Market Segmentation Notes

Market Segmentation

Importance of Justified Segmentation

• Creating segments without a clear purpose is ineffective.
• A good reason must exist for choosing a specific segment.
• The business should aim to offer something different and tailored to that segment.
• Simply segmenting without offering a unique value proposition is pointless.

Complexity of Market Segmentation

• Segmenting the market requires significant time and financial investment.
• Generic answers about segmentation will not be considered sufficient.

Segmentation Methodologies

• Various methodologies can be employed for segmentation.

Demographics

• Demographics: Statistical data relating to the population and particular groups within it.

• Examples:

  • Age

  • Gender

  • Education Level

  • Location

  • Using age as a demographic factor:

    • Example: Targeting children vs. teenagers with different computer products.

Product Differentiation based on Age

• Children's Laptops (Ages 4-10):

  • Purpose: Gaming, educational content (e.g., Cocomelon), movies, and videos.
  • Price Point: Lower price range (\$200-\$300), possibly a Chromebook.

• Middle-Class Laptops:

  • Price Point: \$500 range.
  • Type: Windows PC.
  • Capabilities: General use for presentations, work, school, office applications, internet navigation, and video streaming.

Value Proposition

• Treating customers as just "everybody else" reduces their willingness to pay more.
• Offering special treatment or a very specific value proposition to different segments can increase revenue.
• Generic approaches are ineffective in business, regardless of whether the company is public or private.

Public vs. Private Companies

• Public Companies: Companies whose stocks are available for public purchase.
  • Example: Apple.
  • Requirement: Public companies must disclose their financial numbers due to investors and stockholders.

Business-to-Business (B2B) Market Segmentation

• Another way to segment B2B markets.