Question 2 (a)
Market segmentation, its difference from targeting, and the factors used to segment markets
12 marks
- Time to write
- About 24 minutes
Question
Question 2 (a) · 12 marksWhat is meant by Market Segmentation? In what way is it different from Market Targeting? Explain with the help of the various factors which affect the market segmentation.
Reworded from the university paper; the task is the same. The original paper belongs to the University of Delhi. See DU's question bank.
Before you write
Read off the question and its marks
Read from the question
- What is meant…?What…?Explain…3 asks, each with its own marks below. Answer all 3.
Write it in this order
- Read; underline the asks; jot your points 2 min
- 1 Meaning of market segmentation 2 marks 1 min
- 2 Difference from market targeting 2 marks 4 min
- 3 Factors affecting market segmentation 8 marks 15 min
- Check: every ask answered, key terms underlined 2 min
Easy marks
- Meaning of market segmentation (step 1, 2 marks): a clear definition and a line on what it covers. It opens the answer, so it takes a minute or two.
Short on time? Keep step 1 short. Trim steps 2 and 3 evenly rather than skip one: each is capped at its own marks.
Try it first. About 24 minutes for 12 marks. Write it out, then open the solution.
Solution
Hover or tap a marked figure, like 72,000, to see how it is made and where else it appears.
Meaning of market segmentation
Market segmentation is the process of dividing a total market into distinct, relatively homogeneous groups of buyers, each with similar needs, characteristics or behaviour, so that each group can be served with a separate marketing mix. Each group is a market segment. Segmentation recognises that buyers differ and that one product and message cannot satisfy everyone equally well. Example: a toothpaste market can be divided into buyers seeking cavity protection, whitening, sensitivity relief, herbal ingredients or low price.
1On the table the buyers sort themselves: students, families, office-goers, riders.
Market segmentationDividing the market into groups
2Her hand hovers, then picks the groups her scooters fit best.
Market targetingChoosing one or more groups to serve
3And on the street, those are exactly the hands on the handlebars.
Segmentation divides the marketTargeting selects from it
Segmentation and targeting distinguished
| Basis | Market segmentation | Market targeting |
|---|---|---|
| Meaning | Dividing the market into groups | Choosing one or more groups to serve |
| Stage | First step of the STP process | Second step |
| Nature | Analysis of the market | A strategic decision |
| Based on | Variables such as age, income, lifestyle, benefits | Segment size and growth, competition, the firm's resources and objectives |
| Result | Segment profiles | Target market and targeting strategy |
Segmentation shows what groups exist; targeting decides which of them the firm will pursue. Example: a two-wheeler company first segments the market into students, daily commuters, families and enthusiasts, and then decides to target commuters and families with fuel-efficient models.
Factors affecting market segmentation
Markets are segmented by the following groups of factors (variables), usually in combination:
- Geographic factors. Nation, region, state, city size, urban or rural location, climate and terrain. Example: demand for air coolers in dry northern areas and for dehumidifiers in humid coastal areas; rural packs and urban packs.
- Demographic factors. Age, gender, family size and life-cycle stage, income, occupation, education, religion, caste and generation. They are easy to measure and closely related to wants. Example: children's, teenagers' and adults' health drinks; budget, mid-range and premium cars by income.
- Psychographic factors. Social class, lifestyle, values and personality. People with the same demographics may want different products. Example: fitness-oriented buyers choose sports shoes and protein foods; style-conscious buyers choose fashion brands.
- Behavioural factors. Occasions (festive gifting, weddings), benefits sought (economy, quality, convenience, status), user status (non-user, first-time, regular), usage rate (light, heavy), loyalty status and readiness to buy. Example: chocolates promoted for festive gifting; airline loyalty programmes for frequent flyers.
Besides these bases, the firm's choice of segmentation is affected by:
- Nature of the product. Uniform commodities such as salt need little segmentation; fashion, cosmetics and cars need much.
- Size and diversity of the market. Large, varied markets such as India's offer many segments.
- Company resources. A small firm may afford to serve only one segment; a large firm can serve many.
- Competition. Gaps left by competitors suggest new segments.
- Availability of data and media. Segments must be measurable and reachable.
A segmentation is useful only if each segment is large enough to be worth serving, can be measured and reached, responds differently from the others, and can be served with a practical programme. The firm should also avoid over-segmentation: dividing a market into very small groups raises costs and may leave each segment too small to be profitable, so some firms deliberately combine segments (counter-segmentation).
Segmentation divides the market, targeting selects from it, and the choice of segmentation factors depends on the product, the market and the firm. A well-chosen segmentation reveals unmet needs, guides product design and pricing, and makes promotion more efficient because messages reach the people most likely to respond.
Where the 12 marks sit
| # | Component | Marks |
|---|---|---|
| 1 | Meaning of market segmentation | 2 |
| 2 | Difference from market targeting | 2 |
| 3 | Factors affecting market segmentation | 8 |
| Total | 12 |
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