MARKET

SEGMENTATION

By: Naveen Kumar

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.

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 market segmentation. 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. The importance of market segmentation results from the fact that the

buyers of a product or a service are no 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 customers to market segments by

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.

Segmenting markets is the foundation for superior performance. Understanding how buyer needs

and wants vary is essential in designing effective marketing strategies. Segmenting markets may

be critical to developing to developing and implementing market driven strategy.

The need to improve an organization’s understanding of buyers is escalating because of buyers

demand for uniqueness and an array of technology available to generate products to satisfy the

demands. Companies are responding to the opportunities to provide unique customer value with

products.

Buyers vary according to how they use the products, the needs and preferences that the products

satisfy, and their consumption patterns. These differences create market segments. Market

segmentation is the process of identifying and analyzing subgroups of buyers in a product market

with similar response characteristics. Recognizing differences between market segments, how

they change better and faster than competitors is an increasingly important source of competitive

advantage.
 IMPORATNCE OF MARKET SEGMENTATION

Market segmentation is very important because it allows organizations to identify the needs of

the consumers and to identify what its products or services are in high demand, for example, the

telecommunications industry has developed cellular phones that align with the trends of online

social networking, (i.e. the new Kin phone.). In today's generation with Twitter, Facebook and

various other networking sites, organization decided to hone in on new opportunities associated

with international marketability, thus creating a stronger brand for the consumer. Market

segmentation is pivotal in global expansion, increased profitability and sustainable customer

relationships. An organization that anticipates astronomical generated revenue must attempt to

segment their markets if they want to succeed in maintaining a competitive advantage.

ATTRIBUTES OF EFFECTIVE SEGMENTATION

Market segmentation is resorted to for achieving certain practical purpose. For example, it has to

be useful in developing and implementing effective and practical marketing programs. For this to

happen, the segments arrived at must meet certain criteria such:-

a. Identifiable - The differentiating attributes of the segments must be measurable so that

they can be identified.

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.

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.

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.

There are number of variables involved in consumer market segmentation, alone and in

combination. These variables are:

 Geographic variables

 Demographic variables

 Psychographic variables

 Behavioral variables

Geographic Segmentation

In geographical segmentation, market is divided into different geographical units like:

 Regions (by country, nation, state, neighborhood)

 Population Density (Urban, suburban, rural)

 City size (Size of area, population size and growth rate)

 Climate (Regions having similar climate pattern)

A company, either serving a few or all geographic segments, needs to put attention on variability
of geographic needs and wants. After segmenting consumer market on geographic bases,

companies localize their marketing efforts (product, advertising, promotion and sales efforts).

Demographic Segmentation

In demographic segmentation, market is divided into small segments based on demographic

variables like:

 Age

 Gender

 Income

 Occupation

 Education

 Social Class

 Generation

 Family size

 Family life cycle

 Home Ownership

 Religion

 Ethnic group/Race

 Nationality
Demographic factors are most important factors for segmenting the customers groups. Consumer

needs, wants, usage rate these all depend upon demographic variables. So, considering

demographic factors, while defining marketing strategy, is crucial.

Psychographic Segmentation

In Psychographic Segmentation, segments are defined on the basis of social class, lifestyle and

personality characteristics.

Psychographic variables include:

 Interests

 Opinions

 Personality

 Self Image

 Activities

 Values

 Attitudes

A segment having demographically grouped consumers may have different psychographic

characteristics.
Behavioral Segmentation

In this segmentation market is divided into segments based on consumer knowledge, attitude, use

or response to product.

Behavioral variables include:

 Usage Rate

 Product benefits

 Brand Loyalty

 Price Consciousness

 Occasions (holidays like mother’s day, New Year and Eid)

 User Status (First Time, Regular or Potential)

Behavioral segmentation is considered most favorable segmentation tool as it uses those

variables that are closely related to the product itself.

Bases for Business Market Segmentation

Business market can be segmented on the bases consumer market variables but because of many

inherent differences like

 Businesses are few but purchase in bulk

 Evaluate in depth
  Joint decisions are made

Business market might be segmented on the bases of following variables:

 Company Size: what company sizes should we serve?

 Industry: Which industry to serve?

 Purchasing approaches: Purchasing-function organization, Nature of existing

relationships, purchase policies and criteria.

 Situational factors: seasonal trend, urgency: should serve companies needing quick

order deliver, Order: focus on large orders or small.

 Geographic: Regional industrial growth rate, Customer concentration, and international

macroeconomic factors
EXAMPLE OF
MARKET
SEGMENTATION
Titan entered the Indian market of wristwatches in

1984, at a time when HMT watches were enjoying a monopoly-situation. The venture took birth

from the TATA group and today is India’s market leader in wristwatches and the sixth-largest

watchmaker in the world.

The constant innovation and effective market segmentation has been the great boon of the

company.

Today the company has a model for every price segment and every market.

Initially when the mechanical technology was the norm, Titan went against the tide and built-up

its line with Quartz. Styling was not a factor initially with the Indian watch industry but Titan

was there to make a difference and gave a fresh breath of life to the age-old rusty style of

wristwatches.

Titan is also capturing the rural market very efficiently. Its price range starts from

Rs.475-1200 for the basic consumers. It has also appointed Mahendra Singh Dhoni(himself

belonging to Ranchi) as the brand ambassador of its Sonata collection to reach out to the rural

population. On the other hand, his counter-part Aamir Khan was capturing the minds of the

urban segments.
It brought out the Aqua, a trendy collection for the youth. Raga was for the sophisticated Indian

woman. This was a significant move as the women were now more liberal in the society and the

corporate culture was establishing its roots in India. The needs of women throughout the nation

were changing and the brand was aimed to cater these very needs.

Sonata for the masses and the budget-conscious. It includes watches for both men and women.
Fastrack for the cool and funky fetishes of the youth (girls and boys)while INSIGNIA,

STEEL ,NEBULA(Available in 18k gold with leather straps embedded with 'Tanishq Certified

Brilliant Cut Diamonds) and new RAGA DIVA were all aimed at the luxury watches segment.

Designed for men, the all new OCTANE celebrates

masculinity and is the perfect blend of style and technology.

of independent spirit who seeks to explore new horizons.

OCTANE
The unique designs and price variations enabled it to reach
all classes and customers.
Today, the Titan group has its own retail shops throughout
the country. One can now see the “World of Titan” in almost
every city and town of the India.
 Bases of market segmentation

Titan segments its market on following bases:

a) AGE:-

Titan created a sub brand, Fast track. These watches are specifically for young,

vibrant, and cool outgoing young generation. While for older person and professional

it has created the steel series watches and also the famous, Sonata. For kids it has the

Dash range.

b) GENDER :-

Titan divides its market based on gender also. In most of the above mentions

divisions it has watches for men and women, girls and boys. It has special watches for

men(Octave),women (Raga and Raga Diva),for couples(Bandhan).

c) INCOME :-
 For luxury segment- Segmentation is done on the basis of income level of a person.

Titan offered Insignia and Nebula etc. with price ranges between Rs. 20000 to Rs.1

lakh.

For middle segment,

withstanding the rigors of daily life. There were 100 models in the range. Price ranges

within Rs500-700.

For the lower segment,

Rs.350 to 500.

c) OCCUPATION :-

Titan offers different watches to students (Fast Track) and office goers (Spectra and

Exacta).Thus segmenting the market on occupational basis

d) LIFESTYLE:-

Titan offers watch for people of different status. From high class to middle class and

lower class.

e) PERSONALITY:-

Titan has a watch suiting every individual’s personality.

f) OCCASION:-
 This could be another segmentation strategy since Titan has a wide range of watches

which could be used as a gift on special occasions.

Conclusion

Thus, we can conclude that Titan has brilliant market segmentation strategy which has covered

almost the entire market that too very efficiently. It has definitely carved a world of its own

“THE WORLD OF TITAN”