MARKET SEGMENTATION

BY

EP JOHN

What is a Market?

PEOPLEBUT - not just ANY people, they have to have

• Willingness to buy

• Purchasing power (money)

• Authority to buy

THE REAL FACE OF YOUR SEGMENTS

MARKETING IS ALL ABOUT IDENTIFYING

Various Classes of Consumer and Industrial Goods and Services

eg . n ewsp ap er

eg . Mac's Milk

Con ven ien ce G ood s

eg . g roceries

eg . cloth in g

Sh op p in g G ood s

Consum er G oods

eg . travel

eg . b an kin g

Sp ecialty Services

eg . fast food s

Con ven ien ce Services

Consum er Services

raw m ate ria lg ra in , s tee l

eg . w irin gh arn ess

eg . c ircu it b oard

com p on en tp arts

m aterialsn u ts, b olts

P rod u c tion G ood s

Industria l G oods

accessory eq u ip m en ttools, com p u ters

eg . b u ild in g s

in stallation s

S u p p ort S ervices

Industria l Services

Good s an d S ervic es

Industrial goods are products used in the production of other products

Types of Markets

Consumer Goods and Services

Industrial Goods and Services

Ultra Conservative - don't rock the boat, whatever they purchase must be consistent with their current way of doing things. Conservatives - are willing to change, but only in small increments and only in a very cost effective manner. Liberals - regularly looking for new solutions, willing to make change (even major change) if the benefit can be shown. Technical Liberals - enamored with the benefits provided by high tech solutions and any purchase decision will be biased by the technical content of the offering. Self Helpers - consistently defines/designs solutions to their problems, likes to acquire tools that help in the

innovation process.

Purchase Decision Makers

What is Market Segmentation?Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference. A market segment is a small unit within a large market comprising of like minded individuals. One market segment is totally distinct from the other segment. A market segment comprises of individuals who think on the same lines and have similar interests. The individuals from the same segment respond in a similar way to the fluctuations in the market.

Bases for Market Segmentation (CONSUMER)

Bases for Market Segmentation (Industrial)

Market segmentation is about describing and dividing people. It seeks to identify the people who may have want or need for your product, then divides them into groups so that may be served more efficiently and profitably.

Foundations of Market Segmentation

The purpose of segmentation is the concentration of marketing energy and force on the subdivision (or the market segment) to gain a competitive advantage

within the segment. At its most basic level, the term “market

segmentation” refers to subdividing a market along some commonality,similarity, or kinship.

Foundations of Market Segmentation

Market SegmentationGeographic location - based upon where people live (historically a popular way of dividing markets)Demographic - based upon age, gender and income level (very often used)Psychographic / lifestyles - based on people’s opinions, interests, lifestyles

eg, people who like hard rock music probably prefer beer to wine

Benefits - based on the different expectation that customers have about what a product/service

can do for them

Geographic SegmentationGeographic segmentation refers to the classification of market into various geographical areas. A marketer can’t have similar strategies for individuals living at different places.•Nestle promotes Nescafe all through the year in cold states of the country as compared to places which have well defined summer and winter season.•McDonald’s in India does not sell beef products as it is strictly against the religious beliefs of the countrymen, whereas McDonald’s in US freely sells and promotes beef products.

Demographic SegmentationDemographic Segmentation is the most common approach to Market Segmentation

Variables are:

• age

• gender (male/female)

• income

• occupation

• education

• household (family - style) size

Psychographic Segmentation“The use of psychological attributes,

lifestyles and attitudes in determining the behavioral profiles of different customers”

Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions

AIO - activities, interests, and opinions

Benefit Segmentation“It is based on the Attributes

(Characteristics) of products, as seen by the customers”example, people buy something because it causes a benefitie. Diet coke - less sugar, lose weightie. Extra white toothpaste, whiter teeth, better smile

Industrial GoodsIndustrial goods are things used in the production of other products

Some products are both industrial and consumer goods - eg. electricity, water,

desktop PCs

Two categories of industrial goods

Production GoodsSupport Goods

Geographic Segmentationuseful for the automotive industry

Product Segmentationie. Special parts and components

Segmentation by End-Use Applicationie. Paint mfg. Paint for waterproof

applications, paint for rust prevention, paint which sticks to glass

Segmentation for Industrial Markets

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