Market Segmentation

Which of these 2 Agents is more likely to succeed and Why?

Look! We sell insurance. Whatever

your insurance needs, we have the

policy for you!

I’m an insurance agent known to be a specialist with teachers. I know 30 principals and have

insured over 200 teachers in this city. I've

developed a special insurance program

specially for teachers like you.

The Market Scenario

1

•Purpose of businesses is to fulfill customer needs profitabily

2

•Customer expectations are increasing & becoming unique

3

•It is becoming difficult to understand complex customer needs

4

•Businesses are becoming more and more specialized to fulfill these unique needs

STPSegmentDivide the

market into distinct

groups of buyers

TargetSelect a unique market

segment

PositionBecome a

specialist in it

Segmentation is the identification of subsets of buyers within a market who

share similar needs and who have similar buying processes.

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Need For Segmentation

Not all customers have the same needs

Not all customers are equally attractive

Mass marketing is very expensive

Basis of Segmentation

Geographic Segmentation Demographic Segmentation Psychographic Segmentation Behavioral Segmentation

Divide the target market

on basis ofDistanceRegionDensityTerrain

Demographic SegmentationSegmenting the market on basis of physically

recognizable or evident factors.Age

Young Adults (20 – 34), Middle Aged (35 – 54), Senior Citizens (55 and above), etc

GenderEthnicity

Hindu-Marathi, Hindu-Rajput, Muslim, Christian, etcFamily Life Cycle

Young single, Young Couple, Full Nest, Middle age with Grown Up Kids, Old With Children to Support, Old Without any Support, etc

Demographic SegmentationIncome

Low Income (0-2 Lakh), Mass Market (2-6 Lakh), Affluent (6-24 Lakh), HNI (>24 Lakh)

OccupationProfessional, Manager, Clerical, Skilled & Unskilled Labor, Businessman, Homemaker, Retired

EducationPrimary or less, Secondary, Intermediate, Graduate, Post Graduate

PsychographicLifestyle

People of similar age and socio-economic statusPosses varied interest, performing different activities,

lead different life stylesExamples are Socialites, DINKs, Fitness Freak, Fiscal

fledgingPersonality

“Birds of the Same Feather Flock Together”Examples are Conservative, Extrovert, Risk Seeker,

ThriftyValues

The internal belief system that helps people in taking decisions.

Examples are Altruists, Fun Seekers, Strivers, Devout

BehavioralBenefit

Buyers can be segmented on benefit that they seekExamples are Protection, Investment, Savings, Pension

LoyaltySegmentation on basis of buyers’ loyalty towards brandsExamples are Hard Core Loyals, Split Loyals, Switchers

Usage RateSegmenting on usage helps determine the LTV of

customerExamples are need, frequency and volume

Buyer ReadinessWhere is the customer in buying processExamples are unaware, consideration, seeking, buying

Identify your Target SegmentList your current customer

profiles and other groups in your market

For different segments Estimate the SizeGrowth ProspectsProfitabilityCompetition

Your chosen segment should beSubstantialDifferentiable

Position Yourself As a NICHE AgentStudy the Demographics of your chosen

segmentsKnow everything about them such as their

lifestyles, personality, attitude, behaviors, etc.Identify their unique problems, needs &

desires.Promote a “Service Guarantee” specific to your

nicheSweeten the POT by offering non insurance

services unique to your niche.

In groups identify a unique segmentList their needs and behavior

characteristicsList things your group will do as a

NICHE Agent