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Introduction to Market Segmentation


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Fundamentals of market segmentation, its purpose and types.

Published in: Business, Health & Medicine

Introduction to Market Segmentation

  1. 1. Market Segmentation Raymund Sanchez
  2. 2. Content of the Lesson <ul><li>Definition of segmentation </li></ul><ul><li>Purpose of segmentation </li></ul><ul><li>Types of segmentation </li></ul><ul><li>Segmentation process </li></ul><ul><li>Levels of segmentation </li></ul>
  3. 3. Definition <ul><li>A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. </li></ul><ul><ul><li>it is distinct from other segments (heterogeneity across segments) </li></ul></ul><ul><ul><li>it is homogeneous within the segment (exhibits common attributes) </li></ul></ul><ul><ul><li>it responds similarly to a market stimuli </li></ul></ul><ul><ul><li>it can be reached by a market intervention </li></ul></ul>
  4. 4. <ul><li>Size, purchasing power, profiles </li></ul><ul><li>of segments can be measured. </li></ul><ul><li>Segments must be effectively </li></ul><ul><li>reached and served. </li></ul><ul><li>Segments must be large or profitable enough to serve. </li></ul>Measurable Accessible Substantial Differential Actionable <ul><li>Segments must respond differently to different marketing mix elements & actions. </li></ul><ul><li>Must be able to attract and serve the segments. </li></ul>
  5. 5. Purpose <ul><li>Increase marketing efficiency by focusing marketing efforts to a particular group </li></ul><ul><li>Maximize scarce marketing resources </li></ul><ul><li>Find a market with limited competition </li></ul><ul><li>Select the most profitable segment </li></ul>
  6. 6. Segmentation Criteria <ul><li>Geographic variables </li></ul><ul><ul><li>region of the world or country, East, West, South, North, Central, coastal, hilly, etc. </li></ul></ul><ul><ul><li>country size/country size : Metropolitan Cities, small cities, towns. </li></ul></ul><ul><ul><li>Density of Area Urban, Semi-urban, Rural. </li></ul></ul><ul><ul><li>climate Hot, Cold, Humid, Rainy. </li></ul></ul>
  7. 7. Segmentation Criteria Geographic Demographic Age, gender, family size and life cycle, or income Psychographic Social class, lifestyle, or personality Behavioral Occasions, benefits, uses, or responses Nations, states, regions or cities
  8. 8. Demographic Criteria <ul><li>Demographic variables </li></ul><ul><ul><li>age </li></ul></ul><ul><ul><li>gender </li></ul></ul><ul><ul><li>sexual orientation </li></ul></ul><ul><ul><li>family size </li></ul></ul><ul><ul><li>family life cycle </li></ul></ul><ul><ul><li>education </li></ul></ul><ul><ul><li>income </li></ul></ul><ul><ul><li>occupation </li></ul></ul><ul><ul><li>education </li></ul></ul><ul><ul><li>socioeconomic status </li></ul></ul><ul><ul><li>religion </li></ul></ul><ul><ul><li>nationality / race </li></ul></ul><ul><ul><li>language </li></ul></ul>
  9. 9. Psychographic Criteria <ul><li>Psychographic variables </li></ul><ul><ul><li>personality </li></ul></ul><ul><ul><li>life style </li></ul></ul><ul><ul><li>value </li></ul></ul><ul><ul><li>attitude </li></ul></ul>
  10. 10. Behavioral Criteria <ul><li>Behavioral variables </li></ul><ul><ul><li>benefit sought </li></ul></ul><ul><ul><li>product usage rate </li></ul></ul><ul><ul><li>brand loyalty </li></ul></ul><ul><ul><li>product end use </li></ul></ul><ul><ul><li>readiness-to-buy stage </li></ul></ul><ul><ul><li>decision making unit </li></ul></ul><ul><ul><li>profitability </li></ul></ul><ul><ul><li>income status </li></ul></ul>
  11. 11. Market Segmentation Process <ul><li>Determine the characteristics of segments in the target market & separate these segments in the market based on these characteristics. </li></ul><ul><li>Verify the market segments size if adequate enough to support the organization's product. </li></ul><ul><li>Develop a marketing strategy to target this market. </li></ul>
  12. 12. Market Segmentation Process 1. Identify Bases for Segmenting the Market 2. Develop Profiles of Resulting Segments 3. Develop Measures of Segment Attractiveness 4. Select Target Segment(s) 5. Develop Positioning for Each Target Segment 6. Develop Marketing Mix for Each Target Segment Market Positioning Market Targeting Market Segmentation
  13. 13. Levels of Segmentation Mass Marketing Same product to all consumers (no segmentation) Segment Marketing Different products to one or more segments (some segmentation) Micromarketing Products to suit the tastes of individuals or locations (complete segmentation) Niche Marketing Different products to subgroups within segments ( more segmentation)
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