Segmentation

Week - 4

Learning Objectives:

1. By the end of this session you will be able to:

2. Understand the concept of segmentation

3. Understand the various methods of segmenting

consumer and organisational markets

4. Recognise the importance of segmentation in

devising marketing strategies.

Market Segmentation Concept:

Definition:

“Segmentation can be viewed as the art of discerning

and defining meaningful differences between groups

of customers to form the foundations of a more

focused marketing effort.”

Objectives of segmentation

1) To reduce risk in deciding where, when, how,

and to whom a product, service, or brand will be

marketed;

2) To increase marketing efficiency by directing

effort specifically toward the

designated segment in a manner consistent with

that segment's characteristics.

Segmenting example: Kellogg's Frosties

are marketed to children, while

Kellogg's Crunchy Nut Cornflakes are

marketed to adults.

Both goods denote two products that

are marketed to two distinct groups of

people, both with similar needs (a

breakfast food), traits, and wants.

Segmentation, Targeting & Positioning

Market segmentation identify and profile groups of customers

Market targeting select one or more segments to enter

Positioning establish the product’s distinctive benefits, and

define its competitive position in the target

market

Develop the marketing mix strategy for the product

Bases/Variables for Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioural

1- Geographic variables:

Region – this can be used to identify different needs from one region

to another.

City size – can be an important segmentation variable.

Density – this refers to the number of potential customers within a

particular unit of land area – e.g. population per square kilometre, or

per square mile.

Climate – in Europe this is used as a segmentation variable for

numerous products, since it affects the product design/build. For

example, washing machines sold in Italy require a lower spin speed

than those sold in Germany due to the warmer climate.

2- Demographic Variables:

Age – is widely used for segmentation purposes for example, the marketing of

breakfast cereals.

Gender – this is a common demographic variable in some markets, including

clothes, cosmetics, books, and magazines.

Race – marketers use ethnicity as a means of segmenting markets for goods

such as food, music and clothing.

Family lifecycle – product needs vary according to marital status, and by the

number and age of children.

Income – It affects the ability to buy, and their aspirations for a certain style of

living.

Occupation – the occupation of the head of the household is known to have an

impact on the types of products / services purchased.

Education & Social class – both of these variables are used to assess

readership of daily newspapers.

3. Psychographic Variables (Also known as Lifestyle segmentation)

Personality –Personality sometimes influences the clothes, make-up,

and hairstyles that individuals adopt.

Motives – this variable takes into account the consumer’s reason for

purchasing the product. Durability, economy, convenience, are all

motives affecting the type of product purchased, and the choice of

outlet at which it is purchased.

Lifestyle – this form of segmentation groups’ people according to

their way of living as reflected in their activities, interests and

opinions (attitudes to life, beliefs and aspirations are also considered

in the widest sense of the term ‘lifestyle’).

4- Behavioural Segmentation variables:

Occasion –special days (birthdays).

Benefits – can be a very complex area – what benefits do we expect

to gain from using a particular product?

User status – markets can be segmented into non-users, ex-users,

potential users, first-time users, regular users.

Usage rate – segmentation here is on light, medium and heavy user

groups of products.

Loyalty status

Buyer-readiness stage – consumers are often in different stages of

readiness to purchase a product. Some are unaware of the product,

some are aware, others informed, some desire the product, others

intend to buy. The relative numbers in each group will affect the

marketing programme.

Attitude – there are five attitude groups: enthusiastic, positive,

indifferent, negative, hostile. Door-to-door workers in political

campaigns assess voter attitude to determine how much time to

spend with the voter.

Steps in Segmenting a Market:

1. Select a market or product category for study

2. Choose a basis or bases for segmenting the market

3. Select segmentation descriptors

4. Profile and analyze segments

5. Select target markets

6. Design, implement, and maintain appropriate marketing mixes

Segments Characteristics:

Distinctive

Tangible

Accessible

Defendable