market segmentation

What is Market Segmentation?

Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs and applications for the relevant goods and services.

Segmentation Strategies 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

Why use segmentation?

For companies to better understand the needs of a specific customer base

Identify other applications for their products that may not have been obvious before

To improve the overall efficiency of the company's marketing efforts

egmentation

argeting

ositioning

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Consumer Market Segmentation

Segmentation Variables

Demographic Segmentation

Geographic Segmentation

Pyschographics Segmentation

Behavioural segmentation

Consumer Market Segmentation

Demographic Segmentation

originates from the word ‘demography’ which means a ‘study of population’

can be divided into age, gender, income, and family lifecycle amongst other variables

Consumer Market Segmentation

Geographic Segmentation

Geographical segmentation divides markets into different geographical areas. Marketers use geographic segmentation because consumers in different areas may display certain characteristics and behaviours in that particular region. An area can be divided by the town, the region or the country.

Consumer Market Segmentation

Psychographics Segmentation

can be broken down into lifestyle, social class, and personality characteristics.

Lifestyles segmentation

Personality Characteristics

Social Class Segmentation

Consumer Market Segmentation

Behavioural Segmentation Refers to why people purchase a product or service

Consumer Market Segmentation

Business Market Segmentation

based on regional variables such as customer concentration, regional industrial growth rate, and international

macroeconomic factors.

Business Market Segmentation Geographic segmentation

based on factors such as the size of the organization, its industry, position in the value chain, etc.

Customer Type

Buyer Behavior based on factors such as loyalty to suppliers, usage

patterns, and order size.

Targeting various marketing strategies and promotional schemes according to the tastes of the individuals of particular segment.

Once market segments are created, organization then targets them.

Kinds of Targeting/ 3 Targeting Options an Organization Can Adopt Option 1

Undifferentiated marketing - Sometimes referred to as mass marketing the firm may decide to aim its resources at the entire market with one particular product.

Option 2 Differentiated marketing strategy - Where the firm decides to target several segments and develops distinct products/services with separate marketing mix strategies aimed at the varying groups.

Kinds of Targeting/ 3 Targeting Options an Organization Can Adopt

Option 3 Concentrated Marketing: Where the organisation concentrates its marketing effort on one particular segment. The firm will develop a product that caters for the needs of that particular group.

Kinds of Targeting/ 3 Targeting Options an Organization Can Adopt

Definition & Goal

how organizations want their consumers to see their product

about how you want consumers to perceive your products and services and what strategies you would adopt to reach this perceptual goal

To influence how the product is perceived by consumers

A product's position is how potential buyers see the product

A platform for the brand: It facilitates the brand to get through to the mind of the target consumer

Developing a Positioning Strategy

depends much on how competitors position themselves:

‘a me too’ strategy - position themselves close to their competitors so consumers can make a direct comparison when they purchase

‘away from their competitors’ strategy

3 Types of Concepts Functional positions

- Solve problems. - Provide benefits to customers. - Get favorable perception by investors (stock profile) and lenders.

Symbolic positions

- Self-image enhancement. - Ego identification. - Belongingness and social meaningfulness. - Affective fulfillment.

Experiential positions

- Provide sensory stimulation.

- Provide cognitive stimulation.

CRITERIA’S FOR SUCCESSFUL POSITIONING a. Clarity: While positioning its brand the

firm must be able to position itself in both distinct value, proposition, and to its target audience.

b. Consistency: Consistency in positioning means keeping the positioning plank/bases intact for longtime. But it does not mean that the firm must change its positioning bases even though its survival is at stake. The firm must be flexible to the changing environment.

c. Credibility: The firm must deliver trustworthy and believable value proposition. There should be perfect match between promise and action.

d. Competitiveness: For surviving in this competitive and changing environment innovative resources, talent pool, competitive advantage, strong financial backup etc are very important.

SUMMARY