Discuss different bases for market segmentation.

Discuss various criteria of market segmentation.

Ans.

Segmentation of market can be done using several basis Candiff and Still classified the bases for market segmentation as under:

(a) Bases for Consumer Market: (1) Consumer’s age, (2) Consumer’s incomes (3) Consumer’s sex (4) Consumer attitude towards urbanisation (5) Geographical divisions of consumers (6) Consumer’s education (7) His religion (8) Size of his family.

(b) Bases for Industrial Market: 1. Type of business 2. Normal method of purchase 3. Size of business 4. Geographical distribution.

However, major bases that market organisations use for segmenting market include:

(a) Bases for Consumer Market:

1. Geographic: It includes factors like region, state, district, rural/urban area. National level manufacturers split their sales areas into territories for proper controlling. Geographical segmentation is important for the advertising point of view. Advertiser should adopt such means or media which are in accordance with the features of various market segments.

2. Demographic: Here segmentation of markets is done on the basis of heterogenous characteristics of consumer. These include his age, income, sex, education, religion, social status etc. These factors and their importance as basis for market segmentation are described below:

(i) Income of Consumer : Consumers based on their income may be divided further in three groups: (i) Upper income group- they give more importance to social status fashion, discrimination, while buying etc. (ii) Medium income group prefers durability and (iii) Low income group. They buy cheaper goods or second hand goods of comfort. On the basis of income of the consumers, nature of products to be demanded can be known. The consumers of middle income group stress upon the durability and utility of products.

(ii) Sex of Consumer: This is another base for segmentation. Women love cosmetics, services of beautician, men prefer buying goods for health and personality reasons. Demands of women differ from men for psychological and mental reasons. For example market has different kinds of shoes for men and women. Different needs and attitude of ladies and gents can be known.

(iii) Education of Customer: This is another basis for segmentation. Literary, science and other books, magazines, news paper are meant for educated people. Some particular products mainly books and stationary are sold on the basis of educational standard. Different pricing policies and advertising policies may be adopted for different segments of the market.

(iv) Size of Family: Much of the purchasing is based on family size. Things like dinning set, air conditioners, houses etc. are purchased on the basis of family size.

3. Psychorophic Segmentation: Psychorophic factors include personality, life style, attitude about life etc. Different markets cater to needs covered under above factors. Different consumers of a product have different personality. The knowledge of thinking, attitudes and buying motives of consumers can be helpful. Some are the consumers who purchase a product because it increases their social prestige and status, while some consumers purchase a product because it is useful in their daily life. Producer can take decision regarding the kinds of product.

4. Buyer’s Behaviour: Different groups expect different benefits from the same product. While buying their motives are different.

B. Basis of Industrial Market:

1. Kind of Business: There are different kinds of businesses as cloth business, iron and steel business, garments business etc. A businessman first examines in which business his product fits and then explores possibilities of finding market in that area. A producer of leather will first try shoe industry for his product and exert all his marketing energy on shoe makers, saddle manufacturers, leather garment makers etc. Different marketing policies and programming may be prepared for these segments to suit the need of the customers.

2. Geographic Allocation: This element is very useful for products that are manufactured on large scale and are sold country wide through a well established selling network. For example we may quote Life Insurance Corporation which has divided its market into northern zone, southern zone, eastern zone, western zone and central zone. The geographical location affects the cost of transportation. The climate of the area of purchaser affects his needs,

3. Method of Tender: Some organisations buy goods on tender bid basis. They divide their demand in two categories (1) direct purchase (2) tender purchase.

4. On the Basis of Size: Industrial buyers may be differentiated as those that make bulk purchases and another whose purchases are comparatively low. An industrialist concentrates more on customers who make bulk purchasers.