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2.2.2 Market Segmentation

Definition

  • A market segment consists of a group of customers who share a similar set of needs and wants.
  • Segmentation is the process of dividing a market into distinct subsets of consumers with common characteristics or needs to create homogeneous groups within a heterogeneous market.

Purpose of Segmentation

  • Allows businesses to:
  • Identify homogeneous groups within a larger market.
  • Tailor marketing strategies to meet specific needs and wants.
  • Develop products, pricing, distribution, and promotion that align with customer expectations.

Segmentation Process

  1. Identify the Market:
  2. Start with a heterogeneous market (e.g., a city like Bangalore).
  3. Choose a Basis for Segmentation:
  4. Divide the market into smaller groups based on specific characteristics.
  5. Example: Age group of 30–40 years in Bangalore.
  6. Create Homogeneous Groups:
  7. Focus on subsets of customers with shared needs or characteristics.
  8. Ensure the groups are distinct from each other.

Bases for Segmentation

Segmentation can be based on several factors: - Demographic: Age, income, gender, education, occupation. - Geographic: Region, city, climate, urban vs rural. - Psychographic: Personality, lifestyle, values. - Behavioral: Usage patterns, loyalty, purchase frequency.

Example: Sunsilk Shampoo

  • Sunsilk has multiple product variants to cater to diverse customer needs:
  • Sunsilk Dream: For soft and smooth hair.
  • Sunsilk Hair Fall Solution: To reduce hair fall.
  • Sunsilk Lusciously Thick and Long: For thick and long hair.
  • Sunsilk Stunning Black Shine: For shiny, healthy, black hair.
  • Sunsilk Perfect Straight: For perfectly straight hair.

Insights:

  • Each variant addresses a specific need or want of the customers.
  • This demonstrates segmentation based on customer requirements related to hair care.

Key Learnings

  • Customers are segmented, not products:
  • The segmentation is done for customers based on their needs, wants, or characteristics.
  • Products, pricing, promotion, and positioning are developed based on these segmented customer groups.
  • Example Analysis:
  • Sunsilk identified five customer segments based on hair care needs.
  • They developed specific products to address each segment’s unique requirements.
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