Write a note on Market Segmentation

MARKET SEGMENTATION

Market segmentation is a process of dividing a heterogeneous market into homogenous sub­units; concept that was first developed by a Wendell R. Smith in a paper in 1956.1t is defined as dividing a market into distinct groups of buyers with different needs, .characteristics, or behaviour who might require separate services. A market was analyzed for its nature and composition, and was clubbed under groups of similar needs and other characteristics. Customers inside a grouping had similar preferences & traits, two different groups had different preferences and traits. Each of these grouping was called a segment, & the process was known as market segmentation.

Requirements for Effective Segmentation

• Measurable and obtainable: Size, purchasing power, and characteristics of segments
• Accessible: The segments should be effectively reached and served. For example, questions like this keep cropping up. Will it be possible for us to communicate and serve the people of the North-East if and when we open our branch there?”
• Substantial and viable: The segment chosen should be large and profitable. It should be cost-effective for the service marketer to address the segment.
• Intensity in competition: More the intensity of competition, less attractive is the segment.
• Actionable: If the segments are attractive &have the potential for profit making, then effective marketing programmes can be designed. NIIT found that the Chinese market had huge potential and designed innovative marketing programmes to serve that market.
• Differentiable: The segments should be distinct from each other, behaving and responding differently. Or else, the process becomes like Undifferentiated Marketing.

Bases for Segmenting the Service Consumer

The service marketer can segment the market according to consumer characteristics & consumer responses.

Consumer characteristics indicate who buys:

• Geo-demographic (e.g., political – state, districts, blocks-, region – urban or rural-, geographic North, South. East, ‘West)
• Demographic (e.g’ age, gender, marital status, education, family size, family life cycle, etc.)
• Socio-economic (e.g., income, social class, occupation)
• Culture (e.g., lifestyles, religion, language, ethnic origin & culture)