Marketing

Management
BBA Semester – III

Presented by:
Dr. Dignesh S. Panchasara
M.Com. (MM), M.Com. (HRM), GSET, Ph.D.
Assistant Professor,
Department of Commerce and Business Management
Faculty of Commerce
The Maharaja Sayajirao University of Baroda
MARKET
SEGMENTATION
Meaning
 Market segmentation consists of a group of meaningful
buyers who are sharing particular wants or needs.
 So it is a consumer centric process.
 Customers are grouped into various categories on the
basis of demographic, psychographic and other
factors.
 The process of market segmentation is divided mainly
into two parts.
◦ Define the target market
◦ Sub-division of target market into sub groups of
consumers with homogeneous characteristics, needs
and requirements
Meaning
 There is a wide difference between market
segmentation and target market, while
considering different market segmentations.
 When marketing strategies are formed, it is
known as target market.
 Market can be classified into two types:-
◦ Homogeneous market
◦ Heterogeneous market
Meaning
 Under homogeneous market, needs and
preferences of all buyers are almost same. From
the similar type of product or service these needs
can be satisfied.
 When we study such type of market, we may find
similar type of response from all consumers against
the marketing activities.
 The marketing strategies are of no use and just
wastage of time and money.
 There is no need of segmentation in such a market.
 For example, market for salt, kerosene and LPG.
Meaning
 Heterogeneous market consists of consumers
having different types of needs and
preferences.
 People may react towards the marketing
activities and consumers can be segmented
on the basis of product features like colour,
design, appearance and benefits like luxury,
economy, etc.
Definitions
 “Market segmentation is the sub division of a
market into homogenous sub-sects of
customers where any sub-sect may
conceivably be selected as a market target to
be reached with distinct marketing mix.”
◦ Philip Kotler
Definitions
 “Market segmentation consists of taking total
heterogenous market for a product and
dividing it into several sub markets or
segments, each of which tends to be
homogenous in all significant aspects.”
◦ William Stanton
OBJECTIVES OF MARKET
SEGMENTATION
Objectives of Market Segmentation
 To define the market precisely
◦ The main object of segmenting a market is to know it
perfectly.
◦ For establishing product or service in the market,
careful analysis or demographics, psychographics
and behavioural evaluation is very necessary and by
this way a company gets a clear vision about which
segment should be tapped as the company is having
appropriate information about the preferences of the
market.
Objectives of Market Segmentation
 To determine promotional strategy
◦ The promotional strategy of the company should be
formed according to the market segmentation.
◦ Promotional strategies may differ from segment to
segment considering special characteristics of the
market segment.
Objectives of Market Segmentation
 To decide positioning plan
◦ The aim of market segmentation is to decide the
positioning plan as how, to whom, where to position
the product or service.
◦ For example, promoting alcohol or liquor in Gujarat is
prohibited as it is illegal.
Objectives of Market Segmentation
 To design the product accordingly
◦ The product or services must be tailored according to
the needs and wants of the customer.
◦ For example, now many people have migrated to the
other cities but their families are still residing in India.
◦ So for that we have many applications that have
been designed to transfer cash from one country to
another country within no time.
Objectives of Market Segmentation
 To identify the need of the consumer
◦ It is the base of all marketing activities, which moves
around the needs of the consumer.
◦ For example, if we classify India in geographical
segmentation many people in remote areas need
good transportation and infrastructural facility.
◦ By this way one can easily identify the need of target
market.
Objectives of Market Segmentation
 To find hidden opportunities
◦ It is rightly said that the market is full of hidden
opportunities, underlying with the latent demand,
unseen wants and never felt desires.
◦ So one has to grab this opportunity and provide the
product and services which will satisfy these latent or
unfulfilled demand for example success of IPL and 20-
20 series, people need fast entertainment with
glamour.
IMPORTANCE OF MARKET
SEGMENTATION
Importance of Market Segmentation
 Useful in forming effective marketing
programmes
◦ When the company is going to serve large part of the
market, it is necessary to invade the market after
dividing it into different segments.
◦ As it is not like Panacea means one solution for all the
problems, in marketing activity every problem is
solved with different solutions, so while countering the
segment it is necessary to adopt the marketing
programs according to that particular segment.
Importance of Market Segmentation
 Better assessment of competitors
◦ While segmenting the market, one should also
analyse the existing products in that segment, what
competitors are providing, which includes the
detailed inquiry into competitors’, products’ prices,
promotional strategies, etc. which help the marketer
to put forward the product or services with something
extra at lower or same price.
Importance of Market Segmentation
 Optimum utilization of resources
◦ Market segmentation will help the marketer to utilize
its resources properly.
◦ It saves money and time, starting from production
level to after sales service.
◦ Production should be done according to market
demand and according to the needs of the
customers.
◦ There is also a chance of wastage in marketing
promotion activities as the marketing programs are
not tailor made according to the segment.
Importance of Market Segmentation
 Increase in sales revenue
◦ Marketer always tries to maximize sales by selling huge
volume to very large mass of people at lower price or
by selling small volume to a particular group of
people at a premium price.
◦ As all the activities like production, finance, personnel
and marketing are designed precisely, it affects
positively to sales revenue.
Importance of Market Segmentation
 Knowledge about the market
◦ It requires careful study of market before the market is
segmented, market is studied considering both micro
and macro level environment.
◦ Micro level study includes product demand, features,
consumers taste and preferences, etc.
◦ Macro factors like suppliers of raw material,
competition level, government policies, law, etc.
MARKET SEGMENTATION
PROCESS
Market Segmentation Process
 Market segmentation is considered as an
important element for a marketer to frame
marketing strategies as per consumer needs
and preferences.
 It is a systematic process for targeting suitable
consumer segment.
Market Segmentation Process
Deciding the segments

Data collection for each segment

Analysis of market segments

Selecting the segment

Market Segmentation Process
 Deciding the segments
◦ At this stage the marketer identifies market segments.
◦ Generally marketer decides segments by build up
(Business to Business Markets) or break down (Business to
Consumers) approach.
◦ By analyzing the same demand for business to business
segments, marketers can build up segments.
◦ Marketers can frame homogeneous segments by
breaking heterogeneous segments.
◦ Generally marketers prefer to frame segments by break
sown approach.
◦ For example – geographical, demographic,
behaviourial.
Market Segmentation Process
 Data collection for each segment
◦ After deciding market segments, marketers develop
an understanding of all customer groups.
◦ It will establish a relationship between various
segments and help to frame relationship among
various segments.
◦ Data collection helps to define characteristics of
various market segments.
Market Segmentation Process
 Analysis of market segments
◦ After collecting various information for a particular
market segment, marketers will analyze expected
profit potentiality within every segment.
◦ The basic information needed is expected demand
for each segment. This can be calculated by :-
◦ ∑PS = ∑ncs
 ∑PS : Expected potential segment
 ncs : Number of customers in each segment
Market Segmentation Process
 Selecting the segment
◦ After evaluation of concerned target segments, marketer identify
the correct markets which is suitable for his product or service.
◦ Target market selection helps the marketers to divide the total
markets into many sub segments and offer them selected things.
◦ The main objective of marketers is to deliver maximum satisfaction
and value to the customers.
◦ Marketer can select the segment by adopting the following
strategies:
 Single market segment – Metro shoes
 Full market coverage – Big Bazar, Pantaloons
 Selective market specialization – ebikes
 Product specialization – Maruti cars
 Market specialization – Navneet publication
 Presented by:
Dr. Dignesh S. Panchasara
M.Com. (MM), M.Com. (HRM), GSET, Ph.D.
Assistant Professor,
Department of Commerce and
Business Management, Faculty of
Commerce, The Maharaja Sayajirao
University of Baroda
E-Mail: digneshpanchasara@gmail.com
Mobile No.: +91 7874122777