Magoosh GRE

What is Market Segmentation?

| November 26, 2012

1. What do you understand by the term Market?

Marketing is followed by the different way of processes that may included the success of marketing and involves of marketing research selling product, sales promotion, product and services and main thing of consumer satisfaction and their need and wants. Main things of marketing to envolved and meet the developing of new markets caused by mature markets and over capacities in the last 2-3 centuries. The increased of marketing strategies requires to focus of production and needs and wants of customer means the satisfaction of customer means of staying profitable. (

Marketing is a social and managerial process and also individual and groups means the chain of process, groups obtain want and needs are creating , offering and exchanging of product of value with others product (Kotler 1997. 9th edition)

Marketing is an organisational function it obtain to process for creating communicating and delivering value of customer and managing of customer relationship in the way of benefit the organisation and its stakeholders.

2. Market Segmentation:-

Markets segmentation divided in to two groups heterogenous, homogenous. The aims for segmentation a market is to allow your marketing/sales programmed to focus on the subset of prospects that are most likely to purchase a offer for customer.



Tata have started a  new Mercedes Benz care in India . Many people have need car like Maruti , Santro but they may not need like Mercedes car. They all are happy with santro and maruti. Some people are interested in a luxuary car, but may not be interested in Mercedes . Some people may be interested Mercedes but they are not able to afford of Rs. 32lakh. Thus, the market for Mercedes is a very small part of luxuary car markets(Ananksha Goswami)

A market segment unity of a group of customers within a market who share a similar level of interest in the same. Or comparable, set of needs.

Levels Of Market Segmentation:-

It is discussed in importance of segmentation that consumer have a different needs and good seller have satisfied consumer needs and wants . That’s why market segmentation can be carried out of a different levels of segments. (


1)  Mass Marketing:-

In simple words seller offer same product for all the buyers with different needs and seller engages in mass production, mass distribution, and mass promotion of one product for all buyers.


2) Niche Marketing:-

A niche is a defined more closely group, It is dividing the segment in to sub segments it can be divided that identifying the distinct of consumer which might special needs and benefits this sub segments are made for those consumer whose needs and wants are not satisfied.

3) Local Marketing:-

It depends upon the brand and promoting and to needs and wants of local customer and the design marketing programmed depends upon local consumer group like nearest consumer, Neighborhoods and even specific stores.


4) Individual Marketing:-

Individual Marketing knows as the satisfying of needs and wants of individual customer, it means one-to-one marketing and customized marketing it is the segment level where seller offer customized product to the consumer .

How to identify the market differnation from one another

3. Why Segment The Market / Reasons Of Market Segmetation:-

The market segmentation benefits in different ways. It helps the market to pick up the market targets, and hence research how markets differ from one another. It does this by distinguishing one customer group from other within the market and by showing which segment of the market matters to its situation and should, hence form its target market. Following are the different points of view for the differentiation of market one another.

1)  Facilities effective of the chosen market:-

Segmentation depends upon the market and understanding the needs of each the chosen segment, when the buyers are handled the after the segmentation and the response for each segment will be more homogeneous. In product distribution and pricing for matching the particular customer group and developing the marketing offers.


2)  Marketing effort more efficient and economic:-

Segmentation is more important of marketing efficient and economic, marketing effort is concentrated or selected for well defined segment after all for most firms. If efforts were concentrated on select the segments the ones that match the firms resources and are most productive and profitable.

3) Helps Identify Less Satisfied Segments and Concentrate on Them:-

Segmentation also helps the marketer to asses to what extent existing offers in the market matches the needs of different customer segments and which are the less satisfied segments.


4. Market Can Be Segmented Using Several Bases:-

A market/consumer population for a product can be segmented using several bases

  • Geographic
  • Demographic
  • Psychographic
  • Behavioral

1)  Geographic Segment:-

Geographical segmentation tries to divided in to different market geographical units: these units depends on political boundaries, climate regions, population boundaries


Countries: perhaps categorized by size, development or membership of geographic region.

a) City / Town size: e.g. population within ranges or above a certain level.

b) Population density: e.g. urban, suburban, rural, semi-rural.

c) Climate: according to weather patterns common to certain geographic regions


For Example:-

Geographic segmentation aims the product consumption of different patterns , people in different area like some people in India and some in Kenya in India(kokan and goa) found in stple grain and fish available from sea. Southern area found in a coffee and northern area tea ,  and the international market products are made according to their needs like soft drink when added a glass of water with lots of sugar, in India complexion cream fair and lovely only sell by India.

2) Demographic Segmentation:-

 Consists of dividing the market into groups based on variables such as age, gender family size, income, occupation, education, religion, race and nationality. As you might expect, demographic segmentation variables are amongst the most popular bases for segmenting customer groups. The main demographic segmentation variables are summarized below :


Consumer need and ants change for their age factors they may still wish to consumer the same type of products. So defiened the different types of product, packing, promote the product differently to meet the wants of different age groups. Example for the market of different type of soap and body wash ( the branding soap like Dove and dove body wash use for adults and childrens)

  •  Life-cycle stage:-

A consumer stage in the life-cycle is an important variable – principally in markets such as spare time and sightseeing. For example, contrast the product and promotional approach of Club 18-30 holidays with the slightly more refined and dignified loom adopted beside Saga Holidays.

  •  Gender:-

Gender segmentation is widely used in consumer marketing. The best examples include clothing, hairdressing, magazines and toiletries and cosmetics.

  •  Income:-

Many companies target affluent consumers with luxury goods and convenience services. Good examples include Coutts bank; Moet & Chandon champagne and Elegant Resorts – an up-market travel company. By contrast, many companies focus on marketing products that appeal directly to consumers with relatively low incomes. Examples include Aldi (a discount food retailer), Airtours holidays, and discount clothing retailers such as TK Maxx.

  •  Social class:-

Many Marketers believe that a consumers “perceived” social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services. There is a clear link here with income-based segmentation.

  •  Lifestyle:-

Marketers are increasingly interested in the effect of consumer “lifestyles” on demand. Unfortunately, there are many different lifestyle categorization systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns.


  •  Zee Televisions deals with variety of channels regional channel, sports channel, movie channel.
  •  Peri-peri has both veg and non veg burger and also McDonald has veg burger for vegetarian and non veg burger for non vegetarian.

3) Psychographic Segmentation :-

Psychographic segmentation groups according to customer and their life style, many manufacturer or company product offers based on their attitudes, beliefs and efforts or emotions of their target of market. The  desires for status, enhanced somebody look like and more money of psychographic variables.

Psychographic segmentation helps in repositioning, launch of new products and brand extension: Segmentation consumer based on psychographic rest on identifying consumer state of  mind and hence helps   in piecing together a more inclusive profile of target consumer.


Buying Behavior Segmentation :-

Markets can be segmented on the basis of buyer behavior as well. Since all Segmentation is in a way related to buyer behavior, one might be tempted to ask why buyer behavior-based segmentation should be a separate method. It is because there is some distinction between buyer’s characteristics that are reflected by their geographic, demographic and psychographic profiles, and their buying behavior. Marketers often find practical benefit in using buying behavior as a separate segmentation base in addition to bases like geographic, demographics, a psychographics.

The primary idea in buyer behavior segmentation is that different customer groups expect different benefits from the same product and accordingly, they will be different in their motives in owing it and their behavior in buying it. Variables of buyer behavior are:- Benefit sought: – Quality / economy / service / look etc of the product.


  • Nestle has found a separate segment atta noodles as distinct from the maida noodles.
  • Usage rate: – Heavy user / moderate user / light user of a product.
  • User status: – Regular / potential / first time user / irregular /occasional.
  • Loyalty to brand: – Hard core loyal / split loyal / shifting / switches.
  • Occasion: – Holidays and occasion stimulate customer to purchase products.
  • Attitude toward offering: – Enthusiastic / positive attitude / negative attitude / indifferent / hostile.(


  • Shampoos, soap and all FMCG products buying behavior segmentation is used.

5. Market Criterial For Effective Segmentation in Sales/marketing Management

A decision to use a market segmentation strategy should rest on consideration of four important criteria that affect its profitability. (www.citemannetwork)


1)  Accessible:

The firm has to now consider whether the segments are accessible to it. This may need further analysis. The market realities will have to be taken into consideration. The popular segment will be accessible only to the firm with a cost advantage, since price is a major determinant in this segment. Liril of Hindustan Lever has a commanding position in this segment. At the upper end of the segment, HLL’s Pears and Dove are well entrenched. Several other brands of different companies are competing in the segment.

2) Identifiable and measurable: –

Segments must be identifiable so that the market can determine which consumers belong to a segment and which do not. However, there may be a problem with the segment’s measurability (that is, the amount of information available on specific buyer characteristics) because numerous variables (e.g. psychological factors) are difficult, if not impossible, to measure at the present time. For example, if the marketer discovered that consumers who perspire profusely favored a particular brand, very little could be done with this information since such a group would be difficult to measure and identify for segmentation purposes.

3) Substantial:-

This collection refers to the degree to which a chosen segment is large enough to support profitably a separate marketing program. As was noted preciously a strategy of market segmentation is costly. Thus, one must carefully consider not only the number of customers available in a segment but also the amount of their purchasing power.

4) Responsive:-

 There is little to justify the development of a separate and unique marketing program for a target segment unless it responds uniquely to these efforts. Therefore, the problem is to identify market segments that will respond favorably to marketing programs designed specifically for them.

6. Identifing Market Segmentation And Market Target :-

There are five different patterns of target market selection:

 1. Single Segment Concentration:-

 Also known as the “be a big fish in a small pound” strategy is, based on the generic competitive strategy-Focus. Through concentrated marketing, an industry achieves a strong understanding of the segment’s needs, develops competitive advantages to accomplish a strong presence in the given segment. Through segment leadership, it captures an elevated return on investment.

2. Selective Specialization:-

The company may decide to target several segments, but may be selective about the segments to target. This multi-segment strategy has the benefit of spreading a firm’s hazard and gives it larger presence in an industry.

3. Product Specialization:-

A firm specializes in a specific product and vends it to numerous segments. A firm may specialize in water purifiers and may decide to target homes, institutions, commercial research labs, and government establishments. For each market segment it targets the company would have to appropriately modify several elements of the marketing mix, but what it achieves is a strong repute in a particular product area. The disadvantage of this strategy is a technological revolution that may threaten the business of the company.

4. Market Specialization:-

A firm concentrates on serving the various requirements of a specific customer group.

For example, an online seller of books, who having built up a large customer base, diversifies into selling other products like music, cameras and other such assortments to the customer group. The firm achieves a well-built status in serving this customer group and turns out to be a channel for extra products that the customer segment can utilize. The disadvantage of this strategy is major shift in the attractiveness of the given market segment, would threaten the entire business of the company.

5. Full Market Coverage:-

The company tries to cover all market segments through their products. Huge firms can take on a full market coverage approach. Firms can cover the market in two ways: through differentiated marketing or undifferentiated marketing. In undifferentiated marketing, the firm practices mass marketing by going after the entire market with one marketing mix. In differentiated marketing, the firm works in numerous markets, but designs an explicit marketing mix for each market segment, that it selects to target.

Example of General Motors:-

GM has identified about 40 different ‘customer needs’ and correspondingly, 40 different market segments in which it would present with its vehicles. For example, it has targeted the Pontiac at active, sports-oriented, young couples, the Chevrolet at price-conscious young families, the Oldsmobile at affluent families, and the Buick at older, more conservative couples.

7. Segment-Target-Postion:-

The strategic marketing planning process flows from a mission and vision statement to the selection of     target markets, and the formulation of specific marketing mix and positioning objective for each product or service the organization will offer. Leading authors like Kotler present the organization as a value creation and delivery sequence. In its first phase, choosing the value, the strategist “proceeds to segment the market, select the appropriate market target, and develop the offer’s value positioning. The formula – segmentation, targeting, positioning (STP) – is the essence of strategic marketing.” (Kotler, 1994, p. 93).

The marketer would draw out the map and decide upon a label for each axis. They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two). The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.


Whether market segmentation is successful or not can be evaluated by the following questions( ankasha 91)

 1. Is it sizeable: –

 Size-wise, the popular segment is a bigger compared to the premium segment. In term of tonnage, of the total market of around 6, 00,000 tones, the popular segment account for 80 percent and the premium segment for the remaining 20 percent. If the firm wants a very large volume, it has to think of the popular segment. At the same time, it has to note that the premium segment too is sizeable, as it account for over 120,000 tones. In term of value, the premium segment is even more sizeable, formerly nearly 30 percent of the total market. Clearly, the segment cannot be ruled out as lacking in size.

 2. Is it growing: –

 Growth rate and likely future position of the segment will be the next consideration in the evaluation process? Usually, business firms seek out the high growth segments. Analysis will readily indicate to the firm that in bath soaps, the premium segment happens to be the high growth segment. Whereas the popular segment has been growing at 10 percent per annum, the premium segment has been growing at over 20 percent annum. When this fact is taken into consideration, the firm’s choice may tilt toward the premium segment.

 3. Is it profitable: –

Next consideration will be the extend of profitability. In the present example, the firms quickly sense that the premium segment is more profitable one. Even a relatively lower volume in the segment may bring in good returns. On the contrary, in the popular segment, a much larger volume will be necessary for the business to be viable, since prices and margins in the segment are low. Another point is that costs of marketing, distribution and promotion in the business are quite high and are constantly on the rise. Costs of launching a new brand are particularly high. The market is very competitive, aggressive promotional support through expensive media like TV becomes essential.

4. Is it accessible: –

The firm has to now consider whether the segments are accessible to it. This may need further analysis. The market realities will have to be taken into consideration. The popular segment will be accessible only to the firm with a cost advantage, since price is a major determinant in this segment. Premium segment will be accessible only to firms, which enjoy a differentiation advantage, and which are also marketing savvy. Liril of Hindustan Lever has a commanding position in this segment. At the upper end of the segment, HLL’s Pears and Dove are well entrenched. Several other brands of different companies are competing in the segment.


Principle of market segmentation is that the product and services needs of individual customers differ. Market segmentation involves the grouping of customers together with the aim of better satisfying their needs whilst maintaining economies of scale. It consists of three stages and if properly executed should deliver more satisfied customers, few direct confrontations with competitors, and better designed marketing programmes. Segmentation depends the differentiation of market starategy and the achieve of goals that the main important thing with segment market don’t have achieve the target, market segmentation of different ways that the concludes are Segmentation to helps the market to pick up the market targets and that the differentaion of main thing is bases of segmentation they decided the all level of ages customer needs and wants. Segments must be identifiable so that the market can determine which consumers belong to a segment and which do not This collection refers to the degree to which a chosen segment is large enough to support profitably a separate marketing program. As was noted preciously a strategy of market segmentation is costly. Thus, one must carefully consider not only the number of customers available in a segment but also the amount of their purchasing power.



1) introduction.

2) Kotler, Philip (1997), Marketing Management, 9th Ed., Prentice Hall, New Jersey.

3) Market Segmentation.,akanksha91,market-segmentation.( student of bhilai business school)

4) MarketSegmentDefinition.

5) Levels of market segmentation.

6) Levels of market segmentation 91

7) Reasons Of Market Segmention:

8) Shewe,charlesed.(2009-2010). Market Can Be Segmented Using Several Bases:

9) ankansha 91.(2010). www.slideshare.net91

10) Market Criteria for effective Segmentation in Sales / Marketing Management.  Market-criteria-for-effective-segmentation(2009).

11) ht Jorge A. Restrepo. (1994). Segment-Target-Position.

12)  Kotler, Philip. Marketing Management, 1997, 9th edition, pp. 249-268.

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