Market segment The process of dividing a market into distinct subsets of consumer with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix.
Need of segmentation• Need, want and desire are not same.• The primary advantage is cost reduction.• It avoids head on competition in the market place.
How segmentation operates• Segmentation studies are designed to discover the needs and wants of specific groups of consumer, so that specialized goods and services can be developed and promoted to satisfy each groups needs.• It is also used to guide the redesign, the reposition, or extending the product targeting to a new consumer segment.
Segmentation strategies The first step in developing a segmentation strategy is to select the most appropriate base on which to segment the market. Eight major categories of consumer characteristics provide the most popular bases for market segmentation. – Geographic factor – Demographic factors – Psychological characteristics
– Sociological variables– Use related characteristics– Use-situation factors– Benefit sought– Hybrid segmentation.
Geographic segmentation In geographic segmentation, the market is divided by location. The theory behind this strategy is that people who live in the same area share some similar needs and wants and that these needs and wants differ from those of people living in other areas.
Demographic segmentation Demographic characteristics, such as age sex, marital status, income, occupation and education are most often used as the basis for market segmentation. Demographics refers to the vital and measurable statistics of a population. Demographics help to locate a target market.
Psychographic segmentation Psychographic characteristics refers to the inner qualities of the individual consumer. Consumer segmentation strategies are often based on specific psychological variables. 1. need and motivation 2. personality 3. perception 4. attitude, etc.
Socio-cultural segmentation Socio-cultural variables such as group and culture, provide further bases for market segmentation. For example, consumer markets have been successfully subdivided into segments on the basis of stages in the family life- cycle, social class, core culture values, etc
Use related segmentation An extremely popular and effective form of segmentation categorizes consumers in terms of product, service, or brand usage characteristic, such as usage rate, awareness status, and degree of brand loyalty.
Usage-situation segmentation Marketers recognize that the occasion or situation often determines what consumers will purchase or consume. For this reason, they sometimes focus on the usage situation as a segmentation variable.
Benefit segmentation Marketing and advertising executives constantly attempt to isolate the one particular benefit that they should communicate to consumers. Changing lifestyle plays a major role in determining the product benefits that are important to consumers and provide marketers with opportunities for new product and services.
Hybrid segmentation Marketers commonly segment markets by combining several segmentation variables rather than relying on a single segmentation base. 1. psychographic-demographic 2. geo-demographic 3. VALS 2
VALS II VALS 2 is a marketing and consulting tool that helps businesses worldwide develop and execute more effective strategies. The system identifies current and future opportunities by segmenting the consumer marketplace on the basis of the personality traits that drive consumer behavior. VALS applies in all phases of the marketing process, from new-product development and entry- stage targeting to communications strategy and advertising.