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

Demographic
Age, Psychographic Behavioral
gender, Life style, Occasions,
Geographical income,
Regions, cities,
occupation,
personality, Benefits,
states, countries values, Usage rate,
religion,
social class, beliefs Loyalty status
family size
 Bases for Organizational Market
Segmentation

Market
Segementation

Personal
Operating Characteristics Purchasing
Demographics Of the
Situational
Variables Approaches
Purchaser
 Bases for Organizational Market
Segmentation
Demographics:
Industry-Certain industry can segment their markets
Industry
Financial 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