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Market Segmentation

Consumer Buying Behavior 3

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Page 1: Consumer Buying Behavior 3

Market Segmentatio

n

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A retail market segment is a group of customers whose needs are satisfied by the same retail mix because they have similar needs.

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Criteria for Evaluating Market Segments

ActionableThe defined segment clearly indicates what the retailer should do to

satisfy its needs

IdentifiableThe retailer is able to determine which customers are in the segment

SubstantialA segment must be large enough or have significant buying potential

ReachableThe retailer can target promotions and other marketing information

to consumers in the segment

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Approaches for Segmenting Markets

No approach is best for all retailers so they must examine various factors and determine which are

most important.

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Geographic Segmentation

This is when customers are group according to where they live. A segment can be a country or a segment within a country, such

as states, cities, and neighborhoods.

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Demographic Segmentation

This is where consumers are grouped by easily measured,

objective characteristics such as age, gender, income, and

education

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Geodemographic Segmentation

This is where both geographic and demographic characteristics are used to group consumers into

market segments

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Lifestyle Segmentation

This type of segmentation uses how people live, spend their time

and money, as well as their activities and opinions for

dividing the market

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Buying Situation Segmentation

Retailers may use buying situations as a way to segment

the market

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Benefit Segmentation

This is where retailers group customers seeking similar benefits into a segment.

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Composite Segmentation

Because no approach meets all the criteria for useful customer segmentation retailers

often use multiple variables to identify customers . This is known as composite segmentation and is based on benefits sought, lifestyles, and demographics.