SEGMENTATION – The Basis

For Differentiation
Market Segmentation
The process of dividing a
potential market into
distinct subsets of
consumers and selecting
one or more segments as a
target market to be
reached with a distinct
marketing mix.
Why to Segment?
Heterogeneity in terms of :
 Benefits wanted
 Purchase rates
 Promotion elasticity's
 Focus
Three Phases of Marketing Strategy

Phase 3
Product/Brand Positioning

Phase 2
Target Market and Marketing Mix Selection

Phase 1
Market Segmentation
Bases for Segmentation
 Geographic  Use-Related
 Demographic  Usage-Situation
 Psychographic  Benefit Sought
 Sociocultural  Hybrid
Geographic Segmentation
 The division of a total potential market into smaller
subgroups on the basis of geographic variables (e.g., region,
state, or city)
 Different locations vary in their sales potential, growth rates,
consumer needs and competitive dynamics
 How modern trade and retail stores are using demographic
variables in Karachi to set up their business?
Demographic Segmentation
 Helps to locate target market whereas psychological
and sociocultural segmentation helps to describe it
 Age – A bank use of age factor vs a product like Red

bull
 Gender – Gender specific products vs gender role

irrespective of product type

 Income, Education, and Occupation
 Demographics
• Age – Age groups segregation and use as
means of segmenting the market

Cognitive Vs Chronological age

Cognitive age is the perceived age, a part of

one’s self-concept

Generation / Cohort Age

Group of person who have experienced a

common social, political, historical and
economic environment

Cohort Analysis

Process of describing and explaining the

attitudes, values and behaviors of an age
group as well as predicting its future
attitudes, values and behaviors
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 Age

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Psychographic Segmentation

 Also known as Lifestyle Analysis

 Psychographic variables include attitudes, interests,

and opinions
(AIOs)
Sociocultural Segmentation
 Family Life Cycle – (bachelorhood, honeymooners,
parenthood, postparenthood, dissolution)
 Social Class (relative status in the community based on

combination of demographic factors)

 Culture, Subculture, and Cross-Culture
Use-Related Segmentation
 Rate of Usage
◦ Heavy users, medium users, light and non-users
 Awareness Status
◦ Aware vs. Unaware
 Brand Loyalty
◦ Brand Loyal vs. Brand Switchers
Usage-Situation Segmentation
 Segmenting on the basis of special occasions or
situations
 Example Statements:

◦ We always go for dining out on weekends

◦ Gold jewelry is part of our wedding season
Benefit Segmentation

 Segmenting on the basis of the most important and

meaningful benefit
 Can be used to position various brands within the

same product category e.g. detergent for whiteness,

detergent for stains, detergent with fragrance
Targeting Strategies

• Niche Market • Smaller segments

• Consumers seeking
• Mass Market specialized benefits
• Objective is to avoid
• Growth Market onslaught from large
competitors
Targeting Strategies

• Niche Market • Undifferentiated mass

marketing and
• Mass Market differentiated mass
marketing
• Growth Market
Targeting Strategies

• Niche Market • Targeting one or more fast

growing even though they
may not be very large
• Mass Market • Favored by relatively small
competitors who cannot
• Growth Market afford to go for mass market
• Requires strong R&D and
marketing capabilities to
identify and develop
products appealing to newly
emerging user segments