1) (a)What do you understand by the term Marketing Segmentation?

    (b)What are the different types of consumer and Industrial Market Segmentation?

2) Explain the term Targeting? Explain the different types of target marketing strategies and their
relevance.

3) Explain the term 'Positioning?'What are different types of positioning and the positioning
processes?

Marketing > Segmentation

Market Segmentation

Market segmentation is the identification of portions of the market that are different
from one another. Segmentation allows the firm to better satisfy the needs of its
potential customers. Market segmentation could be defined as the process of   dividing
the market in to different homogeneous groups of consumers who have similar interests.
In other words, it could also be defined as a  strategy that involves dividing the market
into various subsets of consumers who have common needs and interests regarding the
goods and services offered. This is because by splitting the market into various
segments it is possible for an organization to offer their marketing mix for specific target
markets instead of offering the same marketing mix for the entire market which
comprise of vastly different customers. To say, once an organization has identified their
specific market segments/s they are able to decide on the marketing mix to the specific
group of consumers which will enable them to better satisfy the needs of the customers.

By the way, if any of the identified  subsets of consumers lack the above requirements,
than it is unlikely that the organizations may get a successful outcome

The Need for Market Segmentation

The marketing concept calls for understanding customers and satisfying their needs
better than the competition. But different customers have different needs, and it rarely is
possible to satisfy all customers by treating them alike.

Mass marketing refers to treatment of the market as a homogenous group and offering

the same marketing mix to all customers. Mass marketing allows economies of scale to
be realized through mass production, mass distribution, and mass communication. The
drawback of mass marketing is that customer needs and preferences differ and the same
offering is unlikely to be viewed as optimal by all customers. If firms ignored the
differing customer needs, another firm likely would enter the market with a product that
serves a specific group, and the incumbant firms would lose those customers.

Target marketing on the other hand recognizes the diversity of customers and does not
try to please all of them with the same offering. The first step in target marketing is to
identify different market segments and their needs.
Requirements of Market Segments

In addition to having different needs, for segments to be practical they should be

evaluated against the following criteria:

 Identifiable: the differentiating attributes of the segments must be measurable so

that they can be identified.

 Accessible: the segments must be reachable through communication and

distribution channels.

 Substantial: the segments should be sufficiently large to justify the resources

required to target them.

 Unique needs: to justify separate offerings, the segments must respond

differently to the different marketing mixes.

 Durable: the segments should be relatively stable to minimize the cost of

frequent changes.

A good market segmentation will result in segment members that are internally
homogenous and externally heterogeneous; that is, as similar as possible within the
segment, and as different as possible between segments.

Bases for Segmentation in Consumer Markets

Consumer markets can be segmented on the following customer characteristics.

 Geographic

 Demographic

 Psychographic

 Behavioralistic

Geographic Segmentation

The following are some examples of geographic variables often used in segmentation.

 Region: by continent, country, state, or even neighborhood

 Size of metropolitan area: segmented according to size of population

 Population density: often classified as urban, suburban, or rural

 Climate: according to weather patterns common to certain geographic regions

Demographic Segmentation

Some demographic segmentation variables include:

 Age
  Gender

 Family size

 Family lifecycle

 Generation: baby-boomers, Generation X, etc.

 Income

 Occupation

 Education

 Ethnicity

 Nationality

 Religion

 Social class

Many of these variables have standard categories for their values. For example, family
lifecycle often is expressed as bachelor, married with no children (DINKS: Double
Income, No Kids), full-nest, empty-nest, or solitary survivor. Some of these categories
have several stages, for example, full-nest I, II, or III depending on the age of the
children.

Psychographic Segmentation

Psychographic segmentation groups customers according to their lifestyle. Activities,

interests, and opinions (AIO) surveys are one tool for measuring lifestyle. Some
psychographic variables include:

 Activities

 Interests

 Opinions

 Attitudes

 Values

Behavioralistic Segmentation

Behavioral segmentation is based on actual customer behavior toward products. Some

behavioralistic variables include:

 Benefits sought

 Usage rate
  Brand loyalty

 User status: potential, first-time, regular, etc.

 Readiness to buy

 Occasions: holidays and events that stimulate purchases

Behavioral segmentation has the advantage of using variables that are closely related to
the product itself. It is a fairly direct starting point for market segmentation.

Bases for Segmentation in Industrial Markets

In contrast to consumers, industrial customers tend to be fewer in number and purchase

larger quantities. They evaluate offerings in more detail, and the decision process usually
involves more than one person. These characteristics apply to organizations such as
manufacturers and service providers, as well as resellers, governments, and institutions.

Many of the consumer market segmentation variables can be applied to industrial

markets. Industrial markets might be segmented on characteristics such as:

 Location

 Company type

 Behavioral characteristics

Location

In industrial markets, customer location may be important in some cases. Shipping costs
may be a purchase factor for vendor selection for products having a high bulk to value
ratio, so distance from the vendor may be critical. In some industries firms tend to
cluster together geographically and therefore may have similar needs within a region.

Company Type

Business customers can be classified according to type as follows:

 Company size

 Industry

 Decision making unit

 Purchase Criteria

Behavioral Characteristics

In industrial markets, patterns of purchase behavior can be a basis for segmentation.

Such behavioral characteristics may include:

 Usage rate
  Buying status: potential, first-time, regular, etc.

 Purchase procedure: sealed bids, negotiations, etc.

What is market segmentation?

Market segmentation could be defined as the process of   dividing the market in to
different homogeneous groups of consumers who have similar interests. In other words,
it could also be defined as a  strategy that involves dividing the market into various
subsets of consumers who have common needs and interests regarding the goods and
services offered. This is because by splitting the market into various segments it is
possible for an organization to offer their marketing mix for specific target markets
instead of offering the same marketing mix for the entire market which comprise of
vastly different customers. To say, once an organization has identified their specific
market segments/s they are able to decide on the marketing mix to the specific group of
consumers which will enable them to better satisfy the needs of the customers.

Having said that, it is not just enough splitting the market into various segments, but
the identified segments should have certain requirements meaning to say that they
should be,

  Measurable ( how many consumers are there, how much do they have to spend
and where are they ).

  Accessible by communication  and distribution channels ( segments can be

reached and served )

  Different in its response to a marketing mix

  Not changing too quickly

  Sustainable enough to be profitable

By the way, if any of the identified  subsets of consumers lack the above requirements,
than it is unlikely that the organizations may get a successful outcome.

What are the bases for market segmentation?

Market segmentation could be carried out for both the consumer markets as well as for
industrial markets. In other words, both the consumer and the industrial markets could
be divided into subsets of consumers on the following basses.

Consumer market segmentation

  Geographic segmentation - This means that the consumers in the market
could  be segmented or divided according to the region( by continent, country,
state or even the  neighbourhood they belong to ), according to the population,
according to urban, suburban and rural areas, and also according to the weather
patterns unique to certain geographic areas. 

 Demographic segmentation - This basically means that the consumers are

segmented according to the demographic variables such as age, gender, family
lifecycle( bachelor, married with children, married without children etc), income,
occupation, education, nationality, religion, social class. ethnicity etc.

 Psychographic segmentation - This is when the market is segmented

according to the  life styles of the consumers. Some of the psychographic
variables used in segmenting include activities, interests, attitudes, opinions and
values of the consumers.

 Behaviouristic segmentation – When it comes to behaviouristic segmentation,

this is based on the actual behaviour of the consumers towards the product.
Some of the behaviouristic variables used in segmenting are benefits sought,
usage rate, brand loyalty, user status( first time buyer, regular buyer etc),
readiness to buy, and occasions etc.

Industrial market segmentation

When it comes to industrial markets, usually the customers in there markets are rather
fewer in number when compared with the consumer markets. But however, these
customers basically look for more information with regard to purchasing goods and
services while the decisions taken by them  involves more than one person. For 
example, these include manufactures, service providers, resellers and institutions etc. To
say, the industrial markets too could be segmented using the bases of the consumer
market, but is addition there are some other variable bases used in segmenting the
industrial customers. These include,

 Location - The business customers could be segmented according their location 

as this is an important factor to consider at times, mainly when shipping costs are
concerned.

 Company type - The business customers can even be segmented according to

the company size, industry , decision making unit, etc.

 Behavioural characteristics – The industrial customers can also be segmented

according to the patterns of purchase behaviour such as usage rate, buying
status ( regular, first time buyer, etc.), or even the purchase procedure ( sealed
bids, negotiations etc).

Reasons for segmenting the market

Having looked at  some of the   bases  in which the markets are segmented upon , it is
important to know why  market segmentation is important in the first place. In other
words, let us look at some of the reasons why organizations  consider segmenting the
market.
  One of the many reasons why organizations segment their markets is because it
helps to understand the needs and wants of the customers better. In other
words, by dividing the market into various subsets of consumers basically
provides and insight to what type of consumers do require what goods and
services.

 Another reason for segmenting the market is to help  better target  and position
the products of the organization to the exact people who are willing to buy the
products or services, rather than trying to try and sell to the entire market. In
other words, they are able to target the customers who they are able to satisfy
using the proper marketing mix.

 Market segmentation do paves way for a two way communication between the
organization and potential buyer.

 Market segmentation basically plays an important part in help maintaining an

effective relationship with the customers. To say, because of segmenting the
market into various subdivisions, the organizations get to produce goods and
services to their selected targets thus satisfying them to their best possible
capabilities which on the other hand eventually paves way for a effective long
term relationship.

 Another reason why organizations tend to segment the market is due to the fact
that it helps to retain their existing consumers while attracting new customers. In
other words, because of segmentation,  the organizations are able to provide the
customers with value for money thus satisfying them through continuous
improvement. As a result, this not only helps to retain the existing customers but
also attracts new customers.

 Resources are very limited and it is indeed vital to get the maximum use of the
resources available to the organization. As a result, segmenting the market also
provides a vital part when it comes to better use of the available resources. To
say, this is because once the market is segmented then the organizations are
able to use their resources to produce goods and services for their selected
targets in order to satisfy their needs.

 Market segmentation also helps to reduce the cost or expenses with regard to
various marketing activities and  the  production itself. By producing exactly what
the consumers are willing to buy it basically reduces wastage and also the costs
related with advertising and promotion. Not only that but also paves way to
increase the market share which will eventually increase profits.

It should be said that market segmentation is one of the important strategies that
provides an organization with competitive advantage.

However, in spite of one or two disadvantages  such as not concentrating on the entire
market at large but dividing the market into small subgroups of consumers, market
segmentation contributes  to the success of the organizations in many ways such as
helping to better understand the consumer needs and wants,  better target and position
the products, to retain existing customers and win new customers, maintains effective
relationships with the customers, reduce costs and expenses, increase market share and
profits and better use of resources, etc.

Hence so, if the organizations are to face the turbulent, ever changing competitive
environment then they obviously have to segment the market before hand, whether it
may be consumer or industrial.