• Segmentation is a practice that seeks out pieces of the total market that contain customers with identifiable characteristics, as defined by income, age, personal interests, ethnic background, special needs, and so forth.
• The point of segmentation is to break a mass market into submarkets of customers who have common needs.
Why do we need segmentation?
• Not all individuals have similar needs. Individuals have different needs based on various factors which define them or their lifestyle like needs of men, women and kids differ from each other completely, or the needs of married individuals would differ from bachelors or needs of people from different countries will be different, when they are to be satisfied using various products and services. Identifying these segments makes it possible to do two things:
(1) create goods and services that are better tailored to the needs of specific customers and
(2) focus marketing resources more efficiently
Market segments must rate favorably on five key criteria (MSADA) for them to be useful: • Measurable: The size, characteristics & purchasing power of the segments can be measured.
• Substantial: The segments are large and profitable enough to serve. A segment should be the largest possible homogeneous group worth going after with a tailored marketing program.
• Accessible: The segments can be effectively reached and served.
• Differentiable: The segments are conceptually distinguishable and respond differently to different marketing-mix elements and program.
• Actionable: Effective programs can be formulated to attract and serve segments.
Possible Levels Of Segmentation:
Marriott International® owns a number of different hotel chains that target specific consumer groups.
For example, Courtyard by Marriott® hotels focus on travellers on the road, who want a nice, clean place to stay during their trip; Ritz-Carlton® hotels target those who don't mind paying a premium for luxury; and Marriott ExecuStay® hotels are aimed at professionals who need a long-term & comfortable place to stay.
Marriott International doesn't communicate the same marketing message to all its customers.
Each hotel is designed and positioned to appeal to the unique wants and needs of a specific group.
The segments that fit into the company objective that can be serviced are identified & targeted.
Firm can sell one product to several segments with product specialization.
Firm focus on serving many needs of a specific customer segment with market specialization.
Example: Positioning map of cars
• Creating a favorable & distinctive image (or position) for the product in the mind of the consumer.
• To Develop a conducive position, brand requires optimal Points-of-parity (POPs) and Points-of-difference (PODs)