MODULE 3 MARKET SEGMENTATION, TARGETING & POSITIONING

13.1 WHY SEGMENT THE MARKET?

The market for any product is normally made up of several segments. A market
after all is the aggregate of consumers of a given product. And, consumers, who
make a market, are seldom one homogenous lot. They vary in their characteristics
& buying behavior. It is thus natural that many differing segments occur within a
market.
Markets usually divide the heterogeneous market for any product into segments,
with relatively more homogenous characteristics, since this helps in tapping it\. And,
this process of disaggregating a market into # of sub-markets/ segments is known as
market segmentation.

Market segmentation rests on the recognition that:

a) Any market is made up of several sub-markets, or sub-groups of
consumers, distinguished from one another by their varying needs
& buying behavior AND
b) It is feasible to disaggregate the consumers into segments in such
a manner that in needs, characteristics & buying behavior, the
members would vary significantly among/ across segments, but
would be homogenous within each segment.

Why segment the market?

Facilitates Proper Choice of Target Market
In the first place, segmentation helps the marketer to distinguish one
customer group from another within a given market & thereby enables
him to decide which segment should form his target market.
Facilitates Tapping of the market, adapting the Offer to the Target
Segmentation also enables the marketer to crystallize the needs of the

target buyers. It also helps him generate an accurate prediction of the

likely response from each segment of the target buyers. Moreover, when
buyers are handled after careful segmentation, the responses from each
segment will be homogenous. This, in turn, will help the marketer
develop marketing offers, programs that are most suited to each group.
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13.2 WHY SEGMENT THE MARKET?

The Ford Strategy
Through segmentation, car manufacturers have gained useful insights
on the product features/ benefits to be provided to different segments of
car buyers. It will also be clear that within a given segment, the Indian
requirement is often unique, giving rise to an India-specific sub-segment
within any segment. Product offerings have to be tailored to suit Indian
conditions, especially Indian roads. Firms do appreciate this reality &
they provide specific offers/models suiting the Indian target segment.
The undermentioned explains how Ford has gained useful insights

through segmentation & adapted its offer to suit the Indian target
segment:

Adapting Offer to Suit Target Segment

Ford modifies its models for India
Ford modified its models for the Indian target segment as shown
below:
Higher ground clearance to make the car more compatible to the rougher
road surface in India.
Stiffer rear springs to enable negotiating the omnipresent potholes on
Indian roads.
Changes in cooling requirement, with greater airflow to the rear.
Higher resistance to dust.
Compatibility of engine with the quality of fuel available in India.
Location of horn buttons on the steering wheel.
As the Indian motorist uses the horn far more frequently, for cars sold in
India, the horn buttons are kept on the steering wheel & not on a lever on
the side as in the models sold in Europe.

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13.3 WHY SEGMENT THE MARKET?

Helps Divide the Markets & Conquer Them
Through segmentation, the marketer can look at the differences among
the customer groups & decide on appropriate strategies/offers for each
group. This is precisely why some marketing experts have described
segmentation as strategy of dividing the markets for conquering them.

Makes the Marketing Effort more Efficient/Economic

Segmentation also makes the marketing effort more efficient &
economic. It ensures that the marketing effort is concentrated on welldefined & carefully chosen segments. After all, the resources of any firm
are limited & no firm can normally afford to attack & tap the entire
market without any delimitation whatsoever. It would benefit the firm if
the efforts were concentrated on segments that are the most productive
& profitable ones.

Helps Identify Less Satisfied Segments & Concentrate on Them

Segmentation also helps the marketer assess as to what extent existing
offers from competitors match the needs of different customer
segments. The marketer can thus identify the relatively less satisfied
segments & succeed by satisfying such segments.

Benefits the Customer as well

Segmentation brings benefits not only to the marketer, but to the
customer as well. When segmentation attains higher levels of
sophistication & perfection, customers & companies can conveniently
settle down with each other, as at such a stage, they can safely rely on
each others discrimination. The firm can anticipate the wants of the
customers & the customers can anticipate the capabilities of the firm.

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13.4 ADVANTAGES OF MARKET SEGMENTATION

Helps distinguish one customer group from another within a given

market.
Facilitates proper choice of target market.
Facilitates effective tapping of the market.
Helps divide the market & conquer them.
Helps crystallize the needs of the target buyers & elicit more
predictable responses from them; helps develop marketing programs
on a more predictable base; helps develop marketing offers that are
most suited to each group.
Helps achieve the specialization required in product, distribution,
promotion & pricing for matching the customer group & develop
marketing offers & appeals that match the needs of such group.
Makes the marketing effort more efficient & economic.
Helps concentrate efforts on the most productive & profitable
segments, instead of frittering them over irrelevant or unproductive or
unprofitable segments.
Helps spot the less satisfied segments & succeed by satisfying such
segments.
Brings benefits not only to the marketer but also to the customers.
When segmentation attains high sophistication,
companies can choose each other & stay together.

customers

&

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13.5 SEGMENTATION OF MARKETS

Markets can be segmented using several relevant bases. For ex,
demographic characteristics of consumers, such as age, sex,
income/[purchasing capacity, education etc., form one base for
segmentation. Geographic characteristics constitute another; and
buying behavior of the consumers form yet another base.
Geographic Segmentation: Segmentation of consumers based on
geographic factors like climate, region, state, district, urban and rural
areas etc.,
Demographic Segmentation: Segmentation of consumers based on
demographic factors like age, sex, marital status, family size, race,
religion, community, language, occupation, income/purchasing capacity,
education, social status etc.,
Of the several elements of demographics, purchasing capacity forms one
of the more significant bases of segmentation. It manifests through
buyers preference in the matter of price.
In segmentation, it is the consumers, who are classified, not products:
Sometimes, marketers equate market segments with product segments
& price segments (products segmented on the basis of price).
This is the result of a mistaken understanding of the process of market
segmentation. Actually, in market segmentation, it is the consumers who
are classified, not products.
Again, it is not the price of the product, but the consumer characteristic
of purchasing capacity/price preference that is used as the base for the
segmentation. Differentiated product offers in specific price slots is the
response resulting from the segmentation of the consumers.
Buyers of cars are segmented into groups, with price preference as the
base. It is not a case of segmentation of cars with price as the base.

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13.6 PSYCHOGRAPHIC SEGMENTATION

In psychographic segmentation, elements like personality traits,
attitudes, and lifestyle & value system form the base. Psychographics
consist of psychological, sociological & anthropological factors as well as
self-concept & lifestyle. And psychographic segmentation implies
segmenting a given market using these factors.
Since differences among consumers extend to personality traits,
lifestyle & attitude, psychographics often serve as a valuable base for
segmenting & explaining markets. And, among the various elements of
psychographics, lifestyle & attitude are the core ones from the
segmentation angle.

Psychographic segmentation facilitates grouping of consumers in such a

manner that those included in a group react en masse in a particular
way to a particular emotional appeal & share a common buying
behavior pattern. In the case of certain products, buying behavior
predominantly depends on lifestyle & attitude characteristics.
Psychographics help in identifying customers state-of-mind & in
piecing together a more useful profile of the target market. Hence, it is
particularly useful in positioning/repositioning of products & in new
product launch & brand extensions.
Just as purchasing capacity/price preference forms a major base in
demographic segmentation, lifestyle forms a major base in
psychographic segmentation. Psychographic (lifestyle) segmentation is
demonstrated using examples as:
a) How passenger car firms in India came up with Station Wagons
b) Titan creating a sub-brand Titan Fastrack.
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13.7 SEGMENTATION BASSED ON LIFESTYLE

Segmentation of car buyers based on lifestyle
Throughout the 90s, India was an evolving market for different types of
passenger cars. Naturally, carmakers were discovering newer segments
among car buyers.
One significant move has been the spotting of a segment based on
lifestyle. By late 90s, many car buyers in India were showing a
preference for a Station Wagon, with suitable features. It was essentially
a lifestyle-based phenomenon.
Passenger car firms in India, who were segmenting car buyers, using
several relevant bases, including lifestyle, and came out with Station
Wagons, as it suited the particular segment.
Several new offers emerged in the market in response to the needs of
this lifestyle-based segment. They included the following:
Baleno GLX Estate from Maruti, Corsa Station Wagon from GM, Opel
Swing from GM & Sienna Weekend from Fiat.

Segmentation based on Lifestyle Titan Watches

Titan felt there was an opportunity for a casual watch. Since Indian
consumers do not believe in throwaways, the watch had to be fit for
casual wear & yet serious. Fastrack fitted the bill.
For the new watch, Titan went in for a new positioning Fastrack Cool
Watches by Titan. It was a lifestyle-based positioning resulting from the
lifestyle-based segmentation/targeting. Fastrack was targeted at the
outdoor loving urban youth. To start with, 25 designs were offered.
Later, titan added Fastrack digital for this segment when digital
becoming the trend.
Advertising, packaging & merchandising were all different for Fastrack
young, vibrant & cool reflecting the lifestyle-based positioning. In
fact, Fastrack was not the solitary attempt by Titan at segmentation
with lifestyle as the base. The European Insignia & the professional
Sports Instruments 2000 Range were other examples.