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© 2012 McGraw-Hill Ryerson Ltd.
Market Segmentation
Key to success
1
BalanceBalance
Satisfying Customer
Needs
Satisfying Customer
NeedsProfitabilityProfitability
LO 3
© 2012 McGraw-Hill Ryerson Ltd.
10 Steps In Market Segmentation
2
LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 1: Review Company Objectives
Review strategic company objectives.– Clear – Quantifiable
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LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 2: Identify objectives
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LO 3
Identify specific business unit objectives.
© 2012 McGraw-Hill Ryerson Ltd.
Step 3: Identify Consumer Needs
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Common InterestsCommon Interests
Evolving TrendsEvolving Trends
Market ShiftsMarket Shifts
Consideration of Other CountriesConsideration of Other Countries
Consumer PerspectiveConsumer
Perspective
LO 3
Identify consumer/customer needs and common characteristics in the market.
© 2012 McGraw-Hill Ryerson Ltd.
Step 4: Cluster Common Consumer Variables
Cluster common consumer/customer variables to create meaningful market segments.Clusters = Segments in the marketVery important: Review the clusters from a consumer
perspective– Cereal: High fibre vs. health conscious
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LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 4: Cluster Common Consumer Variables
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LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 5: Conduct a SWOT Analysis
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Opportunities and the ability of the
company to compete
Opportunities and the ability of the
company to compete
LO 3
Conduct SWOT analyses on the segments to determine strengths, weaknesses, opportunities, and threats.
© 2012 McGraw-Hill Ryerson Ltd.
Step 6: Identify Best Segment
Identify the segment that best meets strategic company objectives.Opportunities and threats relative to company objectivesUncovers opportunity segments
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LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 7: Marketing Programs & Budget
Identify marketing programs and budget requirements needed for this segment.Recommended marketing programFull financial evaluation
10
LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 8: Sales Forecast
Create a sales forecast for this segment.Estimated sales potential
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LO 3
© 2012 McGraw-Hill Ryerson Ltd.
Step 9: Profit and Loss Analysis
Conduct a profit-and-loss financial analysis for this segment.Determination of the financial viabilityAbility to make a rational decision
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LO 3
© 2012 McGraw-Hill Ryerson Ltd.
10. Measure
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LO 3
Check financial forecasts against specific business unit objectives.
