto, etc

Occupation Income Education

•Professional •$20,001-$30,000 •Secondary
•White-collar •$30,001-$40,000 •TAFE
•Blue-collar •And so on •Bachelors, etc.
 Age

• Age is often a strong determinant of product choice

• Health club/gym example...

Aged 55 and
Aged 18-34 Aged 35-54 over
Goal is to To help ‘deal For ‘medicalphysical
‘look good’ with stress’ therapy’
 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 of The opportunity Is likely to

education for a better job, generate a
provides… which.. higher income
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
 Psychographic
segmentation
• 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 Activities Life style

•Extrovert •Work •Actualizers
•Feeling •Internet •Strugglers
•Intuitive •Sport •Achivers
 Behavioral Segmentation

Usage Rate Awareness Status

•Heavy •Enthusiastic
•Medium •Interested
•Light users •Unaware

Brand Loyalty
•Strong Ocassion
•Some •Regular
•None •Special
 Benefit

• 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-up Aim Colgate Tartar

Social appeal Nice taste, so Control
of bright teeth kids will brush •Healthy, plaguefree
their teeth teeth
 Occasions

• 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 Rate

Non-users Light Medium Heavy users

• 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?