Segmenta(on

and Targe(ng

Segmenta(on

What is segmenta(on
Why segment
Characteris(cs of good segmenta(on
Bases of segmenta(on

What is segmenta(on
Segmenta(on
Dividing the market into groups of (actual and/or
poten(al) customers so that each group is rela(vely
homogenous with respect to its characteris(cs,
needs, evalua(ons or behaviors. The groups are
called market segments.

Why segment
Op(mizes eec(veness of companys ac(ons
More targeted marke(ng mix by iden(fying key
dierences among customers
Increased customer sa(sfac(on
Higher CLV

Op(mizes cost-eciency of companys ac(ons

Doing away with irrelevant dierences to create single
oering for customers within each segment

Characteris(cs of Good Segmenta(on

MECE
Homogenous within
Heterogenous across

Bases of segmenta(on
Value-based segmenta(on
Prole-based segmenta(on
Geographic

Region, country, urban/rural

Demographic

age, gender, income, educa(on

Psychographic

life-style and personality variables

e.g. style-conscious, risk-taker, fun-loving

Behavioral

User status, usage rate, channel usage, loyalty status

Good approach to segmenta(on?

 Pepsis New Genera(on campaign in 80s with MJ

.. where then-CEO Roger Enrico was looking for
a big idea to launch his youth-targeted "New
genera(on" campaign for the brand. "The goal
was to make Pepsi look young and Coke look old,
and Michael Jackson was in fact the choice of that
genera(on ..
h_p://www.youtube.com/watch?v=po0jY4WvCIc

Scooter industry and Hero Motocorp

 Hero Motocorp
h_p://www.youtube.com/watch?v=4kH2_1LJym0

Hero Pleasure

How good is this segmenta(on?

h_p://www.youtube.com/watch?v=eCyw3prIWhc

Methodological Approaches to Segmenta(on

Qualita(ve or judgmental
Quan(ta(ve
Cluster Analysis

Targe(ng

What is targe(ng
Criteria for target market(s) selec(on
Targe(ng approaches
Examples

Targe(ng: Selec(ng one or more markets to enter

Criteria:
Segment a_rac(veness
Segments ability to deliver value to the company and its
collaborators

Segment compa(bility
Companys ability to create superior value rela(ve to the
compe((on

Targe(ng approaches based on levels of

segmenta(on
Mass Marke(ng

Segment-based marke(ng

Mul(ple segments or single segment concentra(on

Niche marke(ng: one or a few small segments

One-to-one marke(ng (also called mass

customiza(on)

Examples

You can have any color you want,

as long as it is black

 Oberois targe(ng approach

Target: Premium
s egment
Trident Oberoi

Oberoi Resorts
Target: Luxury segment

Volkswagen Phaeton: Target Segment?

The "Peoples' Car" brand simply couldn't get away with

a full-blown luxury sedan in the US

Apple vs Samsung
iPhone saw its share of the global smartphone market
decline in the January-March quarter, as its shipment grew
at the lowest rate in its history..WSJ, April 2013
Apple's market share fell to 18% from 23% in the same
period a year earlier, whereas Samsung captured its
highest-ever share of 33% from 29%
Samsung sells a number of smartphones targeted at
dierent segments, whereas Apple has focused on the
premium segment of the market with its iPhone.
"Apple's premium-only strategy for the iPhone is
approaching a natural ceiling and it will need to expand
deeper into large markets like China or launch a lower-
priced iPhone model for mass-market users," said Strategy
Analy(cs Execu(ve Director Neil Mawston in the report.