Marketing - Role and Relevance of Segmentation and Positioning

Market Segmentation

Market segmentation is the process of dividing the whole market into different segments to identify the smaller markets that exists with in a larger market. A consumer market is the sum of consumer who vary in their characteristics and buying behaviour.

"It is the process of dividing the heterogeneous market for any product into different segments of relatively homogeneous markets."

According to Philip Kotler "Market segmentation is the sub-dividing of a market into homogeneous sub-sect of customers where any sub-sect may conceivably be selected as a market target to be reached within a distinct marketing mix."

Bases of Segmentation

1. Geographic segmentation: Segmentation on the basis of geographical units such as nations, regions, states, etc.

2. Demographic segmentation: Segmentation on the basis of age, sex, income, family size, expenditure patterns, education, etc.

3. Psychographic segmentation: Segmentation on the basis of lifestyle, personality traits, social class, etc.

4. Behavioural segmentation: Segmentation on the basis of consumers buying behaviour such as consumers' usage rate, usage type, benefits sought from the product, brand loyalty, usage occasions, etc.

Properties of an effective segment

1. Distinguishable
2. Measurable
3. Accessible
4. Servable
5. Growing
6. Profitable
7. Appropriate size

Advantages of Market Segmentation

1. Focusing target market: It helps a marketer in targeting a particular market to which it can focus to sell its products. Like McDonalds targets college students or similar people for its "aloo tikki" burger who would like to spend less while eating out.

2. Market expansion: Marketer by way of market segmentation gets to know the needs of the customers better. Therefore they are able to introduce new innovative products which already has acceptance in the same market segment. Like Rekitt Benckiser company which deals mainly in home care, personal care, fabric care, etc segments introduced vanish shakti O2 in indian markets targeting people who were looking for some product especially for removing stains effectively.

3. Reducing risk: It helps in reducing the risk of time and money by marketing the right product to the right customer.

4. Increasing efficiency: Segmentation helps in increasing efficiency by making more focused efforts to the most profitable segments suited for a particular product.

Target Marketing

Target marketing is focusing one's marketing efforts to one or more selected market segments. It involves developing separate marketing mixes for each segment that is selected as target market.

Target market selection

In evaluating different market segments two factors are to considered:

1. The segment's overall attractiveness and 

2. The company's objectives and resources

Lets assume Ms as market and Ps as products.

1. Single segment concentration
In single segment concentration a firm focuses one product for one market segment only and it helps it to establish a strong market presence for that product.

	M1	M2	M3
P1
P2
P3

2. Selective specialisation
In selective specialisation a firm focuses different products for different markets. Like HUL offers different kind of products to different market segments.

	M1	M2	M3
P1
P2
P3

3. Product specialisation
In product specialisation the firm sells a particular product to the different segments of  the market. Like Colgate offers tooth pastes to different segments, it offers different tooth pastes for kids, youngsters, for people having sensitive teeth, etc.

	M1	M2	M3
P1
P2
P3

4. Market specialisation
In market specialisation the firm offers different products to the same market. Like again Colgate offers toothpastes, tooth brushes, mouth washes, etc for oral care market.

	M1	M2	M3
P1
P2
P3

5. Full market coverage

In this case the firm offers all the products to all the market segments. Like Maruti offers cars for almost all the segments of the market.

	M1	M2	M3
P1
P2
P3

Product Positioning