Prerequisites for Effective Segmentation
In order to be effective, a segmentation exercise would have to fulfill the following requirements.
Segments are formed with the help of certain variables. These variables should be distinct, clear, and measurable. Only then can segments be described in exact terms and the differences between them understood properly. So far, companies have not been able to reach rural market due to lack of poor data related to markets and consumers. In the absence of information related to size, purchasing power and profiles of rural consumers, marketers tend to consider rural consumers as being similar to urbanites. Also, factors measurable in urban (e.g. monthly income) cannot be measured directly in rural due to non-uniform income patterns and multiple sources of income.
Reach is important to serve the different segments. Till recently, marketers preferred urban markets over rural because of the inaccessibility of the latter. Rural consumers were reached through vans and village retailer visiting distributors and retail outlets in nearby towns. Now, while segmenting rural markets, it is important for the marketer to ensure that the segmented market is conveniently reachable for the quick and efficient delivery of products. With significant improvement in connectivity of villages and increased interest in using traditional haats and other new channels for distribution, rural marketers are becoming more and more accessible.
Segments merit the consideration and attention of marketers only when they have distinguish features. Rural consumers are identified as a separate segment as their responses are likely to be different from those of urban customers, at least for some products. For instance, while buying a motorcycle, rural consumers give more importance to the sturdiness, mileage and carrying capacity of the vehicle, whereas urban consumers look for style, power and aesthetics.
A segment is attractive to the marketer only when it is profitable. A segment should as such possess the following characteristics:
(a). Homogeneity: The segment should consist of people who are similar in their views, education, preferences, attitudes, and actions. As such, it will make it easy to cover them.
(b). Largeness: The segment should comprise either a large number of light users or a small number of heavy users, so that marketing is profitable to the company.
Degrees of Segmentation
The segmentation is considered as a process with two polar points from zero to complete, four distinct segment approaches are identifiable as follows
In the early period of the 20th century many companies practiced mass production and mass distribution as economics evolved as economy evolved and societies became civilized, consumer choice and requirements came into focus until now the rural market was considered as homogeneous mass as worse the Indian market till some 20 years ago. Some companies depend on mass marketing while many do not.
The principle of segment marketing rests on wants, demands and behaviors. The need for segment marketing arises when
Consumer‘s have become more diverse, sophi
Competition has become tuff.
A niche is very small group with a different set of traits, who seek a special combination of benefits. Niche marketing identifies special sub groups within larger segments and offers different products and services.
Micro marketing involves tailoring products and programs to suet the taste of specific locations and individuals. It includes local marketing and individual marketing.
Local marketing:- It involves in the programs to suit the taste of specific locations and wants of local group‘s on a geographical bases.
Individual marketing:- Individual market is customized marketing or one to one marketing. Tailoring units hotels, tourist operators provide individualized services for example building contractors builds houses of flats to specific requirements of customers.
Basis of Segmentation
Geographic segmentation- Region: East, West, North, South; Village Size: <500, 501-1000, 1001-2000, 2001-5000, >5000; Density: Low, Medium, high; Climate: Summer, rainy, winter; Culture: 56 socio cultural regions.
Demographic –Age, Family Size (nuclear or joint ), gender, Income, Occupation, Education, SEC, religion, race, Nationality, social class
Psychographic –Use of Psychology and demographics, Lifestyle (AIO) –Nike, Benetton, * Personality –Femina – woman of substance; * Values –HiDesign leather accessories consumers who hold the value ‗style and elegance in a classical sense‘
Behavioral Segmentation - based on buyer‘s knowledge of, attitude towards, use of, or response to a product.
Occasions –Marriage, Birth –Archies and Hallmark cards Benefits –In soaps - Dettol –antiseptic, Lux –Beauty
User Status –Non users, first time users, potential users, regular user Usage rate –Light users, medium users, heavy users
Buyer Readiness State –Cold Prospect, Hot Prospect
Loyalty status –Hard Core Loyals, Split Loyals, Shifting Loyals, Switchers Attitude –enthusiastic, positive, indifferent, negative, hostile