UNIT-4

KMB 106
Unit-4 KMB106 Dr. Harit Kumar
 ‘Market Segmentation’

“Market Segmentation is the sub-dividing of customers into homogenous sub-set of customers

where any sub-set may conceivably selected as market target to be reached with distinct Marketing
Mix .”

Philip Kotler

Unit-4 KMB106 Dr. Harit Kumar

 Market Segmentation consists of taking the total heterogeneous market for a product & dividing into
several sub-market of segments, each of which tends to be homogenous in full significant aspects .

William Stanton

Unit-4 KMB106 Dr. Harit Kumar

 Steps involved in Market Segmentation

• Identify the current and the potential needs of the customer existing
already in the market to be segmented.

• Identify the unique and distinguishable features that may divide the
market into segments.

• Select those segment which offer higher potential and which will
also be amenable to the offering of the firm.

Unit-4 KMB106 Dr. Harit Kumar

 Criteria for successful Segmentation

Requirements for Effective Segmentation 7-8

Measurable • Size, purchasing power, profiles

of segments can be measured.

Accessible • Segments must be effectively

reached and served.

Substantial • Segments must be large or

profitable enough to serve.

Differential • Segments must respond

differently to different marketing mix
elements & actions.

Actionable • Must be able to attract and serve

the segments.

Unit-4 KMB106 Dr. Harit Kumar

 Levels of Market Segmentation

1.Mass Marketing:

An attempt to appeal to an entire market with one basic marketing strategy utilizing mass production,
mass distribution and mass promotion of one product for all buyers. Also called undifferentiated
marketing.

The appeal of mass marketing is in the potential for higher total profits. Companies that employ the
system expect the larger profit to result from:

(1) Expanded volume through lower prices, and

(2) Reduced costs through economies of scale made possible by the increased volume.

Henry Ford applied the concept in the automobile industry. His Model-T was conceived and
marketed as a "universal" car — one that would meet the needs of all buyers.

Unit-4 KMB106 Dr. Harit Kumar

 Ford Model –T in Black Color

Unit-4 KMB106 Dr. Harit Kumar

 Coca Cola

Unit-4 KMB106 Dr. Harit Kumar

 Amul Butter (The TASTE OF India)

Unit-4 KMB106 Dr. Harit Kumar

 Tata Salt (Desh ka Namak)

Unit-4 KMB106 Dr. Harit Kumar

 2. SEGMENT MARKETING

A market segment consists of a large identifiable group of customers within a market

who share a similar set of needs and wants, purchasing power, geographical location,
buying attitudes, or buying habits.

Identifiable Group with in a Market with Similar

• Needs & Wants

• Purchasing Power
• Geographical Location
• Buying Attitudes

Unit-4 KMB106 Dr. Harit Kumar

 Examples

Income Level

Car Market

Lower Middle Upper

Middle Upper Class
Middle Middle
Class Class
Class

Unit-4 KMB106 Dr. Harit Kumar

 Family Life Cycle

Family
Life Cycle

Hatchback Sedan SUV MUVs

Unit-4 KMB106 Dr. Harit Kumar

 3. Niche Marketing:

Group of customers seeking a distinctive mix of benefits who are ready to pay
extra premium.

A niche is a more narrowly defined customer group typically a small market

whose needs are not being well served. Marketers usually identify niches by
dividing a segment into sub segments or by defining a group seeking a distinctive
mix of benefits.

Example: Ezee, the liquid detergent from godrej, is a fabric- washing product for
woolen clothes.
Crack, an ointment from paras pharmaceuticals, is another example of a product
with a niche focus.
Few television such as Aastha, Star sports, ESPN.

Unit-4 KMB106 Dr. Harit Kumar

4.Local Marketing:

Target marketing is leading to marketing programs tailored to the needs and wants of local
customers groups in trading areas, neighborhoods, even individual stores.

Ex. Recently, the movie Bahubali was released in worldwide in 15 different languages, including
few regional dialect. Owing to such local marketing, the movie broke a number of collection
records .
Bharat Matrimony, the online matrimony service provider is one of the largest matrimonial
website in India. The reason behind its success has been the realization that in India,
marriages are mostly community based .Therefore the emphasis was on customizing
services according to the needs of community and as a result of which the service provider
has initiated 15 regional web sites such as
1.bengalmatrimoy.com
2.punjabmatrimony.com
And in addition to it the website is itself readable in 8 different languages and provides the
horoscope in 9 different languages.

Unit-4 KMB106 Dr. Harit Kumar

 5.Individual Marketing:

The ultimate level of segmentation leads to “segments of one” , “Customized marketing”,

or “one to one marketing”. Today customers are taking more individual initiative in
determining what and how to buy. Customization is certainly not for every company.

Ex. Paints companies such as Asian paints, Kansai Nerolac, and Berger paints, follow the
mass- customization strategy in paint retailing.

Unit-4 KMB106 Dr. Harit Kumar

  BASES FOR SEGMENTATION
Market Segmentation

Consumer Market Industrial Market

Region, Population size,

Climatic condition, Population Location
Geographical density

Age, Income, Company Type:- Size, Type of

Demographical Gender, Education, Religion, Industry, Decision Unit
Nationality ,Family Size

Psychographical Activities, Interest, Opinion, Behavioural:- Usage rate,

Values Buying status,
Purchase procedure
Benefit sought, Usage rate, User
Behavioural status, Brand Loyalty, Readiness
to buy
 Geographic Segmentation
The segmentation on the basis of region, climate, Size of metropolitan area,
Population density

Unit-4 KMB106 Dr. Harit Kumar

 Segmentation of consumer based on variables such as race, religion, community,
language, age, stage in family cycle, gender, marital status, family size, occupation,
economic position/income/purchasing capacity level, and social status ,of the consumer
demographic segmentation.

Age: Based on age on can have the 1) Infants 2) Child Market Teen Market 3) Youth
Market 4) Middle Aged Market 5)Elders Market

Genders: On the basis of gender, the consumer market may be classified into male
market, female market.

Social Class: Companion design their products and services for particular social classes.
There are three social classes: 1 Upper classes 2. Middle classes 3. Lower class

Unit-4 KMB106 Dr. Harit Kumar

Unit-4 KMB106 Dr. Harit Kumar
 Psychographic Segmentation

VALS is actually a proprietary term of SRI international. The term was developed
by Social scientist and futurist Arnold mitchell. Arnold mitchell actually developed
the VALS framework to determine different classes of people who had varying
values, attitudes and lifestyle.

Unit-4 KMB106 Dr. Harit Kumar

 Thinkers

They’re mature , satisfied

and reflective people
motivated by ideals and
who value order ,
knowledge and
responsibility . They seek
durability and
functionality and value in
products.

Unit-4 KMB106 Dr. Harit Kumar

 Believers

Conservative ,
conventional and
traditional people with
concrete beliefs . They
prefer familiar products
and are loyal to
established brands.

Unit-4 KMB106 Dr. Harit Kumar

 Achievers

Successful , goal
oriented people who
focus on career and
family . They favor
premium products that
demonstrate success
to their peers.

Unit-4 KMB106 Dr. Harit Kumar

 Strivers

Trendy and fun-loving

people who are
resource constraints .
They favor stylish
products that emulate
the purchases of those
with great material
wealth.

Unit-4 KMB106 Dr. Harit Kumar

 Experiencers

Young , enthusiastic ,
impulsive people who
seek variety and
excitement . They
spend a comparatively
high proportion of
income on fashion ,
entertainment and
socializing .

Unit-4 KMB106 Dr. Harit Kumar

 Makers

Practical , down-to-
earth , self sufficient
people who like to work
with their hands . They
seek products with a
practical or functional
purpose.

Unit-4 KMB106 Dr. Harit Kumar

 The customer can also be divided into certain segments on the basis of their knowledge,
attitude, use, or response to a product. Such behavioural variables are discussed below:

Occasions : (Marraiges, festival occasasions)

Benefits sought : (Colgate- White teeth stops bad breath, Cibaca Provides Therapeutic
benefits, Vicco vajradanthi and neem gives ayurvedic benefit)

User Status: (Ex-users, first users, regular users, Potential users)

Usage rate: (Light, Medium, and heavy user segments)

Loyalty status: (Hard core loyal, Split Loyal(Two or Three brands), Shifting Loyal (Shift
from one brand to another), Switchers (No loyalty to any brand))

Attitude: Customers are divided into five groups(Enthusiastic, Positive, Indifferent,

Negative and Hostile)

Unit-4 KMB106 Dr. Harit Kumar

 TARGET MARKETING

Target Marketing involves breaking a market into segments and then

concentrating the marketing efforts on one or a few key segments. Target marketing
can be the key to a business’s success.

Segmentation is actually the prelude to target market selection.

Unit-4 KMB106 Dr. Harit Kumar

FACTORS TO BE CONSIDERED WHILE TARGET
MARKET SELECTION

•Attractiveness of a Market Segment

•Size of the segment (number of customers and/or number of units).

•Growth rate of the segment.
•Competition in the segment.
•Brand loyalty of existing customers in the segment.
•Sales potential for the firm in the segment.
•Expected profit margins in the segment.

•Suitability of Market Segments to the Firm

•Whether the firm can offer superior value to the customers in the segment.
•The impact of serving the segment on the firm's image.
•Access to distribution channels required to serve the segment.
•The firm's resources vs. capital investment required to serve the segment.

Unit-4 KMB106 Dr. Harit Kumar

TARGET MARKET STRATEGIES
1.Single-segment strategy-

Also known as a concentrated strategy. One market segment (not the entire market) is served
with one marketing mix.
M1 M2 M3

P1

P2

P3

The firm concentrates on one group of consumers with a distinct set of needs and uses a tailor-
made marketing plan to attract this single group. One product to one market niche.
Examples:
Rolls Royce cars, which targets the premium car market segment.
Rolex watches has chosen to concentrate on the luxury segment of the watch market.
Peter England at professionals

Unit-4 KMB106 Dr. Harit Kumar

 •Selective specialization-

 This is a multiple-segment strategy, also known as a differentiated strategy. Different

marketing mixes are offered to different segments.
M1 M2 M3

P1

P2 p2

P3 p3

The firm aims at two or more different market segments, each of which has a distinct set
of needs, and offers a tailor-made marketing plan for each segment. Two or more
products to two or more groups.

Examples: Raymands- Be & Park avenue, Hero -Pleasure & Passion,.

Unit-4 KMB106 Dr. Harit Kumar

Product specialization-

The firm specializes in a particular product and tailors it to different market segments.

M1 M2 M3

P1

P2

P3

The firm tries to reach a wide range of consumers with one basic marketing plan. These
consumers are assumed to have a desire for similar goods and service attributes. One
product for everybody.

Examples: Tata Salt, Birla Cement, Microscope manufacturer to university, govn. & commercial
Institutions.

Unit-4 KMB106 Dr. Harit Kumar

Market specialization-

The firm specializes in serving a particular market segment and offers that segment an array of
different products. M1 M2 M3

P1

P2

P3

Examples: Nataraj- Pencil, Eraser, Scale, Sharpener.

Unit-4 KMB106 Dr. Harit Kumar

 Full market coverage –

The firm attempts to serve the entire market.

M1 M2 M3

P1

P2
P3

Example: Microsoft (Software market), United Beverage (Alcoholic market), HUL

(FMCG market).

Unit-4 KMB106 Dr. Harit Kumar

 Positioning

Positioning is the act of designing the company’s image and value offer so that the
segment’s customers understand and appreciate what the company stands for in relation to
its competitors.
Philip Kotler

Definition:
It is all about placing a product / brand in the minds of the customer to occupy a stable,
distinct and permanent place in their rational and conscious mind set.

According to Al Ries and Jack Trout, “Positioning is not what you do to your product,
but what you do to the mind of your prospective customer”.

Thus it is all about winning a distinct place in the minds of the customer

Unit-4 KMB106 Dr. Harit Kumar

 Positioning Approaches
Marketers manage product positioning by focusing their marketing activities on a
positioning strategy. Pricing, promotion, channels of distribution, and advertising all are
geared to maximize the chosen positioning strategy.
According to C. Merle Crawford, common bases used for positioning include:
1. Features refer to objective physical or performance characteristics and are often used
to differentiate products.
Example: Amazon.com has a unique “1-click” ordering facility. Some autos claim “Zero to
100 Kph in 6 seconds.”
2. Benefits are directly related to products.
Example: such as Volvo’s emphasis on safety and “Sticks in a snap” Fevi Kwick., Fairglow
soap is “fairness soap.”
3.Usage includes end use, demographic, psychographic, or behavioural segments for whom
the product is meant.
Example: Chayavanprash to build body resistance of children or elders, Bajaj Pulsar
“definitely male” for customers of a certain psychographic profile.

Unit-4 KMB106 Dr. Harit Kumar

 4. Parentage means the lineage denoting who makes the product.
Example: Companies proudly trumpet their names, such as “Sony Vaio”, “Tata Indica”,
“Fiat Palio,” etc.
5.Manufacturing process is often used to position the product. Some expensive watches
claim to be “hand crafted,” an appealing proposition in an age of mass produced
artifacts.
Example: Domiso’s Burger Pizza #Good Oven
6. Ingredients are sometimes highlighted to create a position.
Example: Some garment manufacturers claim “One hundred per cent cotton,” or
“Hundred per cent Merino wool.”
7. Comparison with a competitor’s product is a fairly common positioning approach.
Example: Samsung Laser Printer compared itself with HP Laser jet... And thereby jumped
cleverly onto the same platform.

Unit-4 KMB106 Dr. Harit Kumar

 8. Pro-environment approach to positioning aims to show that the company is a
good citizen.
Example: Canon mentions on its packages, “Made from recycled material.”
9. Product class, such as freeze-dried coffee shown as a product that is a different
one from instant or regular coffee.
• Example: Dove soap positioned as a moisturiser and not the toilet soap, and Pears
as a glycerine soap.
10. Price/quality is a powerful positioning technique.
Example: Zenith computers say “Multinational quality, Indian price.”
• Country or geographic area, such as German engineering, Russian vodka,
Benarsi silk sari, or Dehradun rice.

Unit-4 KMB106 Dr. Harit Kumar

Positioning Strategies:
Identifying Possible Competitive advantages

Choosing the right competitive advantages

Selecting an overall strategy

More for More for The same for Developing a

More the Same less Less for
much less positioning
Ex. Parker Ex. Mi , LG, Ex. Wal-Mart, statement
Pen, Samsung, Vishal Ex. Nirma,
Breeze, Points of
Mercedes, MicroMax megamart, Differences
Apple, Surf Naptol. Prale.
(PODs)
Excel Or
Points on
parity(POPs)

Communicating and developing the chosen position

Unit-4 KMB106 Dr. Harit Kumar

 Differentiation & Value Proposition

Value proposition is defined by the authors Philip Kotler and Gary Armstrong, as “the set of
benefits or values it [the brand] promises to deliver to consumers to satisfy their needs”

Unit-4 KMB106 Dr. Harit Kumar