The Concept Of Market Segmentation Marketing Essay

Market segmentation is the division of market into different groups of customers with distinctly similar needs and product/service requirements. Or to put it another way, market segmentation is the division of a mass market into identifiable and unique groups or sections, each of which have common characteristics and needs and screen similar reactions to marketing activities.

Market segmentation was first defined as 'a condition of expansion when core marketplaces have been developed on the generalised basis to the stage where additional promotional expenses are yielding diminishing returns' (Smith, 1956). There is now widespread arrangement that they form an important foundation for successful marketing strategies and activities (Breeze, 1978; Hooley and Saunders, 1993).

The purpose of market segmentation is to leverage scarce resources; in other words, to ensure that the elements of the marketing combination, price, distribution, products and advertising, are made to meet particular needs of different customer groups. Since companies have finite resources it is not possible to create all possible products for all the people, all of the time. The best that may be targeted for is to provide preferred offerings for preferred groups of people, the majority of the time. This process allows organizations to concentrate on specific customers' needs, in the most effective and effective way. As Beane and Ennis (1987) eloquently commented,

'a company with limited resources must choose only the best opportunities to follow'.

The idea of market segmentation was initially proposed as an alternative market development technique in imperfectly competitive marketplaces, that is, in markets where there are relatively few competition selling the same product. Where there are lots of competitors selling similar products, market segmentation and product differentiation produce similar results as opponents imitate your proper approach more quickly and product differentiation strategies meet market segment needs more directly.

With an increasing proliferation of likes in society, consumers have increased disposable incomes. As a result, marketers have looked for to design product and service offerings around consumer demand (market segmentation) more than around their own production needs (product differentiation) plus they use market research to inform this process

Objective Of Study

1. To comprehend market segmentation and consider why it is used.

2. To examine how companies section markets.

3. To explore different focusing on strategies.

4. To learn about the role and procedure for positioning in segmentation strategies.

5. To consider how marketers can perform the most from market segmentation.

The Process of Market Segmentation

The intricacies involved in market segmentation are thought to make it an exacting activity. Griffith and Pol (1994) argue this aspect on the basis of multiple product applications, greater customer variability, and problems associated with the identification of the main element differences between sets of customers. However, there have been numerous tries to explain and explain business segmentation, utilizing a variety of parameters and ranging from the severely product-based to customer needs-based orientation.

There are two main approaches to segmenting markets. The first adopts the view that the market is known as to consist of customers which are fundamentally the same, therefore the task is to identify groups which show particular differences. That is referred to as the break down method. The next approach considers market to contain customers that are all different, so here the duty is to find similarities. That is known as the build-up method. The break down approach is perhaps the most founded and well known and is the main method used for segmenting consumer marketplaces. The build-up procedure seeks to go from the average person level where all customers will vary, to a far more general level of analysis based on the recognition of similarities (Freytag and Clarke, 2001).

The build-up method is customer oriented as it seeks to find out common customer needs. The purpose of both methods is to identify segments in the market where identifiable variations exist between segments (portion heterogeneity) and similarities are present between customers within each section (member homogeneity).

Market segmentation and placement are fundamental determinants of successful marketing. They are key to the matching process which is the raison d'Єtre of marketers. It really is marketers who are responsible for making certain the offer made by the company available on the market satisfies the needs and needs of the prospective market of customers and consumers. Segmentation and positioning analyses enable the marketer to make enlightened choices in what to provide, to whom, and in what manner.

'Customer' and 'consumer' tend to be used interchangeably. The term 'consumer' generally means the ultimate consumer, who is not necessarily the client. For example, a parent buying lunch pack snacks is most likely acting as an agent with respect to school-age children. The parent can therefore be referred to as the 'intermediate customer' and the kid as the 'end nsumer'. To market such snack foods effectively, the marketer must differentiate the needs and needs of each party influencing the purchase process. She or he must be clear about which celebrities in the process should be the main topic of any segmentation exercise.

The term 'market' must be described unequivocally. For example, Draw Warner and Saga are both holiday companies nevertheless they are not in the same market. The former offers holidays for families, young couples and categories in Alpine and sunshine resorts, while Saga attracts the older traveller who may be looking for holidays involving leisure pursuits such as sightseeing, bridge or walking.

We need a definition so that we can

Measure market show and market development;

Specify concentrate on customers;

Recognize relevant competitors;

Formulate marketing goals and strategies.

As a rule of thumb, market should be described in terms of an consumer need, and in a way that covers the aggregation of all the solution products and services which consumers regard as being capable of satisfying that need. For instance, a make of instant caffeine not only competes with other brands in the same product category, but also with different hot beverages such as tea and delicious chocolate. Consumers could even see cold drinks such as colas and water as substitutes for this.

Needs-based definitions evolve as time passes as styles emerge in the marketplace, and companies must be prepared to revise their definitions consequently. Nevertheless, they need to devise a definition that is manageable. With the extreme end of the range, micromarketing is about marketing to the individual as a segment of 1. However, companies must have the ability to meet the needs of specific segments in a way that is commercially viable. They therefore focus their work on groups of many customers who share about the same needs.

Market segmentation allows companies to gain advantage over their competitors available on the market by enabling them to concentrate resources on clearly identified opportunities. It really is predicated on the assumption that 'birds of your feather flock jointly'.

In many conditions, the segments form separate marketplaces in their own right, and they can frequently be of considerable size. You will discover number of standards that make market portion of commercial interest, including the following

The segments should be large enough to offer an adequate return on investment.

The requirements of section associates should be very similar, but the people should be particular from the rest of the market.

Segments must be reachable, that is, the channels, or routes to advertise (where people buy), must be accessible.

Methods of Market Segmentation

1) Geographical segmentation-Chronologically, this type of segmentation appeared first. For planning and administrative purposes, the marketer will often find it convenient to subdivide the marketplace into areas such as nations, state governments, regions, metropolitan areas, etc. In organized way. The fantastic advantage of adopting this scheme is the fact standards locations are trusted government and its facilitates assortment of statistics. A lot of the national manufactures split their sales areas into sales territories either state wise or district wise.

2) Demographic segmentation-Under this technique, the consumers are grouped into homogenous organizations in terms of demographic similarities such as time, gender, education standard, income level, etc. That is considered to be more purposeful since the emphasis ultimately relax on the clients.

Age group are believed by manufactures of certain special products, for example, toys. Even in the purchase created by parents, children exert a profound influence. The marketplace segmented based on the age groups is really as follows :children, teen agers, adults and developed.

Anti Maturing products

Anti-aging products were formerly designed for the baby-boomer era, yet, in the recent article, the analysts (global aesthetic industry, 2008) unveiled that the

Future development will be fuelled by the growth of the buyer base into youthful age Groups aged 25 to 30 which appear to be more and more interested in applying anti-aging Products, particularly topical skin area treatments. This change is leading to an increase of Spending on anti-aging products which and will probably result in much better market Opportunities for producers seeking constant expansion of these operations.

The growing probable of the anti-aging skincare segment along using its menacing Competition spurs plastic market players to create and launch new products in order to stay in the overall game. Unilever, the world's eighth biggest beauty products manufacturer (plastic design, 2008) regularly updates their skincare product line. The business Launched pond's age group miracle anti-aging skincare cream specifically for the Asian market In the late 2006 - early 2007 in an attempt to capitalize on the market's huge probable. And to tactically respond to the life-long rival p&g's early introduction of Olay total result,

Globally in 1998 (Olay, 2008) and Vietnam 2005, a multifunctional anti-aging products. In Vietnam, pond's age miracle premiered in January 2007. Designed and made utilizing a breakthrough cla (conjugated linoleum acid) technology, pond's Time miracle was said to be always a new solution for the aging skin capable of visibly reducing lines and wrinkles in seven days. Its kick off by unilever Vietnam was designated as "strategic and must-win" stressing its relevance for the manufacturer. Initially, pond's time Miracle received a friendly welcome and shot up to capture a considerable share of Vietnam anti-aging skincare market.


Eight interviews came back us a total of thirty product attributes that the respondents consider when choosing an anti-aging skincare. There have been found no significant distinctions between the interviewees' responses as almost all of them shared the same view of anti-aging products regardless of being Olay, Pond's Age Miracle, third-party users or potential ones. The two capabilities classes - beneficial and image - rather than characteristic, drew most interest of the interviewees. Another important aspect of the interviewees' responses can be an expectation of something more than simply wrinkle reduction, the key function of anti-aging skincare; some even respondents didn't even talk about this attribute at all.

Olay Total Effect

Olay is a P&G skincare brand brand which offers a variety of products with different functions in two main categories - cleanser and cream - with the purpose of meeting the full selection of skincare needs, no matter what user's era or skin type.

In March 2005, P&G inserted India's anti-aging skincare market with the Olay Total Effects brand line expansion in the footsteps of its launch in Indian market. The India unveiling was a first mover strategy to utilize the prime skincare segment prior to the appearance of the major opponents. Olay Total Effect successful market admittance also allowed P&G to make inroads into other skincare categories like whitening, moisturizing and cleansing in 2006 and 2007.

The product is said to provide multi-effects including reducing fine lines and wrinkles, smoothening skin area texture - visibly also to the touch, night complexion for young looking, more well balanced color, bettering surface dullness, supplying skin a radiant, healthy shine, minimizing pores, visibly reducing the appearance of blotches and age places and smoothening dry epidermis.

Olay Total Results comes at the price tag on 190, 000 VND (equivalent of 7. 6 EUR) and in one suits - all size of 50g both through modern channels like supermarkets, shopping malls and traditional channels like road shops and wet-markets.

Olay is tapping the high quality slice of the Rs 2100 crore Indian skin care market. Olay has launched its first product in the anti-ageing segment with its Total Results sub brand. Anti-ageing segment is still a distinct segment with a market size of Rs 60 crore. The segment is but growing extremely fast.

Olay has launched its Total Effects anti ageing solution after much consumer research. It possessed conducted research on over 6000 women old between 30-69 years from three continents and discovered 7 signs of ageing.

1. Fine ines and Wrinkles

2. Sagging skin

3. Uneven epidermis tones.

4. Era spots

5. Appearance of pores

6. Dull skin

7. Dryness

Total Effects is differentiating itself through the presence of the ingredient Vita Niacin. Vita Niacin is a patented formulation which has Niacin amide Supplement B3, Supplement E and Provitamin B5 Pathenol +

sunscreen coverage.

Olay true to the idea of Global Brand and Local strategy has launched itself with some promotional campaigns. The brand has the bollywood diva Sushmita Sen as the brand ambassador. Presently Olay is running two promotions in the aesthetic media. One campaign is th Olay brand building advertising campaign displaying Sushmita Sen and another is made for the Total Results moisturizing lotion.

Watch the Tvc : Total Effects

For the Total Effects range, the business runs on the testimonial type of campaign having a Model/Television set Anchor. The concentration is more on the efficient benefits of the merchandise rather than harping on any emotional benefits. The brand is put as a brand that celebrates beauty within and external. The brand worldwide uses the tagline " Love the skin you are in ". The brand believes that Looking Good and Sense Good are inseparable. Loving the skin were in is the most beautiful feeling of most.

Olay Total Results is priced at Rs 599 for a 50 gm bottle. By Indian criteria, this makes up about reduced category. Olay Total Effects is targeting women between the time 30 - 60. Besides this anti-ageing product, Olay has introduced cleansers, face pack and moisturizing lotions. The brand is expected to present its blockbuster selection of products in India in a phased manner.

The top quality skincare segment was at a vacuum since HUL decided to focus on the masstige segment by repositioning Lakme and Ponds. Now with P&G and ITC significantly looking at prime segment, the marketplace is going to witness a marketing war in days and nights to come

Pond's Age Miracle

Pond's is Unilever's skincare brand range. Introduced to Indian market in 1996, Pond's quickly became a leader in mass skincare, the main market segment in India at the time. Pond's product range targets whitening segment including moisturizers and cosmetic foams. As part of their counter-offensive to an ongoing enlargement of Olay Total Result, in January 2007 Unilever launched Pond's Age group Miracle, an higher tier anti-aging skincare extension of the existing Pond's range also likely to reinforce Pond's overall image in the mass market.

Its launch campaign was predicated on a vox pop format: It acquired people from various strolls of life providing their opinions on the products. This was followed by 'Love Revival', a heartwarming television commercial of any husband-turned-chef looking to bring romance back into his marriage. These campaigns continued to be aired for the first six months of the brand's start.

An endorsement marketing campaign on television set wherein celebrities such as Mehr Jesia Rampal, previous Neglect India and model, and Rina Dhaka, fashion designer, talk about how Pond's Era Miracle has changed their lives, is also seen off and on. Currently, a television campaign, 'Satisfaction amidst Millions', has been screened. `````````

With players like L'Oreal and Olay, in addition to Pond's, the anti-aging market in India stands at Rs 60 crore today, relating to Nielsen characters for 2007, which is growing for a price of 30-40 per cent per annum,

Pond's Time Miracle range includes cream, serum, cosmetic foam, lotion and attention cream toner in which the cream is a flagship product that secures 80% of sales of the complete range. It really is claimed to provide solution to wrinkles and dark areas effective in 7 days.

Pond's Age Miracle cream emerges into two pack sizes: 50g priced at 190, 000 VND (7. 6EUR), and 30g coming in at 129, 000 VND (5 EUR). As a part of the strategy to fight against Olay Total Result, Unilever ensured equally considerable distribution network for Pond's Get older Miracle and its availableness to end-consumers through every possible channel (Unilever, 2008). The successful release in early on 2007 allowed Pond's Age Miracle to get a substantial share of almost 50 % in the anti-aging skincare category a couple of months later. However, immediately after the merchandise experienced a pointed decline of its sales and market show. The bottom line - the merchandise profitability - was also breached, resulting in Unilever Vietnam considering the decision of withdrawing Pond's Get older Miracle from the marketplaces.


The underlying principle of market segmentation is that the product and services needs of individual customers vary. Market segmentation requires the grouping of customers alongside the aim of better gratifying their needs whilst maintaining economies of scale. It contains three stages and if properly executed should deliver more gratify customers, few immediate confrontations with competition, and better designed marketing programmers.

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