Chapter 23 : Strategic Marketing & Planning
1. Market Segmentation
Market segmentation is dividing a market into smaller group of distinct buyers who have different needs, characteristics or
behavior and might require different marketing mixes.
Market segment is a group of buyers who respond in a similar way to a given set of marketing mix.
Basis of segmenting markets:
Segmenting consumer market
Geographic segmentation calls for dividing the market into different geographical units such as states, regions, counties, cities,
Demographic segmentation calls for dividing the market into groups based on variables like age, gender, family size, family life
cycle, income, occupation, education, religion, race, generation, and nationality.
Psychographic segmentation calls for dividing a market into different groups based on social class, lifestyle, or personality
There are four possible lifestyle categories:
1. Upward mobile, ambitious
i. Seek better or more affluent lifestyle
ii. Higher standard of living
iii. Will try new products
2. Traditional and sociable
i. Compliant and conform to group norms
ii. Purchasing pattern will be „conformist‟
3. Security and Status seeking
i. Stresses security and ego-defensive needs
ii. Purchase of known and established products and brands e.g. Insurance
4. Hedonistic preference
i. Emphasis on “enjoying life now”
ii. Immediate satisfaction of needs and wants
Behavioral segmentation involves dividing a market into groups based on consumer knowledge, attitudes, uses, or responses to a
Occasion segmentation: dividing market according into groups according to occasions when buyers get the idea to buy,
actually make their purchase, or use purchased item.
Benefit sought: Dividing market into groups according to different benefits that consumers seek from the product.
Consumers seek unique combination of benefits e.g. for a laundry detergent, from cleaning and bleaching to economy,
fresh smell, strength or mildness etc.
User status and user rate
Segmenting Business Markets
Industry (which industry)
Company size (what size)
Technology (what technology to focus)
User- nonuser status (heavy, medium or light user)
Customer capabilities (many services or few services)
Purchasing function organization (centralized or decentralized) Power structure
Nature of existing relationship
General purchasing policies (leasing, service contracts, or sealed bidding)
Purchasing criteria (quality, service or price)
Urgency (quick delivery/service?)
Size of order
Buyer-seller similarity of values
Attitude towards risk (risk taking or averse)
Loyalty (to companies who show high loyalty to suppliers)
Segmenting International Markets
Companies can segment international markets using one or more of a combination of variables. The chief factors that can be used
1). Geographic location: location or region
2). Economic factors: Population income or level of economic development
3). Political and legal factors: Type / stability of government, monetary regulations, amount of bureaucracy, etc.
4). Cultural factors: Language, religion, values, attitudes, customs, behavioral patterns.
Requirements for Effective Segmentation
Substantial—segment must be substantially large or profitable.
Accessible—segment must be reached and served easily.
Differentiable—It must be conceptually distinguished and should have the ability to respond differently to different marketing