Chapter : 8

Market Segmentation and Targeting

Objectives of the lesson

• Need for market segmentation

• Market segmentation levels

• The selection of segmentation

• Effective segmentation

• Target market selection process

Maruti Udyog Limited

• Maruti800• Alto • Zen• Wagon R• Versa• Esteem• Baleno• Swift

Market Segmentation

• Dividing the market by grouping

the customers with similar tastes,

preferences into one segment is

called segmentation

Market Segmentation Levels

• Segment marketing

• Individual marketing

• Niche marketing

• Local marketing

Market Segmentation Levels

• 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

Market Segmentation Levels• 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.

Market Segmentation Levels• 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.

Market Segmentation Levels• 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...

Bases for Consumer Market Segmentation

Market Segementation

GeographicalRegions, cities,

states, countries

DemographicAge,

gender,income,

occupation,religion,

social class,family size

PsychographicLife style,

personality,values,beliefs

BehavioralOccasions,Benefits,

Usage rate,Loyalty status

Bases for Organizational Market Segmentation

Market Segementation

DemographicsOperating Variables

PurchasingApproaches

Situational

Personal Characteristics

Of thePurchaser

Bases for Organizational Market Segmentation

Demographics:Industry-Certain industry can segment their markets

IndustryFinancial service

Insurance firms Banks Stock brokerage firms

Company size Small & Large

Customer location Proximity

Bases for Organizational Market Segmentation

• Operating Variables:

Company technology

Product and brand use status

Customer capabilities

Bases for Organizational Market Segmentation

• Purchasing approaches:Organization’s purchasing function

Relationships among the buyers and sellers

General purchasing policies

Bases for Organizational Market Segmentation

• Situational factors

Urgency of order fulfillment

Product application

Size of the order

Effective Segmentation

• Measurable

• Substantial

• Accessible

• Differential

• Actionable

Target Market Selection Process

• Evaluating the Market Segments

• Selecting the Market Segments

Selecting the Market Segments

• Single Segment Concentration: Focusing on a single segment gives the marketer the advantage of high sales as all the efforts are concentrated on that one segment

Example: Mercedes concentrates on upper income group

Selecting the Market Segments

• Selective Specialization:

Process in which the company focuses its resources on a few segments and develops its expertise in fulfilling the needs of those segments

Selecting the Market Segments

• Product Specialization :The firm makes a certain product that it sells to

several segments

Example: Microscope manufacturer who sells to university, government, and commercial laboratories.

Selecting the Market Segments

• Market specialization:

The firm concentrates on serving many needs of a particular segment

Example: A firm sells assortment of product to university laboratories.

Selecting the Market Segments

• Full market coverage:

Company targets the full market rather than any specific segment.

Example: Hewlett-Packard targets the full market for its printers.

Other Consideration

• Ethical choice of market targets

• Segment interrelationships and super segments

• Segment-by-segment invasion plans

• Inter segment cooperation