Segmentation
Market Segmentation
The process of dividing a market into meaningful groups that are relatively similar and identifiable.
- Importance
- It enables the marketer identify specific needs and wants of the different segment
- Formulate a more direct marketing mix for the different identified segments
Market Segment
A subgroup of people or organizations sharing one or more characteristics that cause them to have relatively similar product needs.
- Substantial
- Large enough to justify the maintenance and development of a special segment marketing mix and should be profitable
- Measurable
- The size of the segment can be determined and measurable
- Accessible
- The marketing mix should be able to reach the segments
- Responsiveness
- Different segments should respond differently to the marketing mixes
Steps in Market Segmentation
- Select a market or product category for study
- Choose bases for segmenting the market
- Choose segment descriptors
- Profile the resulting segment
- Select target markets
- Implement and maintain appropriate market mixes
Segmentation Variable
A characteristic of individuals, groups, or organizations that is used to divide a total market into segments. Can be single or multiple.
Bases for Segmenting the Consumer Markets
- Geographic
- Method of dividing markets based on the region of the country or world, market size, market density or climate
- Demographic
- Basis of demographic variables such as age, gender, income, ethnic background, and family life cycle
- Psychographic
- The method of dividing markets based on personality, motives, lifestyle, and geodemographics
- Benefits offered by the Product
- Based on personality, motives, lifestyle, and geodemographics
- Personality
- Individual characteristics reflect traits, attitudes, habits
- Motives
- Consumers have motives for purchasing products
- E.g. safety, rationality, status
- Lifestyle
- Lifestyle segmentation groups individuals according to activities, interests, and opinions
- Geodemographics
- Basis of neighborhood lifestyle categories
- Is a combination of geographic, demographic, and lifestyle segmentation
- Usage Rate
- Based on usage rate, benefits, occasions, user status, readiness stage, attitude towards the product
Bases for Segmenting the Business Markets
- Demographic
- Industries which will be served
- Company size
- Location or geographical areas
- Operating Variables
- Customer technologies
- Heavy or light users
- Customer requirements
- Purchasing Approaches
- Key Purchasing Criteria
- Quality
- Delivery
- Technical support
- Price
- Personal Characteristics
- Buyer-seller similarity
- Attitudes toward risk
- Loyalty
- Situational Factors
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