Page 126 - DMGT510_SERVICES_MARKETING

Unit 7: Service Segmentation and Targeting

Introduction Notes

One cannot be everything to everyone;

But one can be everything to a select few.
—Michael Porter
After analyzing the consumer and his buying behaviour, the service marketer usually comes to
the conclusion that it is not possible or desirable to address the whole market with his offers.
The decision for the service firm is to choose its markets, and target them with its service offers.
The process of identifying market segments, selecting one or more of them and developing a
marketing mix to meet their needs is known as target marketing.
Apart from targeting, assigning a draft of the service delivery to the target audience is also
necessary. In this unit you will learn how service marketers segment the market and choose
their target audience.

7.1 Market Segmentation

Market segmentation is a process of dividing a heterogeneous market into homogenous sub-
units, concept that was first developed by a Wendell R. Smith in a paper in 1956. It is defined as
dividing a market into distinct groups of buyers with different needs, characteristics, or behaviour
who might require separate services or marketing mixes.
A market was analyzed for its nature and composition, and was clubbed under groups of similar
needs and other characteristics. Customers inside a grouping had similar preferences and traits;
two different groups had different preferences and traits. Each of these groupings was called a
segment, and the process was known as market segmentation.

7.1.1 The Diaspora Effect

Since pre-historic times, men (or even proto-men) constantly moved from one place to another.
They did so for the following reasons:
Pull factors: This is the ‘fatal attraction’ that the people might have for a place due to

perceived higher greater opportunity, higher quality of life, etc.
Push factors: People move by compulsion, due to natural calamities like flood, drought,

famine; political upheavals like Partition, ethnic ‘cleansing’ of Kashmiri pundits, etc.
But with these movements, the composition of the market gets distorted, and keeps changing.
This makes a constant study of the market very necessary for the marketer; and provides another
reason for market segmentation.

7.1.2 Effective Segmentation

The segments should be:

Measurable and obtainable: Size, purchasing power, and characteristics of segments

Accessible: The segments should be effectively reached and served.


Example: Questions like this keep cropping up: “Will it be possible for us to communicate
and serve the people of the North-East if and when we open our branch there?”

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