Segmentation

Segmentation is required in Mass Marketing. In mass marketing, it is engaged in mass

production, mass distribution and mass promotion of one product for all buyers.
Market segmentation aims at good price and high market gain.
Market Segmentation is a Process of dividing a market into categories of
customer types.
Giant Malls
Consumers
Visit

Specialty Stores
Super Stores
Mail order Catalogs
Home Shopping Networks
Virtual Stores

Broadcasting
Consumers
Respond on
Channels
of Message

Telecasting
Print Media
Online
Telemarketing/ fax
Niche Megazines
Hoardings
Other Advt Channels

Definition:
The process of identification of subsets of buyers within a market, who
share similar needs and who Have similar buying processes

Why Segment the Market:

-Facilitates proper choice of Target Market
-Adapting offer to suit Target segment
-Makes the Market effort more efficient and economic
-Benefits the customers as well

Customer Preference:

1. Homogenous Preference: The Market where all the consumers

have regularly The same preference.
Creaminess

Sweetness
2. Diffused Preference: The Market shows the cross preference are
greatly vary
Creaminess

Sweetness

3. Clustered Preference: The consumers preference are distinct clustering

Creaminess

Bases of Market Segmentation:

A. Geographic Variables:
-

Sweetness

Geographical units that may be considered in developing a segmentatio

Strategy.
Region
City size (Population)
Habituate
Climate

B. Demographic Variables:

Characteristics of populations that may be considered in developing a

segmentation strategy
Age
-Religion
Gender
- Family size
-Race
Income
- Family lifecycle
-Nationality
Occupation
-Social Classes
Education

C. Psychographic Variables:

Consumer characteristics, such as lifestyles, opinions, interests, and

Attitudes
-Lifestyle (Straight, Swinger, Long hair)
-Personality

D. Behavioral:

-Occasional (Regular, Special)

- Benefits (Quality, Service, Economy, Speed)
- User status (Non-user, Ex- user, Potential users, first time user, regular use
-Usage rate ((light, medium, heavy)
-Loyalty Status (None, medium, strong, absolute)
-Readiness stages (unaware, aware, informed, desirous)
-Attitude (Enthusiastic, +ve, -ve, hostile)

E. Product and Service Based:

Consumer characteristics based on the ways in which a product is used,
the brand loyalty it enjoys, and the reasons for which it is purchased

Case Study-

Segment the different buyers groups according usage of the following

commodities:
Credit Cars
Beverages
Banking and Insurance Services
Electronics and Computers
Automobiles
Case Study-

Budget Car Segments (Price within 2.5K)- Maruti- 800, Omni,

Tata Nanotech (lacktakia) etc.
Compact Car segments (Price 3K 4.5K)- Zen, Santro, Maitz, Fial,
Indica etc.
Family Car Segments (4k 5k)- M- Esteem, Daewoo Cielo,
HM. Contesa, Varsha etc.
Premium Car Segments (6K- 10K)- (Opel Astra, Ford Escort, Fiat So
Ford Icon, Honda City, Mitsubisi Lancer etc.
Super Luxury Saloon (10k- and above)- Mercedes Benz,
Rover Montego, BMW etc.

Targeting
Group of people that has similar wants and needs and that can be
expected to show interest in the same products.
Evaluation of different market segmentation:
-Is it sizable?
-Is it growing?
-Is it profitable?
-Is it accessible?
-Is it compatible with the firm resources and capabilities?

Targeting is the second stage of the SEGMENT target POSITION process. After the
market has been separated into its segments, the marketer will select a segment or
series of segments and 'target' it/them. Resources and effort will be targeted at the
segment. It's like looking at a dart board or a shooting target. You see that it has areas
with different scores these are your segments. Aiming the dart or the bullet at a
specific scoring area is 'targeting'.
There are three main types of targeting. They are considered below.

The first is the single segment with a single product. In other word, the marketer
targets a single product offering at a single segment in a market with many segments.
For example, British Airway's Concorde is a high value product aimed specifically at
business people and tourists willing to pay more for speed.

Secondly the marketer could ignore the differences in the segments, and choose to aim
a single product at all segments i.e. the whole market. This is typical in 'mass marketing'
or where differentiation is less important than cost. An example of this is the approach
taken by budget airlines such as Go/Easyjet in the UK and Ryan Air in Eire.

Finally there is a multi-segment approach. Here a marketer will target a variety of

different segments with a series of differentiated products. This is typical in the motor
industry. Here there are a variety of products such as diesel, four-wheel-drive, sports
saloons, and so on.

Positioning

The third and final part of the SEGMENT - TARGET - POSTION process is 'positioning.'
Positioning is undoubtedly one of the simplest and most useful tools to marketers. After
segmenting a market and then targeting a consumer, you would proceed to position a
product within that market.

Positioning is all about 'perception'. As perception differs from person to person, so do

the results of the positioning map e.g what you perceive as quality, value for money,
etc, is different to my perception. However, there will be similarities. Products or
services are 'mapped' together on a 'positioning map'. This allows them to be
compared and contrasted in relation to each other. This is the main strength of this
tool. Marketers decide upon a competitive position which enables them to distinguish
their own products from the offerings of their competition (hence the term 'positioning
strategy').

Case Study:

Indian Motorcycle market:

Traditionally a two stroke scooter market

Stricter emission norms forces an upgrade of technology
Aggressive pricing and fuel efficiency adventage cause shift in market to
motorcycles
CAGR of 25.8% from 1993- 94 to 2001- 02
Majority of market accounted for by 100cc bikes
Two new segments- budget and performance
Major players- Hero Honda, Bajaj Auto, Yamaha, LML, Kinetic and TVS Motor

The 125cc segment:

Account for 5- 7% of market

Main players- Yamaha YBX, YD125, Ambition, GF125
100 cc bikes provide economy but considered too sluggish; 150cc bikes
provide power but guzzle fuel
Prospects for growth as consumers begin looking beyond fuel efficiency
Volumes projected to eclipse 100/ 110cc segment in 3- 5 years
All majors gearing up for major launches in this segment

Market Segments:

Scooters

Budget

Two- wheelers

Motorcycles

Scooterette

Four- stroke

Two- stroke

Economy

Performance

Mopeds

Executive

Niche Segments

Psychographics:

First time buyer or upgrader from scooter/ scooterette

Enjoys his ride, but is parsimonious
Unwilling to accept trade- offs
Pride his level headedness
Pragmatic and uncomfortable with extremes
Does not react to purely emotive messages
Would have liked a more powerful bike but cannot afford to buy/ maintain

Demographics:

21- 35 year old male

Minimum MHI Rs. 10000/Can be employed or dependent, through the earlier is more likely
Graduate, conversant in English
Experienced in purchase of durables- owns a refrigerator, music system and
TV.
Bachelors as well as married men.

Perceptual Map- Power vs Economy

.
.

Libero, Caliber,
Crux, Passion,
Challenger, Splenor

Boxer, Dawn,
Max100, Boss
Victor, Energy,
Adreno

YBX,
Enticer,
Ambition

Increasing mileage

Power
Economy

CBZ, Pulsar,
Fiero, RXZ,
GF 125

Increasing Power

Take a look at the basic positioning map template below.

The marketer would draw out the map and decide upon a label for each axis. They could
be price (variable one) and quality (variable two), or Comfort (variable one) and price
(variable two). The individual products are then mapped out next to each other Any gaps
could be regarded as possible areas for new products. The term 'positioning' refers to the
consumer's perception of a product or service in relation to its competitors. You need to
ask yourself, what is the position of the product in the mind of the consumer?

Trout and Ries suggest a six-step question framework for successful positioning:
1. What position do you currently own?
2. What position do you want to own?
3. Whom you have to defeat to own the position you want.
4. Do you have the resources to do it?
5. Can you persist until you get there?
6. Are your tactics supporting the positioning objective you set?

Look at the example below using the auto market

Product: Ferrari, BMW, Proton, Mercury Cougar, Hyundai, Daewoo.

The seven products are plotted upon the positioning map. It can be concluded that
products tend to bunch in the high price/low economy (fast) sector and also in the low
price/high economy sector. There is an opportunity in the low price/ low economy (fast)
sector. Maybe Hyundai or Daewoo could consider introducing a low cost sport saloon.
However, remember that it is all down to the perception of the individual.

Positioning and Product Differentiation:

Form, size colour etc. (Car Market)
Features (Two-wheelers)
Performance Quality (I-pod, USB drive, Cell phones, Digital Camera, Internet Modem)
Conformance Quality (Brand Positioning)
Durability
Reliability
Reparability
Style
Design