Market Segmentation

Market SegmentationMARKETING MANAGEMENT

GROUP 6

THE BREAKING DOWN OR BUILDING UP OF

POTENTIAL BUYERS INTO GROUPS CALLED

MARKET SEGMENTS

What is Market Segmentation?

Benefits of Market Segmentation

Identifies opportunities for new product development

Helps design marketing programs most effective for reaching homogenous groups of buyers

Improves allocation of marketing resources

The need for marketing segmentation

The marketing concept calls for understanding customer and satisfying there needs better than the competition.

Different customers have different needs, and its rarely possible to satisfy all the customers by treating them alike.

Difference between a mass market and target market

Mass market refers to treatment of the market as a homogenous group and offering the same marketing mix to all customers.

Difference between a mass market and target market

Target market on the other hand recognizes the diversity of the customers and does not try to please all of them with the same offering.

Requirements of market segments

Indefinable: the differentiating attributes of the segments must be measurable so they can be identified.

Accessible: the segments must be reachable through communication and distribution channels.


Unique needs: to justify separate offerings, the segments must respond differently to different marketing mixes.

Substantial: the segments should be sufficiently large to justify the resources required to target them.


Durable: the segments should be relatively stable to minimize the cost of frequent changes.

Bases for segmentation in consumer markets

Geographic

Demographic

Psychographic

Behavioralistic

Geographic segmentation

Geographic segmentation tries to divide markets into different geographical units: Regions Size of the area Population density Climate


Regions: by continent, country, state or even neighborhood

Size of the area: segmented according to size of population


Population density: often classified as urban, suburban, or rural

Climate: according to weather patterns common to certain geographic regions

Demographic segmentation

Demographic segmentation consists of dividing the market into groups based on variables such as:

• Age• Gender • Income

• Social class• Life style

Age : Marketers design, package and promote products differently to meet the wants of different age groups.

Good examples include the marketing of toothpaste (contrast the branding of toothpaste for children and adults) and toys (with many age-based segments).


Gender: Gender segmentation is widely used in consumer marketing.

The best examples include clothing, hairdressing, magazines and toiletries and cosmetics.



Income: Many companies target affluent consumers with luxury goods and convenience services.

Good examples include Coutts bank; Moet & Chandon champagne and Elegant Resorts - an up-market travel company.


Social class: Consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services.


Lifestyle: Marketers are increasingly interested in the effect of consumer "lifestyles" on demand. Unfortunately, there are many different lifestyle categorization systems, many of them designed by advertising and marketing agencies as a way of winning new marketing clients and campaigns.

Psychographic segmentation

Psychographic segmentation groups customers according to their lifestyle. Activities, interest, and opinions (AIO) surveys are one tool for measuring lifestyle. Activities Interest Opinion Values

Behavioralistic segmentation

Behavioralistic segmentation is based on actual customer behavior towards products. Some behavioralistic variable include: Opinions, interests and hobbies Degree of loyalty Occasions Benefits sought Usage

Opinions, interests and hobbies – this covers a huge area and includes consumers’ political opinions, views on the environment, sporting and recreational activities and arts and cultural issues.


Degree of loyalty – customers who buy one brand either all or most of the time are valuable to firms.


Occasions – this segments on the basis of when a product is purchased or consumed.


Benefits sought – this requires marketers to identify and understand the main benefits consumers look for in a product.

Usage – some markets can be segmented into light, medium and heavy user groups.


The endTHANK YOU

Business

Market Segmentation