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MARKETING ENVIRONMENT AND MARKET

SEGMENTATION

Chapter 2
 Marketing Environment:
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 Environment is something that surrounds an enterprise.

 It is the sum total of all factors within which the enterprise
operates.
 These environmental factors may be controllable ,
uncontrollable, qualitative and quantitative.
 Definition of Marketing Environment:
 According to Philip Kotler:
“ a company’s marketing environment consists of the external factors
and forces that affect the company’s ability to develop and maintain
successful transactions and relationships with its target consumers.”:
 Factors influencing environment:
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Internal External
factors(micro) factors (macro)

Demographic
Company
Economic
Channel members
Political
The staff
social

Customers
Cultural
Competitors
Technological
Public
Ecological
suppliers
 MEANING of MARKETING SEGMENTATION:
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 The concept of market segment is based on

the fact that the markets for commodities are
heterogeneous and not homogeneous.
 Market represents a group of customers
having common characteristics .
 But human behavior defers from person to
person and also in term of nature, tastes,
likes,hobbies,income etc.
 So customers having similar characteristics are
grouped in segments.
 Market segmentation is the process of
dividing the market and identifying the
groups of buyers on the basis of their various
needs and desires.
 Meaning:
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 It is a method of achieving
maximum market response by
diving the market into various
groups on the basis of certain
common features.
 It’s strategy to “DIVIDE AND
CONQUER” .

 Market segmentation is a two fold

process:
 Identifying the segments
 Designing separate marketing
programmes for each segment of
the market to achieve maximum
consumer satisfaction and profit
to org.
 Definitions:
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 Philip Kotler:
 Market segmentation is a process of identifying gropus of buyers with
differnet desires or requirements.
 Prof. William Stanton:
 Market segmentation is the process of diving the total heterogeneous
market for a product into several sub markets or segments in such a
way that each of the segment tends to be homogeneous in all respects.
 R.S.DAVAR:
 Grouping of buyers or segmenting the market is described as market
segmentation.
 Approaches/types of market segmentation
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 People oriented approach:

 Under this approach , a
consumer can be classified
based on various dimensions
such as geographic location,
demography, economic, social
and psychological factors.

 Product oriented approach:

 Under this approach , the
response or behavior of the
consumer is studied in relation
to the product benefits,
product usage, brand loyalty.
 Essentials/elements of market segmentation
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 Identifiable

 Measurable

 Adequate market potential

 Economically assessable

 React to marketing efforts

 Stable over a period of time

 dynamic
 Bases of market segmentation:
consumer market
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 Geographic segmentation

 Demographic segmentation

 Psychographic Segmentation

 Behavioral segmentation
 Geographic segmentation:
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 It means grouping consumers into

homogeneous groups in terms of
geographical similarities and factors
such as :
 Nations
 States
 Regions
 Cities
 Climate
 Density of population
 Topography
 Demographic segmentation:
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 It means grouping the customers

into homogenous groups in terms
of demographic similarities like:
 Age

 Gender

 Income

 Educational level

 Religion

 Size of family

 Economic activities
 Psychographic segmentation:
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 It means grouping the

customers into homogenous
groups in terms of
psychographic similarities
like:

 Life style

 Personality traits
 Behavioral segmentation:
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 In this type , buyers are divided

into groups on the basis of their
knowledge, attitudes, use or
response to a product:
 User status

 Usage rate

 Loyalty

 Attitudes

 Benefits sought
 Bases of segmenting industrial goods market:
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 Kind of business

 Buying criteria

 Geographical criteria

 Consumer criteria
 Importance/benefits of market segmentation:
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 Increases market opportunities

 Helps to identify and compare market opportunities
 Helps to design a product
 Helps into fix prices
 Assists in deciding distribution strategies
 Helps in deciding appropriate promotion mix
 Helps to forecast marketing budget
 Ensures optimum utilization of resources
 Provides better services to customers
 Increases sales volume
 Helps to develop sound marketing programme
 Limitations of market segmentation:
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 Expensive:
 Product, production,promotion,inventory , management cost
 Time consuming
 unpredictable consumer behavior
 Changing environment
 Diversity of Indian market
 Conservative attitude of management
 Wrong judgments
 Differentiated marketing:
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 It is aimed at two or more

specific segments in the
market.
 The firm decides to target
several segments and
develops different products
with different marketing mix
aimed at varying group.
 It is also called as multi
segment marketing.
 Differentiated marketing:
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 Merits:
 Attain higher sales
 Consumer demand is highly diversified
 Availability of a wide range of variety

 Demerits:
 Increase overall costs
 Requires developing separate marketing plans
 Increase in promotion cost
 Concentrated marketing:
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 Concentrated marketing is targeted o one

specific market segment or audience.
 It aims a few well defined segments.
 A product is developed and marketed for
a very well defined specific segment.
 Merits:
 Allows small cos. with limited resources to
achieve a strong position in the specific
market.
 Enjoys operating economies because of
specialization in production, distribution and
promotion.
 Demerits:
 Involves higher than normal risk
 May make more difficult for a co. to
expand
 Questions for study:
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 Define marketing environment. Explain the internal factors of marketing

environment by giving suitable examples.
 Define marketing environment. Explain the external factors of marketing
environment by giving suitable examples.
 Define market segmentation. Explain essentials of effective market
segmentation.
 What is market segmentation? Explain the basis of segmenting consumers
as well as industrial market in detail.
 Explain the benefits and limitations of market segmentation.
 Questions for study:
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 Write short notes on:

 Types of market segmentation

 Undifferential marketing

 Differential marketing

 Concentrated marketing

 Procedure of market segmentation.

 Demographic/geographical/behavioural /psychological segmentation

 External factors of marketing environment

 Internal factors of marketing environment

 Class Test
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