2 Segmentation and Competitive Advantage Market segmentation is the process of placing the buyers in a product market into subgroups so that the buyers in a segment display similar responsiveness to a particular marketing positioning strategy. Examining specific market segments helps to identify how a firm can (1) attain a close match between buyers preferences and the organizations capabilities
3 Segmentation and Competitive Advantage (2) compare the organizations strengths to those of the key competitors in each segment. Matching preferences with capabilities; Customer preferences can often be better satisfied within a segment, compared to the total market. Competitive advantage analysis; segment information helps management design effective marketing programs.
4 How Are Market Segments Best Defined? The process should identify one or more relatively homogeneous groups of prospective buyers with regard to their wants and needs Differences within one market segment should be small compared to differences across various segments The segmentation criteria should measure or describe the segments clearly enough so that members can be readily identified The segmentation process should determine the size and market potential of each segment for use in prioritizing which segments to pursue
5 Segmentation Variables Demographic Descriptors: Age Gender Income Occupation Education Race and ethnic origin Events
6 Segmentation Variables Geographic Descriptors: Trade area Behavioral Descriptors: Consumer needs Product usage Purchase influence Lifestyle Social class
7 Conclusion Marketers and entrepreneurs who find new and insightful way to segment mature markets often uncover opportunities for uncontested market entry and rapid growth. Sharply defined target marketing enables marketers to differentiate from mass market leaders by giving consumers in a narrowly defined market segment what they want.