MARKET SEGMENTATION Market segmentation is the process by which customers in markets with some heterogeneity can be grouped into smaller, more similar or homogeneous segments. Figure 7.A Definition of Marketing Segmentation
Targeting The decision about which segment(s) a business decides to prioritise for its sales and marketing efforts. Figure 7.B Definition of Targeting.
Positioning The process of creating an image for a product in the mind of target customers. Figure 7.C Definition of Positioning
TABLE 4.2 Socio-economic classification (JICNARS) Table 4.2 Socio-economic classification (JICNARS) SOURCE: From Peter M. Chisnall, Marketing: A Behavioural Analysis (Berkshire, England: McGraw-Hill Publishing Co. Ltd, 1976), pp. 114-115. Reprinted by permission. SOCIAL GRADE SOCIAL STATUS HEAD OF HOUSEHOLD’S OCCUPATION APPROXIMATE PERCENTAGE OF FAMILIES A Upper middle class Middle class Lower middle class Skilled working class Working class Those at lowest levels of subsistence Higher managerial, administrative or professional Intermediate managerial, administrative or professional Supervisory or clerical and junior managerial, administrative or professional Skilled manual workers Semi and unskilled manual workers State pensioners or widows (no other earner), casual or lowest grade workers 3 B 10 C1 24 C2 D 30 25 E 8
Product Price Distribution Promotion Segment I Segment II Target market Segment III Figure 7.1 Market Segmentation Approach
Types of segmentation approaches
Figure 7.4 Basic elements of segmentation
Consider variables for segmenting market.
Look at profile of emerging segments.
Validate segments emerging.
Understand consumer perceptions.
Position products in the mind of the consumer.
Design appropriate marketing mix.
Decide on targeting strategy.
Decide which and how many segments should be targeted.
Size of purchase
Pattern of purchase
Criteria for Segmentation
Fit with corporate and Marketing Objectives
BASIC CUSTOMER CHARACTERISTICS DEMOGRAPHICS SOCIO-ECONOMICS GEOGRAPHIC LOCATION PERSONALITY, MOTIVES AND LIFESTYLE PRODUCT RELATED BEHAVIOURAL CHARACTERISTICS PURCHASE BEHAVIOUR PURCHASE OCCASION BENEFITS SOUGHT CONSUMPTION BEHAVIOUR AND USER STATUS ATTITUDE TO PRODUCT Variables for segmenting consumer markets
TABLE 7.3 Wells and Gubar life-cycle stages
Bachelor stage (young single people not living with parents)
Newly married couples without children
Full nest I (youngest child under 6)
Full nest II (youngest child 6 or over)
Full nest III (older married couple with dependent children)
Empty nest I (no children living at home, family head in work)
Empty nest II (family head retired)
Solitary survivor (in work)
Solitary survivor (retired)
SOURCE: From Consumer Market Research Handbook , 3rd ed., R. Worchester and J. Downham, eds. (ESOMAR) (England: McGraw-Hill Book Company (UK) Ltd, 1986), p. 394. Courtesy of the European Society for Opinion and Marketing Research, Amsterdam.
CATEGORIES %POP. GROUPS %POP. A Thriving 19.8 1. Wealthy Achievers, Suburban Areas 2. Affluent Greys, Rural Communities. 3. Prosperous Pensioners, Retirement Areas. 15.1 2.3 2.3 B Expanding 11.6 4. Affluent Executives, Family Areas 5. Well-off workers, Family Areas 3.7 7.8 Table 7.5 The ACORN consumer targeting markets SOURCE: CACI Limited, 1993 (Source: OPCS and GRO(S) Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.
CATEGORIES %POP. GROUPS %POP. C Rising 7.5 6. Affluent Urbanites, Town & City Areas. 7. Prosperous Professionals, Metropolitan Areas. 8. Better-Off Executives, Inner City Areas. 2.2 2.1 3.2 D Settling 24.1 9. Comfortable Middle Agers, Mature Home Owning Areas. 10. Skilled Workers, Home Owning Areas. 13.4 10.7 Table 7.5 The ACORN consumer targeting markets SOURCE: CACI Limited, 1993 (Source: OPCS and GRO(S) Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.
Table 7.5 The ACORN consumer targeting markets CATEGORIES %POP. GROUPS %POP. E Aspiring 13.7 11. New Home Owners, Mature Communities. 12. White Collar Workers, Better-Off Multi-Ethnic Areas 9.8 4.0 SOURCE: CACI Limited, 1993 (Source: OPCS and GRO(S) Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.
CATEGORIES %POP. GROUPS %POP. F Striving 22.8 13. Older People, Less Prosperous Areas 14. Council Estate Residents, Better-Off Homes. 15. Council Estate Residents, High Unemployment. 16. Council Estate Residents, Greatest Hardship. 17. People in Multi-Ethnic, Low-Income Areas. 3.6 11.6 2.7 2.8 2.1 Unclassified 0.5 0.5 Table 7.5 The ACORN consumer targeting markets SOURCE: CACI Limited, 1993 (Source: OPCS and GRO(S) Crown Copyright 1991). All rights reserved. ACORN is a registered trademark of CACI Limited.
Light user Moderate user Heavy user Urban Suburban Rural Less than £10,000 £10,000- £19,999 £20,000- £40,000 More than £40,000 Volume usage Population density Figure 7.9 Multivariable segmentation
Marketing mix I Marketing mix II Marketing mix III Organisation Segment I Segment II Segment III Target markets Figure 7.10 Multisegment strategy Product Price Promotion Distribution Product Price Promotion Distribution Product Price Promotion Distribution
Target market strategy Needs/wants of end users Product market size/structure Company/brand market share Resources/ capabilities of the company Intensity of competition Production/ marketing scale economies Figure 7.12 Factors affecting choice of target market strategy SOURCE: Data from D.Cravens, Strategic Marketing (Homewood, III.:Irwin, 1982).