Market Segmentation Notes

Market Segmentation

• Market segmentation is the division of a market into different homogeneous groups of consumers.
• Instead of offering the same marketing mix to vastly different customers, market segmentation allows firms to:
  • Tailor the marketing mix for specific target markets.
  • Better satisfy customer needs.
• Not all elements of the marketing mix necessarily change from one segment to the next; sometimes only promotional campaigns differ.

Market Segment Requirements

A market segment should be:

• Measurable
• Accessible by communication and distribution channels
• Different in its response to a marketing mix
• Durable (not changing too quickly)
• Substantial enough to be profitable

Segmentation Bases

A market can be segmented by various bases. Industrial markets are segmented somewhat differently from consumer markets.

Consumer Market Segmentation

A basis for segmentation is a factor that:

• Varies among groups within a market
• Is consistent within groups

Primary Bases for Consumer Market Segmentation:

• Geographic Segmentation:

  • Based on regional variables such as:
    • Region
    • Climate
    • Population density
    • Population growth rate

• Demographic Segmentation:

  • Based on variables such as:
    • Age
    • Gender
    • Ethnicity
    • Education
    • Occupation
    • Income
    • Family status

• Psychographic Segmentation:

  • Based on variables such as:
    • Values
    • Attitudes
    • Lifestyle

• Behavioral Segmentation:

  • Based on variables such as:
    • Usage rate and patterns
    • Price sensitivity
    • Brand loyalty
    • Benefits sought

• The optimal bases for segmenting the market depend on:

  • The particular situation
  • Marketing research
  • Market trends
  • Managerial judgment