MARKET SEGMENTATION

Uses and bases of segmentation

MARKET SEGMENTATION

It can be defined as the process of dividing a

market into distinct subsets of consumers with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix. Market segmentation consist of group of customers who share a similar set of wants.

USES OF SEGMENTATION

Useful to the marketers Useful to the consumers Better matching of consumer needs Enhanced profits for business Better opportunities for growth Retain more customers Target marketing communication Gain share of market segment Reduction in expenses Improved cash flow Improved productivity Improved manufacturing quality

Improved service delivery Improved employee working conditions Improvement in market share Satisfaction of social esteem Identifies untapped consumer markets Identifies untapped consumer needs

BASES OF SEGMENTATION
Demographics
Consumers can be grouped on the basis of characteristics such as age or household composition. This is easy to do and it is easy to reach such segments with media. But age and other demographics are only loosely related to behaviour. Socioeconomic Characteristics Similarly, characteristics such as income, occupation and education can be used to derive segments that are easy to reach. Such segments are indicators (although not perfect) of behaviour such as lifestyle, price sensitivity, and brand preference.

 Psychographics
Personality, attitudes, opinions, and life styles are often used a segmentation bases. These characteristics have some relationship to behaviour and provide insight into how to communicate with chosen segments. Generation Generation, or cohort, refers to people born in the same period of time. For example, the Baby Boomer generation can be defined as those people born between 1946 and 1955. Such cohorts share much in common. Not only are they of a similar age, but they experienced similar economic, cultural, and political influences in formative years. Thus generation is probably a better segmentation basis than age and just as easy to reach.

 Geography
There are two reasons why people who live in the same area may share similar characteristics. First, some areas have more expensive properties than others and so people with similar socioeconomic characteristics may cluster together. Second, they have similar transport and shopping options. It is easy to reach particular areas by using local newspapers, cinema, outdoor, and selective direct mail but mass media is less effective. Geo demographic There are several commercial geo demographic segmentation schemes available, that combine demographics and geography as a segmentation basis. This approach aims to identify groups of small geographic areas that have similar demographic profiles. These tend to suffer from the fallacy of averages. Some areas may be genuinely relatively homogenous but many are not and this can be very misleading

 Product Usage
Potential to use the firms product is a behaviourally based segmentation basis. Potential could be determined by administering questions about disposition to use (such as awareness, used in the past, would consider using) in a survey and respondents grouped accordingly. The problem is then how to reach the most attractive segments. This is done either by using a large-scale single source survey that asks consumers about product disposition and media usage or by relating product disposition to demographics.

 Benefits Sought
Some people are price sensitive, others seek quality or service. Some people are brand loyal, while others frequently switch brands. It is possible to group consumers on the basis of these factors. Note that price/quality sensitivity can vary by category. Some people are very concerned about the quality of the food they eat but will buy cheap laundry detergent. Others will feed themselves any rubbish but are fastidious about cleanliness. This is a very powerful basis for segmentation.

 Psychological segmentation: need motivation- safety,

security, shelter etc, personality-extrovert, introvert etc

Socio-cultural segmentation: cultures, religion

Use-situation segmentation: morning, evening, work,

leisure etc