1.1.2 market segmentation

market segmentation

occurs when the market is split up into subgroups of consumers with similar characteristics

why is market segmentation useful

helps to identify different types of consumer and different wants and needs

segmentation methods include …

• demographics

• income

• geographics

• behavioural

what identities come under demographics ?

• age

• race

• religion

• level of education

• gender

• family sie

• stage in life (e.g. empty nesters)

geographic segmentation

defines market categories based on where people live e.g. region, cities

income segmentation

market based on levels of income and profession

socio-economic grouping …

A - higher managerial such as chief executies and directors

B - intermediate managerial such as solicitors, accountants and doctors

C1 - supervisory, clerical or junior professsional such as teachers and junior managers

C2 - skilled manual such as plumbers, electricians, carpenters

D - semi and unskilled workers such as refuse collectors and window cleaners

E — pensioners, casual workers, students, unemployed

behavioural segmentation

behavioural patterns of the consumer rather than their characteristics

examples of behavioural segmentation

• reasons for making purchases

• frequency of purchase

• time of purchase

  ect

benefits of market segmentation

• advertising can be targeted at specific segments so its more effective

• most profitable and least profitable customers can be identified

• least profitable markets can be avoided

• easier to identify new products

• helps firm improve existing products

drawbacks of market segmentation

• increasd costs linked to research and product development

• additional market activities required as the business targets mmore segments

• potential for brand to lose its identity

• less able to exploit economies of scale