Segmentation

Market Segmentation

With a large countryMany different types of people

- it is too difficult to create a product that will satisfy everybody, that is why we focus on a segment of the total market

Market Segmentation Defn

“Grouping people according to their similarity related to a particular product category”

Market SegmentationCharacteristicsagegendergeographic locationincomespending patternscultural backgrounddemographicsmarital statuseducationlanguagemobility

Market Segmentation4 commonly used bases for Segmentation

Descriptive

geographic location

demographic

Behavioural

psychographic

benefits

Basis for Market SegmentationSlide 3-7

Market Segmentation

geographic location - based upon where people live[ a popular way of dividing markets)

demographic - based upon age, gender and income level (very often used)

Market Segmentation

Psychographic / lifestyles - based on people’s opinions, interests, lifestyles

benefits - based on the different expectation that customers have about what a product/service can do for them

Geographic Segmentation

The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns.

Demographic Segmentation

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

• age

• gender (male/female)

• income

• occupation

• education

• household (family - style) size

Demographic Segmentation

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

• gender (male/female)gender (male/female)

•gender is an obvious way to divide the market into segments since so many products are gender-specific

• clothing

• medical products

• sports products/services

• entertainment Examples ??

Demographic Segmentation

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

age

• age is another obvious way to divide the market into segments since so many products are based upon “time of life”

Examples ??

Demographic Segmentation

age

• also, people have different consumption patterns at different ages

Examples ??

Demographic Segmentation

Demographic Segmentation is the most common approach to Market Segmentation

• Segmenting by the “stages in the family life cycle

• There are different buying characteristics of people in each stage of the family

Demographic Segmentation

•household (family - style) size

BUYING PATTERNS

• 0-5 young children

• 6-19 school children

• 20-34 young adults

• 35-49 younger middle-aged

• 50-64 older middle-aged

• 65+ seniors

• 80+ SUPER seniors

Demographic Segmentation

•household (family - style) size

FAMILY LIFE CYCLE STAGES

a. Young Single

b. Young Married with no Children

c. Young - married with children

Demographic Segmentation

•household (family - style) size

FAMILY LIFE

c. married with children

d. divorced with children

e. married without dependent children

f. divorced without dependent children

Demographic Segmentation

•household (family - style) size

FAMILY LIFE CYCLE STAGES

5. Older

a. older married

b. older unmarried (divorced, widowed)

Demographic Segmentation

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

• age

• gender (male/female)

• income• occupation

• education

• household (family - style) size

Demographic Segmentation

income

Segmenting markets on the basis of income and expenditure patterns

Psychographic Segmentation

“The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers”

The use of detailed information to understand differences in what people buy

psychological

Psychographic Segmentation

Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions

AIO - activities, interests, and opinions

Benefit Segmentation

“It is based on the Attributes (characteristics) of products, as seen by the customers”

example, people buy something because it causes a benefit

Benefit Segmentation

“Many marketers now consider benefit segmentation one of the most useful methods of classifying markets”

Segmentation Bases for Industrial MarketsSlide 3-12

Segmentation for Industrial Markets

Geographic Segmentationuseful for the automotive industry

Product Segmentationie. Special parts and components

Segmentation by End-Use Applicationie. Paint mfg. Paint for waterproof

applications, paint for rust prevention, paint which sticks to glass

Segmentation for Industrial Markets

Pharmaceutical SegmentationPharmaceutical segmentation can be done for

four categories of products.The first is for consumer or prescription products. Second for Institutional market products. Third, the Industrial market products and finally OTC (Over the counter) or non prescription products.

Pharmaceutical SegmentationFor pharmaceutical companies what is

important is the prescription markets. pharmaceutical market for prescription can be sub divided into two categories:1. Doctors or Intermediate Customer2. Patients or consumer

Pharmaceutical Segmentation1. Segmentation on the bases of

Intermediate customer (Doctor):Doctors can be classified on the basis of their a. Age (Old Doctors, Young Docotrs, Interns), b. Speciality (Cardiologists, Diabetologists, Orthopedician, Opthalmologist etc.) c. Place of Practice (Urban, Rural, Govt Hospitals, Private clinics)

Pharmaceutical Segmentation) d. General Practitioners e. Type of

Practice (Prescribing/Dispensing) f. Usage rate of products (heavy users, light users, medium users, non users)A company need to look into so many factors because these factors would help a company to effectively plan and decide its marketing strategy.

Pharmaceutical Segmentation2. Segmentation on the bases of consumers:

Patients can be categorized as a. Patients with similar kind of illness e.g..

diabetic patients b. Patients with similar stage of illness (acute illness / chronic illness) c. Patients according to their age group (pediatric patients, geriatric patients, young patients etc.) d. Patients according to their gender (male and female patients)

Pharmaceutical SegmentationInstitutional market comprises of large

hospitals who purchase in bulk and directly from the companies. Pharmaceutical companies need to identify the profitable hospitals on the basis of their size and how much business they can generate. Some companies have a separate department or division to cater to the needs of institutional market..

Pharmaceutical SegmentationIndustrial market comprise of buyers of bulk

drugs or active pharmaceutical ingredients. It also includes pharmaceutical machinery suppliers

Pharmaceutical SegmentationOTC market includes consumer who

purchases certain medicines that do not require a prescription from doctor.