Market Segmentation.pptx
- 2. Market segmentation • Market segmentation process involves grouping and sub-grouping large homogenous markets into different clearly identifiable segments. The division is made on the basis of similarities in needs, wants, or demand characteristics of a particular market. • Effective market segmentation can help marketers to easily personalize their marketing campaigns and reduce the risk of an unsuccessful or ineffective marketing campaign.
- 6. Criteria or Essential factors for Effective Segmentation There’s an acronym you can remember for the essential factors in effective and successful market segmentation—ADAMS. The acronym stands for five criteria: Five Criteria: • Accessible • Differentiable • Actionable • Measurable • Substantial
- 7. • First, a market segment should be accessible. Can you reach consumers in that segment at an affordable cost, given the strengths and abilities of your marketing department? For example, if you discover that certain segments respond more effectively to outdoor advertising, social media campaigns, TV infomercials, or print ads, does your organization have the capabilities (and budget) to reach that segment? • Second, a market segment should be differentiable. In an ideal world, a market segment should be internally homogeneous (i.e., consumers within that segment have similar preferences and characteristics) but externally heterogeneous (i.e., different segments should be quite distinct and different from each other). You have to clearly define the differences between market segments so that the marketing programs directed at them can be implemented without overlap. • Third, a market segment should be actionable. Is it practical (or profitable) to execute a marketing strategy aimed at that segment? A market segment should be able to respond to a certain marketing strategy and have outcomes—e.g., awareness, interest, or purchase—that can be easily quantified. • Fourth, a market segment should be measurable. You should be able to accurately estimate the size of the market segment in terms of either sales value or number of customers so that you can decide whether, how, and to what extent you should focus your efforts on that segment. • Finally, a market segment should be substantial. It doesn’t make sense to waste resources to market the product or service to a group too small to justify the expenditure of resources.
- 8. Importance Of Market Segmentation • Companies often deal with customers who belong to different age groups, have varied interests, and are motivated by different triggers. Segmenting these potential customers into different groups – • Makes it easier for the marketer to develop a different marketing mix for each customer segment which is more likely to bring results. • Increases the results of the marketing efforts as each of the groups witness personalised marketing messages according to what stimulates them to do the task.
- 9. Bases Of Market Segmentation • Segmenting is dividing a group into subgroups according to some set bases. These bases range from age, gender, etc. to psychographic factors like attitude, interest, values, etc. Gender • Gender is one of the most simple yet important bases of market segmentation. The interests, needs and wants of males and females differ at many levels. Thus, marketers focus on different marketing and communication strategies for both. This type of segmentation is usually seen in the case of cosmetics, clothing, and jewellery industry, etc. Age Group Segmenting market according to the age group of the audience is a great strategy for personalized marketing. Most of the products in the market are not universal to be used by all the age groups. Hence, by segmenting the market according to the target age group, marketers create better marketing and communication strategies and get better conversion rates.
- 10. Income • Income decides the purchasing power of the target audience. It is also one of the key factors to decide whether to market the product as a need, want or a luxury. Marketers usually segment the market into three different groups considering their income. These are • High Income Group • Mid Income Group • Low Income Group This division also varies according to the product, its use, and the area the business is operating in. Place • The place where the target audience lives affect the buying decision the most. A person living in the mountains will have less or no demand for ice cream than the person living in a desert.
- 11. Occupation • Occupation, just like income, influences the purchase decision of the audience. A need for an entrepreneur might be a luxury for a government sector employee. There are even many products which cater to an audience engaged in a specific occupation. Usage • Product usage also acts as a segmenting basis. A user can be labeled as heavy, medium or light user of a product. The audience can also be segmented on the basis of their awareness of the product. Lifestyle • Other than physical factors, marketers also segment the market on the basis of lifestyle. Lifestyle includes subsets like marital status, interests, hobbies, religion, values, and other psychographic factors which affect the decision making of an individual.
- 13. Geographic Segmentation • Geographic segmentation divides the market on the basis of geography. This type of market segmentation is important for marketers as people belonging to different regions may have different requirements. • For example, water might be scarce in some regions which inflates the demand for bottled water but, at the same time, it might be in abundance in other regions where the demand for the same is very less. People belonging to different regions may have different reasons to use the same product as well. Geographic segmentation helps marketer draft personalized marketing campaigns for everyone
- 14. Demographic Segmentation • Demographic segmentation divides the market on the basis of demographic variables like age, gender, marital status, family size, income, religion, race, occupation, nationality, etc. • This is one of the most common segmentation practice among marketers. • Demographic segmentation is seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc and is set on a premise that the customers’ buying behaviour is hugely influenced by their demographics.
- 15. Behavioral Segmentation The market is also segmented based on audience’s behaviour, usage, preference, choices and decision making. The segments are usually divided based on their knowledge of the product and usage of the product. It is believed that the knowledge of the product and its use affect the buying decision of an individual. The audience can be segmented into – • Those who know about the product, • Those who don’t know about the product, • Ex-users, • Potential users, • Current Users, • First time users, etc. People can be labelled as brand loyal, brand-neutral, or competitor loyal. They can also be labelled according to their usage. For example, a sports person may prefer an energy drink as elementary (heavy user) and a not so sporty person may buy it just because he likes the taste (light/medium user).
- 16. Psychographic Segmentation • Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and attitude. This segmentation process works on a premise that consumer buying behaviour can be influenced by his personality and lifestyle. • Personality is the combination of characteristics that form an individual’s distinctive character and includes habits, traits, attitude, temperament, etc. Lifestyle is how a person lives his life. Personality and lifestyle influence the buying decision and habits of a person to a great extent. • A person having a lavish lifestyle may consider having an air conditioner in every room as a need, whereas a person living in the same city but having a conservative lifestyle may consider it as a luxury.
- 17. Nature of A Market Segment • A market segment needs to be homogeneous. There should be something common among the individuals in the segment that the marketer can capitalise on. • Marketers also need to check that different segments have different distinguishing features which make them unique. But segmenting requires more than just similar features. • Marketers must also ensure that the individuals of the segment respond in a similar way to the stimulus. That is, the segment must have a similar type of reaction to the marketing activities being pitched. • A good market segment is always externally heterogeneous and internally homogeneous.
- 19. Disadvantages Of Market Segmentation • Even though there are many advantages of market segmentations, there are some disadvantages and limitations as well. Extensive Research And Development: • The process of market segmentation requires the business to do extensive research which is not feasible for some of the businesses. Expensive Process: • Segmentation is an expensive process, both in terms of time and money. • It requires the business to spend a lot to identify different groups and market to them differently according to their needs.