Question

1. Differentiate between Market Segmentation and Product Differentiation  

2. Discuss the five Bases for Segmenting Consumer Markets

Answer 1

1.

Market Segmentation refers to the process of segmenting the consumers that have common requirements and similar reactions to the marketing actions.

Product Differentiation refers to the process of distinguishing a product from other products in order to make it attractive to the target audience.

Market Segmentation is a customer oriented process.

Product Differentiation is a production oriented process.

Market Segmentation takes into account only a limited market for research

Product Differentiation considers a larger market area to arrive at conclusions.

2.

Below are the five Bases for Segmenting Consumer Markets:

- Geographic Segmentation: Segmentation based on region, market size, density and climatic conditions.

- Demographic Segmentation: Segmentation based on age, gender, race of the customers

- Pyschographich Segmentations: based on the lifestyle, personalities, motives of the buyers

- Benefits Segmentation: segmenting the market based on the perceived value of the customers to receive the benefits from buying the product

- Usage-rate segmentation: dividing the customers based on their product usage. For example, high user customer, medium user customers etc.