Introduction and definition of market segmentation

1. Introduction and definition of market
segmentation
BY
SMART LEARNING WAY

2. contents
☻Introduction
☻Brief introduction about market
segmentation
☻Definition of market segmentation
☻Market strategy and market segmentation
☻Attributes of effective segmentation
☻Conclusion
☻Review of the topic
☻Bibliography

3. introduction to market
segmentation
• 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, consumer ( the end
user), who makes a market, are of varying
characteristics and buying behavior. There
are different factors contributing for
varying mind set of consumers. It is thus
natural that many differing segments
occur within a market.

4. • In order to capture this heterogeneous
market for any product, marketers usually
divide or disintegrate the market into a
number of sub-markets/segments and the
process is known as market
segmentation.

5. • Thus we can say that market
segmentation is the segmentation of
markets into homogenous groups of
customers, each of them reacting
differently to promotion, communication,
pricing and other variables of the
marketing mix. Market segments should
be formed in that way that difference
between buyers within each segment is as
small as possible. Thus, every segment
can be addressed with an individually
targeted marketing mix.

6. • The importance of market segmentation
results from the fact that the buyers of a
product or a service are not homogenous
group. Actually, every buyer has individual
needs, preferences, resources and
behaviors. Since it is virtually impossible
to cater for every customer’s individual
characteristics, marketers group the
customers to market segments by
variables that they have in common.

7. • These common characteristics allow
developing a standardized marketing mix
for all customers in this segment.
• Through segmentation, the marketer can
look at the differences among the
customer groups and decide on
appropriate strategies/offers for each
group. This is precisely why some
marketing gurus/experts have described
segmentation as a strategy of dividing the
markets for conquering them.

8. • Process of dividing the market according
to similarities that exist among the various
subgroups should be within the market.
The similarities may be common
characteristics or common needs and
desires. Market segmentation comes
about as a result of the observation that all
potential users of a product are not alike,
and that the same general appeal will not
interest all prospects.

9. • Market segmentation and diversity are
complementary concepts.
• Without a diverse market place,
composed of many different people with
different backgrounds, countries of origin,
interests, needs and wants, and
perceptions, there would be little reason to
segment markets.

10. • Diversity in the global marketplace makes
market segmentation an attractive, viable,
and potentially highly profitable strategy.
• The necessary condition for successful
segmentation of any market are a large
enough population with sufficient money to
spend and sufficient diversity to lend itself
to partitioning the market into sizable
segments on the basis of demographic,
psychological, or other strategic variables.

11. • United states, Canada, Western Europe,
Japan, Australia, and other industrialized
nations makes these marketplaces
extremely attractive to global marketers.
• When marketers provide a range of
product or service choices to meet diverse
consumer interests, consumers are better
satisfied, and their overall happiness,
satisfaction, and quality of life are
ultimately enhanced.

12. • Thus, market segmentation is a positive
force for both consumers and marketers.

13. Definition of market
segmentation
• Dividing the market by grouping the
customer with similar “tastes &
preferences” into one segment is called
segmentation.
• Different product rangers target different
customer.

14. • Segmentation helps marketers
understand the needs of different
customer better and serve them with
better value propositions.
• If marketers know which segments of the
market they are targeting they can design
their marketing mix to suit the customer in
the segment.

15. • According to Philip kotler, “ market
segmentation is the sub-dividing of market
into homogeneous sub-sections of
customers. Where any sub-section may
conceivably be selected as a market
target to be reached with a distinct
marketing mix.”

16. • According to W.J.Stanton, “market
segmentation consists of taking the total
heterogeneous market for a product and
dividing it into several sub-markets or
segments, each of which tends to be
homogeneous markets which are made
up of individuals or organizations with
similar need, wants and behavioral
tendencies.”

17. • market segmentation allows a marketer to
take a heterogeneous market, a market
consisting of customers with diverse
characteristics, needs, wants and
behaviors, and carve it up into one or
more homogeneous markets which are
made up of individuals or organizations
with similar needs, wants and behavioral
tendencies.

18. • mc Donald's and other marketers have
market segmentation to be a valuable
technique for the following reasons :
efficient use of marketing resources
Better understanding of customer needs
Better understanding of the competitive
situation
Accurate measurement of goals and
performance.

19. • The problem is that competitors follow the
same logic. They, too have identified the
segment with the “large” potential and are
directing their efforts as it.
• As a result, the attractive segment might
have several brands fighting for it,
whereas there might be a smaller
segment that no brand is attempting to
serve.
• This phenomenon is very common and is
called the majority fallacy.

20. • The segment with the biggest potential is
not always the most profitable, It may be
much more profitable to attempt to gain a
small segment, even if it represents only
5% of the market, than to fight ten other
brands for a share of a large segment that
represents 70% of the market.

21. • It is obviously costly to do direct battle with
large, established competitors in a broadly
based market segment.
• A concentration strategy focusing on a
smaller segment is particularly useful to a
small firm that enters a market dominated
by several larger ones. This is some times
called a niche strategy. It may, in fact, be
suicidal for the small company to compete
with the larger once for the large segment.

22. MARKETING STRATEGY AND
MARKET SEGMENTATION: -
• When it comes to marketing strategies,
most people spontaneously think about
the 4Ps (Product, Price, Place, Promotion)
– maybe extended by three more Ps for
marketing services (People, Processes,
Physical Evidence).

23. • Market segmentation and the identification
of target markets, however, are an
important element of each marketing
strategy. They are the basis for
determining any particular marketing mix.
Basic steps in marketing strategy are as
follows:-

25. ATTRIBUTES OF EFFECTIVE
SEGMENTATION
• Market segmentation is resorted for
achieving certain practical purpose. For
example, it has to be useful in developing
and implementing effective and practical
marketing programmes. For this to
happen, the segments arrived at must
meet certain criteria such as:-

26. • A) Identifiable: The differentiating
attributes of the segments must be
measurable so that they can be identified.
• B) Accessible: The segments must be
reachable through communication and
distribution channels.
• C) Sizeable: The segments should be
sufficiently large to justify the resources
required to target them. A very small
segment may not serve commercial
exploitation.

27. • D) Profitable: There is no use in locating
segments that are sizeable but not
profitable.
• E) Unique needs: To justify separate
offerings, the segments must respond
differently to the different marketing mixes.
• F) Durable : The segments should be
relatively stable to minimize the cost of
frequent changes.

28. • G) Measurable: The potential of the
segments as well as the effect of a
specific marketing mix on them should be
measurable.
• H) Compatible: Segments must be
compatible with firm’s resources and
capabilities.

29. Conclusion:
• Market segmentation is the technique
adapted by marketing organizations for
greater penetration into markets and also
to maximize sales turnover and profits.
The usefulness of this technique is the
same, irrespective of the nature of the
product or whether it is a good or bad
service. Segmentation can be used as a
powerful technique owing to a specific
service characteristic, that is, variability.

30. Market segmentation is also separating the
customers into different groups, and
sometimes can split up into different age
groups because different age customers
are interested in different things from the
business. Market segmentation is a
marketing approach that encompasses
the identification of different groups of
customers with different needs or
responses to marketing activity. The
market segmentation process also
considers which of these segments to
target.

31. Review of the topic:
☻Introduction
☻Brief introduction about market
segmentation
☻Definition of market segmentation
☻Market strategy and market segmentation
☻Attributes of effective segmentation
☻Conclusion
☻Review of the topic
☻Bibliography

32. Bibliography:
1) The essence of international marketing
Author : Stanly J. Paliwoda
Prentice –Hall of India, New Delhi
2) Principles of marketing
Authors : Philip Kotler
Gary Armstrong
Prentice –Hall of India Private Limited

33. 3. Marketing management
Author : S.A. sherlekar
Himalaya publishing house
4. management-2
Authors: Anand K. Bewoor,
S. KULKARNI
Tech-max publications, pune

34. 5. Marketing management
Authors: Douglas .v. ymple
publisher by: john Wiley &sons pvt. Ltd.
6. Strategic management
Authors :Mugh Macmillan,
Mahen Tempoe
published by: oxford university
7. internet