Market Segmentation in Telecom Sector: Its Role and Scope in Cellular Services in India

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Market Segmentation in Telecom sector: Its Role and Scope in Cellular Services in India

Abstract
Market segmentation plays a very crucial role in service sector. It helps in customizing the services to meet the needs of customers, so that they can get maximum satisfaction. It helps a customer to select a service that suits to his budget. Segmentation also helps in identifying the appropriate distribution channel for the services. It plays a very crucial role in increasing the return on investment by minimizing the investments in resources, marketing, production facilities etc. Telecommunication services are one of the very important pillars of infrastructure development in a nation. It plays a pivotal role in developing the other sectors in an economy. India has a vast potential for telecom market which is evident from the report of “Indian Telecom Industry, 2008”. The study aims to study the role of market segmentation in cellular services and to suggest scope for improvement in segmentation of market for the same.

Key Words Market segmentation, three dimensional, psychographic, demographic, behavioral

Introduction
A market segment is a group of potential or actual customers who have similar needs, wants, preferences or buying behavior. Market segmentation is a process of dividing a heterogeneous market into homogenous groups with common needs and requirements. It is a complex process of identifying the consumers with similar needs and grouping them into one category. The best segments must have Potential, Lifespan, Accessibility, and Profitability. The main job in market segmentation is identifying which segments provide value in terms of potential, lifespan, accessibility and profitability; because a sales strategy’s effectiveness increases according to one’s capacity to size segments, identify them, and dissect them[1].

Market segmentation plays a very crucial role, especially in service sector. It helps in customizing the services to meet the needs of customers, so that they derive maximum satisfaction. It helps a customer to select a service that suits to his budget. Segmentation also helps in identifying the appropriate distribution channel for the services. It plays a very crucial role in increasing the return on investment by minimizing the investments in resources, marketing, production facilities etc.

Segmentation has various bases which can be identified and grouped according to the characteristics of the markets and customer traits. Geographic segmentation divides the customer according to geographic locations, demographic segmentation is done on the basis of demographic characteristics such as age, sex, family size, family life cycle, occupation, education, religion, income, social class etc., psychographic segmentation uses parameters such as lifestyle, social class, personality etc., behavioral segmentation is yet another method of segmentation which uses bases such as usage rate, loyalty status etc. Apart from these broad bases of segmentations, there are many new and innovative methods of segmenting the markets. A single company or product can use different segmentation methods in different locations or even a hybrid form of segmentation.

Telecommunication services are one of the very important pillars of infrastructure development in a nation. It plays a pivotal role in developing the other sectors in an economy. India has a vast potential for telecom market which is evident from the report of “Indian Telecom Industry, 2008”. According the report, the telephone coverage in India rose to 34.50% in Jan, 2009 from 33.23% in Dec, 2008 indicating huge market potential, especially in rural areas[2]. The cell phone subscribers increased 10.81 million in Dec, 2008 and 15.40 million in Jan, 2009[3]. Up to the end of Jan, 2009, the total number of cell phone subscribers in India had reached 362.3 million, the fixed phone subscribers dropped to 37.75 million from 37.9 million in Dec, 2008, and...
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