1. Market Segmentation (Meaning & Definition)
Market segmentation is the process of dividing a large heterogeneous market into smaller, homogeneous sub-markets (segments) based on common characteristics such as needs, preferences, or behavior.
👉 In simple words: Instead of selling one product to everyone, businesses divide customers into groups and design specific strategies for each group.
Example: Soft drink companies target teenagers with trendy ads, but promote diet drinks to health-conscious adults.
2. Requirements for Effective Market Segmentation
For segmentation to be successful, the following conditions must be fulfilled:
- Measurable – Segment size, purchasing power, and profile must be quantifiable.
- Accessible – Segments should be reachable and served effectively through distribution and promotion.
- Substantial – Segments must be large, profitable, and worth targeting.
- Differentiable – Segments must show clear differences in needs or responses.
- Actionable – The company must have resources and skills to serve the segment.
3. Advantages of Effective Market Segmentation
- Better customer satisfaction by focusing on specific needs.
- Efficient resource utilization – avoids wasteful marketing.
- Helps in product positioning and brand image building.
- Provides competitive advantage by serving niches.
- Leads to higher profitability with premium pricing.
- Reduces risk and uncertainty by concentrating on profitable groups.
- Encourages innovation and product diversification.
4. Process of Market Segmentation
a. Market Survey – Collect market information through research about customer needs, preferences, and trends.
b. Segment Identification – Identify groups with common needs or behaviors.
c. Segment Profiling – Develop profiles describing demographics, lifestyle, attitudes, and buying patterns.
d. Segment Evaluation – Analyze segment attractiveness (size, growth, competition, profitability).
e. Segment Selection – Choose the most suitable and profitable segments.
f. Product Positioning – Design marketing mix and communication to create a distinct image in the customer’s mind.
👉 Flow (Exam Figure): Survey → Identification → Profiling → Evaluation → Selection → Positioning.
5. Types of Segmentation
- Geographic Segmentation – Based on region, city, climate, rural vs urban.
- Demographic Segmentation – Age, gender, income, education, occupation, family size.
- Psychographic Segmentation – Lifestyle, values, personality, attitudes.
- Behavioral Segmentation – Benefits sought, loyalty status, usage rate, occasion-based buying.
- Occasional Segmentation – Based on events like weddings, festivals, holidays.
Additional/Advanced Types (as per question demand):
a. Local Marketing – Targeting specific local areas or communities.
b. Niche Marketing – Targeting small, highly specialized groups.
c. Differentiated Marketing – Serving multiple segments with different products.
d. Individual (One-to-One) Marketing – Tailoring products to individual customers.
6. Target Market Strategies
After identifying segments, companies adopt targeting strategies:
a. Single Segment Marketing – Focus on one single segment (concentration strategy).
b. Selective Specialization – Choosing multiple unrelated segments.
c. Product Specialization – Offering one product to different segments.
d. Market Specialization – Serving many needs of a specific market.
e. Full Market Coverage – Targeting all segments with full product line.
f. Undifferentiated (Mass) Marketing – One product for the whole market.
g. Micromarketing – Hyper-customized, individual-focused marketing.
7. Segmentation Variables
A. For Consumer Market
i. Geographic/Location Variables – Region, state, climate, population density.
ii. Demographic Variables – Age, gender, family size, income, education, occupation, religion.
iii. Psychographic Variables – Lifestyle, social class, personality traits, interests.
iv. Behavioral Variables – Occasion of use, brand loyalty, purchase benefits, user status.
B. For Industrial/Business Market
i. Geographic Variables – Industry location, regional concentration.
ii. Demographic Variables – Company size, industry type, financial strength.
iii. Operating Variables – Technology used, production capacity, user status.
iv. Purchasing-Related Variables – Procurement policies, purchasing approach, order size.
8. Product Positioning
Product positioning is the act of designing the company’s product and image so that it occupies a unique and valued place in the consumer’s mind compared to competitors.
- Tools: Branding, pricing, quality, features, customer service.
- Example: Apple → innovation, Volvo → safety, Nike → performance.
👉 Positioning Map (for exams): A 2D diagram showing brands positioned on axes like Price vs Quality.
✅ Exam Strategy:
- For 5 marks, write definitions + 3–4 points.
- For 10 marks, expand with requirements, advantages, process, types, strategies, variables, and add a diagram/figure.
