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Marketing segmentation
Segmenting Consumer Markets
By Maya Humbatova12.03.2010
Outline
Define Marketing Segmentation
Levels of Marketing Segmentation
Segmenting Consumer Markets
Mass Marketing vs. Target Marketing
Mass Marketing is when almost the same product is used for promotion and distribution for all customers
Target Marketing is a practice to identify and segment the market and develop products and marketing mixes for each segment or group of customers
Marketing Segmentation
Marketing Segmentation is:
* A process of dividing the market into distinct groups of customers according to their needs, characteristics, or behaviors
* A compromise between mass marketing and target marketing
Marketing Segmentation
Market Segmentation Market Targeting Market Positioning
1. Identify bases for 3. Develop Measures 5. Develop positioning segmenting the market of segment or each target
segment attractiveness 2. Develop profiles of 4. Select the target 6. Develop marketing
mix resulting segments segment(s) for each target
segment
Goals of SegmentationThe two main goals that any segmentation methodology should be able to
address are: 1) At a strategic level, segmentation should be able to help an
organization rapidly evaluate new business opportunities
Geographical expansion: Should the retail chain expand to north east? Product expansion: Should the electronic manufacturer launch a
smartphone?
2) At an operational level segmentation should yield information to help craft successful marketing offers for specific prospects.
Product: What product features are must haves vs. nice to haves? Price: What is the price point that customers are willing to pay? Communication: How to message to the target customers? Distribution: Where do the target customers live?
Levels of Market Segmentation
Mass Marketing
Segmenting Markets
Niche Marketing
Micromarketing
No Segmentation Complete Segmentation
Mass Marketing Segmenting Markets Niche Marketing Micromarketing
Mass Marketing
Traditional marketing strategy that uses no segmentation strategies, and uses the same product, promotion, and distribution to reach a wide audience (whole market)
Promotes the concept “One Size Fits All”
Problems with Mass Marketing
Low production cost ->lower prices -> higher margins
Nevertheless, it is hard to appeal to all diverse groups, more competitors, and proliferation of mass media has made it hard to further practice “one size fits all” approach
Segmenting Markets Companies that are segmenting markets realize the diversity
of the needs, perceptions, and buyer behavior between the customers
So that they match the needs of the customer’s more efficiently, improve and promote products for a distinct segment of the market
A good segmenting approach will eliminate the competitors
Niche Marketing
Niche Marketers focus on the subgroups within the segments of the market, seeking to find customers with a distinctive set of traits looking for the same combination of benefits
Niche Marketing
Micromarketing
A form of target marketing in which companies fit their marketing mixes to specific needs and wants of narrowly defined geographic, demographic, psychographic or behavioral segments
Segmenting Consumer Markets
Geographic Segmentation
Geographic segmentation divides the market into different geographical units: nations, states, regions, countries, cities, or neighborhoods
Demographic Segmentation
Divides the market based on variables: Age Ethnicity Life-cycle Gender Income
Demographic Segmentation. Lifestyle groups
Yuppie Associations Mobile High valued house/flat Good Salary Young branded car
Third Agers Associations
50's Retired early from
profession. Time to spare Adventure Seekers
Socio- demographic Segmentation
Socio – Demographic Case Study. T-Mobile
Geodemographics
Geodemographics studies the relationship between the geographical locations and demographics
Psychographic Segmentation
Divides the customers based on: Social Class Lifestyle Personality
SAGA segmentation of UK grandparents
Psychographic SegmentationCase Study. Adidas vs. Converse
Behavioral Segmentation
Divides the market into segments based on buyers’ knowledge, attitude, uses, responses to the product
Occasions Benefits Sought Usage rate Loyalty status Buyer Readiness Stage Attitude towards the product
Market SegmentationNIVEA Sun Case Study NIVEA sun products – sun care Segmentation Geographically: targeted at different
climates and to users with different skin types Demographic Segmentation: men/women and adults
with children. There is a stark contrast between awareness and usage of sun care products between men (who prefer convenience) and women (who enjoy more luxurious sun care products)
Usage occasion (when) - e.g. holiday, outdoor sports, gardening, working etc. NIVEA provides a variety of SPF's for differing needs and occasions
Benefit sought - convenience is important to men (so they choose spray applicators). Parents want to provide maximum protection for children (high SPFs and coloured products are therefore important)
NIVEA sun segmentation
Attitudinal 5 distinct groups for protection and after sun:
Segmentation using e-mail metrics
Segmentation strategy with the usage of email advertising, or promotion
Bibliography
Constantinou, Andreas. “Operators: service-pipes or bit-pipes ?” November 8, 2006. Retrieved March 15, 2010. <http://www.visionmobile.com/blog/2006/11/operators-service-pipes-or-bit-pipes/>.
Jennings, Jeanne. “Really Simple E-mail Segmentation: Reengaging Inactives.” July 14, 2008. Retrieved March 16, 2010. <http://www.clickz.com/3630202>.
“Market Segmentation”. Learn Marketing. Retrieved March 15, 2010. <http://www.learnmarketing.net/segmentation2.htm>.
“Market Segmentation – Introduction.” Inclusive design toolkit. 2007-2008. Retrieved March 16, 2010. <http://www-edc.eng.cam.ac.uk/betterdesign/knowledge/catusers/catusers2.html>.
“NIVEA sun segmentation”. The Times 100. 2010. Retrieved March 17, 2010. <http://www.thetimes100.co.uk/case-study--segmentation--87-232-1.php>.
Kotler, Philip. Principles of Marketing. Third European Edition 2002.
Thanks For Your Attention!
