This document discusses market segmentation and reviews relevant literature. It begins by defining market segmentation as dividing a market into smaller groups with distinct characteristics and needs. The key bases for segmentation are identified as geographic, demographic, psychographic, and behavioral.
The document then reviews several studies and their findings. One study found that customers are willing to pay more for products tailored to their specific needs. Another argued that any proposed segmentation should meet tests for measurability, accessibility, stability, and substantiality. A third proposed segmenting based on factors causally related to future purchasing behavior.
The benefits of market segmentation are then discussed. Segmentation allows tailoring marketing mixes to specific target segments, which can increase profits and reduce competition.
Behavioral based segmentation and marketing successAlexander Decker
This document discusses behavioral-based segmentation and its relationship to marketing success. It examines segmenting markets based on benefits sought, usage rates, and loyalty status. The author develops hypotheses that segmenting based on these behavioral dimensions will positively impact marketing success measures like customer satisfaction, sales growth, and profitability. Demo-psychographic factors like social class and family lifecycle are also hypothesized to moderate the effects of behavioral segmentation on marketing success. The study aims to test these hypotheses regarding behavioral segmentation strategies in the fast food industry.
Using Of Target Customer Purchase Information In Retail Chain ManagementAntti Syväniemi
This document describes a normative model for using target customer purchase information in retail chain management. It discusses segmenting customers and understanding their needs to tailor products, services, and store locations. The model aims to direct retail processes based on changed market conditions. It emphasizes the importance of intra-organizational collaboration and a customer-centered approach using customer relationship management and process management. The document outlines key retail business processes and the data needed, such as customer purchase histories, to better meet customer needs across different customer touchpoints.
This document discusses how social media data and analytics are increasingly important for market segmentation. It explores how new data sources and analytical techniques allow companies to better understand customer attributes and behaviors to develop more precise segmentation models. While social media provides valuable insights, companies must ensure they use the data appropriately and comply with privacy regulations. Effective use of social media data can enhance relationship building with customers and improve targeting.
Developing Relationships; consumers as a source for sustainable competitive a...Kevin Rommen
The world is changing thus business units should also be changing. The influences of social media and internet can no longer be neglected, case in point “Nestlé’s epic social media #fail”1. These changes are giving consumers more and more power in their relationship with business units. Furthermore the enormous amount of products available give consumers more and more possibilities to choose from. For example, at supermarkets in the USA you’ll find in the average week about 110 cereal brands in stock (Shum, 2004). The availability of that amount of different products/product-ranges within an industry raises the question to how business units can create competitive advantage within this enormous amount of competition, especially when the consumer is gaining power?
This chapter discusses analyzing consumers and consumer behavior. It defines two types of consumers - final consumers who buy for personal use, and organizational consumers who buy for business use or resale. It describes analyzing consumer demographics like age, income, and location to understand different consumer groups. Consumer lifestyles and psychological factors also influence purchasing behavior. The consumer decision process involves stages from initial stimulus to post-purchase evaluation.
The document discusses market segmentation and positioning strategies. It defines market segmentation as dividing a market into smaller segments based on common traits. Marketers identify segments that are manageable and evaluate which to target. Positioning involves distinguishing a product relative to competitors. Segmentation variables include geographic, demographic, psychographic and behavioral factors. Effective segmentation requires segments be measurable, accessible, substantial and allow for actionable marketing programs. Positioning matches company strengths to market opportunities to gain competitive advantage through differentiation.
Perceptions of Market Orientation from a Consumer and Retailer PerspectiveTony Kynes
This document summarizes a study on perceptions of market orientation from consumer and retailer perspectives. It identifies gaps in market orientation that were found through a consumer survey, retailer survey, and interviews. The study revealed gaps in areas like staff training, how retailers deal with complaints, importance of loyalty programs, refund and sales promotion policies, and online presence. These market orientation gaps were found to negatively impact town center shopping and cause consumers to shop more at out-of-town centers instead.
Segmentation, targeting, positioning and differentiation of servicesPROF.JITENDRA PATEL
This Presentation discusses critical issue of marketing which are segmentation, Targeting, Positioning and Differentiation of Services. The topic include
Marketing Segmentation Definition
1.1 Need for Segmentation
1.2 Quality of Good Segmentation
1.3 Basis of Segmentation
1.4 Service Attributes and Levels
1.5 Developing Right Service Concept for a Specific Segment
1.6 Important vs. Determinant Attributes
1.7 Establishing Service Levels
2. Target market strategies
3. Positioning and its example
3.1Elements of Positioning
3.2 Types of Positioning
3.3 Developing an Effective Positioning Strategy
3.4Using Positioning Maps to Analyze Competitive Strategy
4. Differentiation of Service
4.1 The 5 Market Differentiation Strategies
Behavioral based segmentation and marketing successAlexander Decker
This document discusses behavioral-based segmentation and its relationship to marketing success. It examines segmenting markets based on benefits sought, usage rates, and loyalty status. The author develops hypotheses that segmenting based on these behavioral dimensions will positively impact marketing success measures like customer satisfaction, sales growth, and profitability. Demo-psychographic factors like social class and family lifecycle are also hypothesized to moderate the effects of behavioral segmentation on marketing success. The study aims to test these hypotheses regarding behavioral segmentation strategies in the fast food industry.
Using Of Target Customer Purchase Information In Retail Chain ManagementAntti Syväniemi
This document describes a normative model for using target customer purchase information in retail chain management. It discusses segmenting customers and understanding their needs to tailor products, services, and store locations. The model aims to direct retail processes based on changed market conditions. It emphasizes the importance of intra-organizational collaboration and a customer-centered approach using customer relationship management and process management. The document outlines key retail business processes and the data needed, such as customer purchase histories, to better meet customer needs across different customer touchpoints.
This document discusses how social media data and analytics are increasingly important for market segmentation. It explores how new data sources and analytical techniques allow companies to better understand customer attributes and behaviors to develop more precise segmentation models. While social media provides valuable insights, companies must ensure they use the data appropriately and comply with privacy regulations. Effective use of social media data can enhance relationship building with customers and improve targeting.
Developing Relationships; consumers as a source for sustainable competitive a...Kevin Rommen
The world is changing thus business units should also be changing. The influences of social media and internet can no longer be neglected, case in point “Nestlé’s epic social media #fail”1. These changes are giving consumers more and more power in their relationship with business units. Furthermore the enormous amount of products available give consumers more and more possibilities to choose from. For example, at supermarkets in the USA you’ll find in the average week about 110 cereal brands in stock (Shum, 2004). The availability of that amount of different products/product-ranges within an industry raises the question to how business units can create competitive advantage within this enormous amount of competition, especially when the consumer is gaining power?
This chapter discusses analyzing consumers and consumer behavior. It defines two types of consumers - final consumers who buy for personal use, and organizational consumers who buy for business use or resale. It describes analyzing consumer demographics like age, income, and location to understand different consumer groups. Consumer lifestyles and psychological factors also influence purchasing behavior. The consumer decision process involves stages from initial stimulus to post-purchase evaluation.
The document discusses market segmentation and positioning strategies. It defines market segmentation as dividing a market into smaller segments based on common traits. Marketers identify segments that are manageable and evaluate which to target. Positioning involves distinguishing a product relative to competitors. Segmentation variables include geographic, demographic, psychographic and behavioral factors. Effective segmentation requires segments be measurable, accessible, substantial and allow for actionable marketing programs. Positioning matches company strengths to market opportunities to gain competitive advantage through differentiation.
Perceptions of Market Orientation from a Consumer and Retailer PerspectiveTony Kynes
This document summarizes a study on perceptions of market orientation from consumer and retailer perspectives. It identifies gaps in market orientation that were found through a consumer survey, retailer survey, and interviews. The study revealed gaps in areas like staff training, how retailers deal with complaints, importance of loyalty programs, refund and sales promotion policies, and online presence. These market orientation gaps were found to negatively impact town center shopping and cause consumers to shop more at out-of-town centers instead.
Segmentation, targeting, positioning and differentiation of servicesPROF.JITENDRA PATEL
This Presentation discusses critical issue of marketing which are segmentation, Targeting, Positioning and Differentiation of Services. The topic include
Marketing Segmentation Definition
1.1 Need for Segmentation
1.2 Quality of Good Segmentation
1.3 Basis of Segmentation
1.4 Service Attributes and Levels
1.5 Developing Right Service Concept for a Specific Segment
1.6 Important vs. Determinant Attributes
1.7 Establishing Service Levels
2. Target market strategies
3. Positioning and its example
3.1Elements of Positioning
3.2 Types of Positioning
3.3 Developing an Effective Positioning Strategy
3.4Using Positioning Maps to Analyze Competitive Strategy
4. Differentiation of Service
4.1 The 5 Market Differentiation Strategies
This document discusses market segmentation and the bases for segmenting consumer and business markets. It defines market segmentation as dividing a market into homogeneous groups based on factors like wants, resources, locations, and buying practices. Criteria for selecting market segments include being measurable, accessible, durable, substantial, and having unique needs. Consumer markets can be segmented geographically, demographically, psychographically, and behaviorally based on variables like age, income, interests, usage, and more. Business markets can also be segmented using these variables but also consider factors like company size, industry, purchasing approaches, product usage, and location.
Market segmentation involves dividing the overall market into smaller groups based on common characteristics. It allows companies to target specific subsets of consumers more effectively. There are several ways to segment markets, including by geography, demographics, psychographics, and customer benefits. Geographic segmentation divides the market based on where people live. Demographic segmentation considers factors like age, gender, income, etc. Psychographic segmentation examines lifestyle and attitudes. Benefit segmentation focuses on what customer needs a product fulfills. Market segmentation is important for understanding customer differences and concentrating marketing efforts on the most promising segments.
This document discusses market segmentation, targeting, and positioning. It defines market segmentation as dividing a market into subgroups of customers with similar needs or characteristics. Effective segmentation requires segments to be measurable, accessible, substantial, and responsive to different marketing mixes. Common bases for segmentation include geographic, demographic, psychographic, behavioral, and benefit factors. Targeting involves selecting specific segments to focus on based on factors like segment size, growth, and attractiveness. Positioning develops a specific marketing mix to influence customers' perceptions of a brand relative to competitors. It identifies attribute, benefit, user, and competitor bases for positioning. The document also discusses differentiation, market coverage strategies, and repositioning.
Market segmentation involves dividing broad consumer markets into subgroups based on shared characteristics. This allows companies to identify the most profitable segments to target. There are several approaches to segmentation, including geographic segmentation which combines demographic and location data to create detailed profiles. Demographic segmentation groups consumers by variables like age, income, and family size. Psychographic segmentation studies activities, interests, and opinions to better understand motivations. Behavioral segmentation observes past behaviors to divide consumers into segments.
The document summarizes a research study that examined Malaysian consumers' shopping behaviors and factors influencing repurchase intentions. The study developed a framework to analyze the relationships between product attributes, demographics, interpersonal influence, and repurchase intentions. A survey of 500 Malaysian consumers found that: 1) Purchase importance and influencing factors varied for high vs low involvement products. 2) Quality, price, brand, and information strongly predicted repurchase intentions for high involvement products, while price and brand were most important for low involvement products. 3) Interpersonal influences did not significantly impact repurchase intentions regardless of product type. The research contributes to understanding consumer purchase behaviors and can help marketers improve strategies.
The document discusses different types of market segmentation. It defines market segmentation as breaking buyers into internally similar but externally different groups. There are four main bases for segmentation: geographic, demographic, psychographic, and behavioral. Demographic segmentation divides the market based on variables like age, gender, income, occupation, and household size. Psychographic segmentation uses psychological attributes, lifestyles, and attitudes to develop behavioral profiles of customers. Behavioral segmentation focuses on factors like usage occasions, benefits sought, and brand loyalty.
Service market segmentation and targetingManvi Sehgal
1. Segmentation, targeting, and positioning are strategic marketing fundamentals used to generate competitive advantage and business opportunities. Segmentation involves dividing the market into distinct groups that share common characteristics, needs, behaviors, or patterns.
2. There are four types of service organizations based on their service focus and market focus: unfocused, service focused, market focused, and fully focused. Market segmentation recognizes the need for specialization to suit market segments rather than trying to be all things to all people.
3. Market segmentation leads to more efficient resource utilization, improved market manageability by dividing into smaller parts, and an enhanced ability to satisfy customers. The objectives of segmentation are to identify similarities and differences between buyer needs in segments
This study examined the effect of market segmentation on the performance of micro, small, and medium enterprises in Makurdi Metropolis, Benue State, Nigeria. A survey was conducted of 246 owners and managers of these enterprises. Multiple regression analysis found that demographic segmentation had a positive and statistically significant effect on enterprise performance, while geographic and behavioral segmentation had negative effects that were not statistically significant. The study concludes that market segmentation can improve enterprise performance by helping to identify the best customer groups to target. It recommends that enterprises in the area focus their segmentation on demographic characteristics.
Cosnumers intention of buying private label brands in food and grocery retail...IAEME Publication
1) The document is a research paper that examines consumers' intention to purchase private label brands (PLBs) in the food and grocery retail sector in Chennai, India.
2) A survey of 800 consumers in Chennai found that consumers' purchase intention of PLB food and grocery items is influenced most by their perceived benefits, perceived quality, perceived risk, and perceived economic situation.
3) Factor analysis identified three key factors that influence consumers' perceptions of PLBs: perceived risk of PLBs, perceived quality of PLBs, and intention to purchase PLB food and grocery items.
The document reviews literature on purchasing management in the service industry. It discusses three key aspects: (1) objectives of purchasing management have evolved from a transactional focus on price and delivery to strategic goals aligned with long-term organizational objectives, (2) global sourcing allows firms to reduce costs through sourcing globally but risks vary across countries, (3) partnership relationships with suppliers are preferred over adversarial ones as partnerships can provide advantages for managing supply chains.
Influencing the online consumer's behavior : the web experienceGiang Coffee
The document discusses factors that influence online consumer behavior and the online buying process. It identifies the "Web experience" as a key factor marketers can control to sway consumers. The Web experience encompasses all elements of a website that shape a user's impressions, including functionality, psychological factors like trust, and content factors like design. A classification system is proposed that divides the Web experience into three main categories - functionality, psychological, and content factors - which are further broken down into sub-categories. The document aims to identify and categorize all elements of the Web experience that marketers can control to potentially impact consumers' online decision making.
This document provides an overview of market segmentation. It defines market segmentation as breaking down potential buyers into homogeneous groups. The benefits of segmentation include identifying new product opportunities, designing effective marketing programs for groups, and improving resource allocation. Different customers have different needs, so segmentation allows targeting specific groups rather than treating all customers the same. Segments must be measurable, accessible, have unique needs, be large enough to target, and be relatively stable over time. Common bases for consumer segmentation include geographic, demographic, psychographic, and behavioral factors.
Industrial Market is another name for B2B (Business to Business) Markets.
This presentation focuses on
1. Segmentation Variables for Business Markets
2. Effective Segmentation Criteria
3. Steps in Segmentation Process
This document summarizes key aspects of using business intelligence (BI) systems in the fast-moving consumer goods (FMCG) and retail industries. It outlines major changes in these industries, key performance indicators (KPIs) used, an example data model for a retail scenario, and how BI can help address challenges around customer analytics, supply chain management, and operations optimization. Major trends are discussed, including the need for agile infrastructure to support dynamic business demands and enhanced customer experiences.
A widely used approach for gaining insight into the heterogeneity of consumer’s buying behavior is market segmentation. Conventional market segmentation models often ignore the fact that consumers’ behavior may evolve over time. Therefore retailers consume limited resources attempting to service unprofitable consumers. This study looks into the integration between enhanced Recency, Frequency, Monetary (RFM) scores and Consumer Lifetime Value (CLV) matrix for a medium size retailer in the State of Kuwait. A modified regression algorithm investigates the consumer purchase trend gaining knowledge from a pointof-sales data warehouse. In addition, this study applies enhanced normal distribution formula to remove outliers, followed by soft clustering Fuzzy C-Means and hard clustering Expectation Maximization (EM) algorithms to the analysis of consumer buying behavior. Using cluster quality assessment shows EM algorithm scales much better than Fuzzy C-Means algorithm with its ability to assign good initial points in the smaller dataset.
This document summarizes a theoretical analysis of defensive marketing strategy through customer complaint management. The analysis develops an economic model showing that maximizing customer complaints, subject to cost constraints, can increase market share and reduce expenditures on offensive marketing. It is shown that complaint management allows firms to lower the total cost of marketing by reducing the cost of advertising, even if complaint resolution costs exceed product profits. Effective complaint handling strengthens brand loyalty and improves customer retention compared to firms that do not encourage customer feedback.
ECT 584_Research Paper_JoyceRose_08182015Joyce Rose
1. The document discusses the importance of context-aware recommender systems for one-to-one marketing in e-commerce. Traditionally, recommender systems use collaborative filtering or content-based recommendations without considering the context or situation of a customer's purchase.
2. It proposes that recommender systems should take into account the "embodied knowledge" or context of customers' online shopping behavior in order to improve marketing strategies and increase sales. Capturing contextual information could help create perceptions of trust, value and relevance to better satisfy customer needs.
3. Recommender systems are currently built from a "seller-centric" view rather than considering customer perspectives and contexts. Incorporating contextual factors could help elicit positive customer
This report summarizes Colin Dunn's work experience at Staples Business Advantage during his 4th co-op term. As a Sales and Marketing Associate, Colin was responsible for qualifying new business and maintaining existing accounts. The report focuses on understanding the five stages of the consumer purchase decision process: 1) need recognition, 2) information search, 3) alternative evaluation, 4) purchase decision, and 5) post-purchase evaluation. It provides examples of how Colin was able to apply his understanding of these stages to effectively market and sell products to customers at Staples Business Advantage.
The structural model of the effects of marketing mix elements on brand equity is defined in line with the existing theoretical findings. Research hypotheses are defined according to the identified structural model. In order to test the defined structural model and research hypotheses empirical research was conducted on the sample of undergraduate students of the Faculty of Economics and Business in Zagreb. Research results indicate that the structural model has an acceptable level of fit to the empirical data. The estimated structural coefficients and indirect effect coefficients indicate the direction and intensity of effects of each analysed element of marketing mix on brand equity. Finally, implications of research results for the theory and practice of brand management are analysed and discussed.
Market segmentation involves dividing a market into subgroups of customers with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes. It allows companies to target specific subsets of customers more effectively. Key reasons for segmentation include better matching products to customer needs, enhancing profits by understanding differences in customer preferences, and improving marketing communications by targeting specific audience segments. Common bases for segmentation include demographics, behaviors, benefits sought, geography, and lifestyle.
This document provides a literature review on developing an STP (segmentation, targeting, positioning) strategy for launching a new product in the European market. It discusses various academic theories and approaches to segmentation, targeting, and positioning. For segmentation, it describes different variables that can be used, including geographic, demographic, psychographic, behavioral, and multi-factor segmentation. It also discusses criteria for effective segmentation like segments being measurable, accessible, substantial and stable. For targeting, it discusses mass, differentiated, and concentrated targeting strategies. For positioning, it discusses developing positioning concepts for each target segment. The document provides an overview of key considerations for developing an STP strategy to launch a new product successfully in a new market.
This document discusses market segmentation and the bases for segmenting consumer and business markets. It defines market segmentation as dividing a market into homogeneous groups based on factors like wants, resources, locations, and buying practices. Criteria for selecting market segments include being measurable, accessible, durable, substantial, and having unique needs. Consumer markets can be segmented geographically, demographically, psychographically, and behaviorally based on variables like age, income, interests, usage, and more. Business markets can also be segmented using these variables but also consider factors like company size, industry, purchasing approaches, product usage, and location.
Market segmentation involves dividing the overall market into smaller groups based on common characteristics. It allows companies to target specific subsets of consumers more effectively. There are several ways to segment markets, including by geography, demographics, psychographics, and customer benefits. Geographic segmentation divides the market based on where people live. Demographic segmentation considers factors like age, gender, income, etc. Psychographic segmentation examines lifestyle and attitudes. Benefit segmentation focuses on what customer needs a product fulfills. Market segmentation is important for understanding customer differences and concentrating marketing efforts on the most promising segments.
This document discusses market segmentation, targeting, and positioning. It defines market segmentation as dividing a market into subgroups of customers with similar needs or characteristics. Effective segmentation requires segments to be measurable, accessible, substantial, and responsive to different marketing mixes. Common bases for segmentation include geographic, demographic, psychographic, behavioral, and benefit factors. Targeting involves selecting specific segments to focus on based on factors like segment size, growth, and attractiveness. Positioning develops a specific marketing mix to influence customers' perceptions of a brand relative to competitors. It identifies attribute, benefit, user, and competitor bases for positioning. The document also discusses differentiation, market coverage strategies, and repositioning.
Market segmentation involves dividing broad consumer markets into subgroups based on shared characteristics. This allows companies to identify the most profitable segments to target. There are several approaches to segmentation, including geographic segmentation which combines demographic and location data to create detailed profiles. Demographic segmentation groups consumers by variables like age, income, and family size. Psychographic segmentation studies activities, interests, and opinions to better understand motivations. Behavioral segmentation observes past behaviors to divide consumers into segments.
The document summarizes a research study that examined Malaysian consumers' shopping behaviors and factors influencing repurchase intentions. The study developed a framework to analyze the relationships between product attributes, demographics, interpersonal influence, and repurchase intentions. A survey of 500 Malaysian consumers found that: 1) Purchase importance and influencing factors varied for high vs low involvement products. 2) Quality, price, brand, and information strongly predicted repurchase intentions for high involvement products, while price and brand were most important for low involvement products. 3) Interpersonal influences did not significantly impact repurchase intentions regardless of product type. The research contributes to understanding consumer purchase behaviors and can help marketers improve strategies.
The document discusses different types of market segmentation. It defines market segmentation as breaking buyers into internally similar but externally different groups. There are four main bases for segmentation: geographic, demographic, psychographic, and behavioral. Demographic segmentation divides the market based on variables like age, gender, income, occupation, and household size. Psychographic segmentation uses psychological attributes, lifestyles, and attitudes to develop behavioral profiles of customers. Behavioral segmentation focuses on factors like usage occasions, benefits sought, and brand loyalty.
Service market segmentation and targetingManvi Sehgal
1. Segmentation, targeting, and positioning are strategic marketing fundamentals used to generate competitive advantage and business opportunities. Segmentation involves dividing the market into distinct groups that share common characteristics, needs, behaviors, or patterns.
2. There are four types of service organizations based on their service focus and market focus: unfocused, service focused, market focused, and fully focused. Market segmentation recognizes the need for specialization to suit market segments rather than trying to be all things to all people.
3. Market segmentation leads to more efficient resource utilization, improved market manageability by dividing into smaller parts, and an enhanced ability to satisfy customers. The objectives of segmentation are to identify similarities and differences between buyer needs in segments
This study examined the effect of market segmentation on the performance of micro, small, and medium enterprises in Makurdi Metropolis, Benue State, Nigeria. A survey was conducted of 246 owners and managers of these enterprises. Multiple regression analysis found that demographic segmentation had a positive and statistically significant effect on enterprise performance, while geographic and behavioral segmentation had negative effects that were not statistically significant. The study concludes that market segmentation can improve enterprise performance by helping to identify the best customer groups to target. It recommends that enterprises in the area focus their segmentation on demographic characteristics.
Cosnumers intention of buying private label brands in food and grocery retail...IAEME Publication
1) The document is a research paper that examines consumers' intention to purchase private label brands (PLBs) in the food and grocery retail sector in Chennai, India.
2) A survey of 800 consumers in Chennai found that consumers' purchase intention of PLB food and grocery items is influenced most by their perceived benefits, perceived quality, perceived risk, and perceived economic situation.
3) Factor analysis identified three key factors that influence consumers' perceptions of PLBs: perceived risk of PLBs, perceived quality of PLBs, and intention to purchase PLB food and grocery items.
The document reviews literature on purchasing management in the service industry. It discusses three key aspects: (1) objectives of purchasing management have evolved from a transactional focus on price and delivery to strategic goals aligned with long-term organizational objectives, (2) global sourcing allows firms to reduce costs through sourcing globally but risks vary across countries, (3) partnership relationships with suppliers are preferred over adversarial ones as partnerships can provide advantages for managing supply chains.
Influencing the online consumer's behavior : the web experienceGiang Coffee
The document discusses factors that influence online consumer behavior and the online buying process. It identifies the "Web experience" as a key factor marketers can control to sway consumers. The Web experience encompasses all elements of a website that shape a user's impressions, including functionality, psychological factors like trust, and content factors like design. A classification system is proposed that divides the Web experience into three main categories - functionality, psychological, and content factors - which are further broken down into sub-categories. The document aims to identify and categorize all elements of the Web experience that marketers can control to potentially impact consumers' online decision making.
This document provides an overview of market segmentation. It defines market segmentation as breaking down potential buyers into homogeneous groups. The benefits of segmentation include identifying new product opportunities, designing effective marketing programs for groups, and improving resource allocation. Different customers have different needs, so segmentation allows targeting specific groups rather than treating all customers the same. Segments must be measurable, accessible, have unique needs, be large enough to target, and be relatively stable over time. Common bases for consumer segmentation include geographic, demographic, psychographic, and behavioral factors.
Industrial Market is another name for B2B (Business to Business) Markets.
This presentation focuses on
1. Segmentation Variables for Business Markets
2. Effective Segmentation Criteria
3. Steps in Segmentation Process
This document summarizes key aspects of using business intelligence (BI) systems in the fast-moving consumer goods (FMCG) and retail industries. It outlines major changes in these industries, key performance indicators (KPIs) used, an example data model for a retail scenario, and how BI can help address challenges around customer analytics, supply chain management, and operations optimization. Major trends are discussed, including the need for agile infrastructure to support dynamic business demands and enhanced customer experiences.
A widely used approach for gaining insight into the heterogeneity of consumer’s buying behavior is market segmentation. Conventional market segmentation models often ignore the fact that consumers’ behavior may evolve over time. Therefore retailers consume limited resources attempting to service unprofitable consumers. This study looks into the integration between enhanced Recency, Frequency, Monetary (RFM) scores and Consumer Lifetime Value (CLV) matrix for a medium size retailer in the State of Kuwait. A modified regression algorithm investigates the consumer purchase trend gaining knowledge from a pointof-sales data warehouse. In addition, this study applies enhanced normal distribution formula to remove outliers, followed by soft clustering Fuzzy C-Means and hard clustering Expectation Maximization (EM) algorithms to the analysis of consumer buying behavior. Using cluster quality assessment shows EM algorithm scales much better than Fuzzy C-Means algorithm with its ability to assign good initial points in the smaller dataset.
This document summarizes a theoretical analysis of defensive marketing strategy through customer complaint management. The analysis develops an economic model showing that maximizing customer complaints, subject to cost constraints, can increase market share and reduce expenditures on offensive marketing. It is shown that complaint management allows firms to lower the total cost of marketing by reducing the cost of advertising, even if complaint resolution costs exceed product profits. Effective complaint handling strengthens brand loyalty and improves customer retention compared to firms that do not encourage customer feedback.
ECT 584_Research Paper_JoyceRose_08182015Joyce Rose
1. The document discusses the importance of context-aware recommender systems for one-to-one marketing in e-commerce. Traditionally, recommender systems use collaborative filtering or content-based recommendations without considering the context or situation of a customer's purchase.
2. It proposes that recommender systems should take into account the "embodied knowledge" or context of customers' online shopping behavior in order to improve marketing strategies and increase sales. Capturing contextual information could help create perceptions of trust, value and relevance to better satisfy customer needs.
3. Recommender systems are currently built from a "seller-centric" view rather than considering customer perspectives and contexts. Incorporating contextual factors could help elicit positive customer
This report summarizes Colin Dunn's work experience at Staples Business Advantage during his 4th co-op term. As a Sales and Marketing Associate, Colin was responsible for qualifying new business and maintaining existing accounts. The report focuses on understanding the five stages of the consumer purchase decision process: 1) need recognition, 2) information search, 3) alternative evaluation, 4) purchase decision, and 5) post-purchase evaluation. It provides examples of how Colin was able to apply his understanding of these stages to effectively market and sell products to customers at Staples Business Advantage.
The structural model of the effects of marketing mix elements on brand equity is defined in line with the existing theoretical findings. Research hypotheses are defined according to the identified structural model. In order to test the defined structural model and research hypotheses empirical research was conducted on the sample of undergraduate students of the Faculty of Economics and Business in Zagreb. Research results indicate that the structural model has an acceptable level of fit to the empirical data. The estimated structural coefficients and indirect effect coefficients indicate the direction and intensity of effects of each analysed element of marketing mix on brand equity. Finally, implications of research results for the theory and practice of brand management are analysed and discussed.
Market segmentation involves dividing a market into subgroups of customers with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes. It allows companies to target specific subsets of customers more effectively. Key reasons for segmentation include better matching products to customer needs, enhancing profits by understanding differences in customer preferences, and improving marketing communications by targeting specific audience segments. Common bases for segmentation include demographics, behaviors, benefits sought, geography, and lifestyle.
This document provides a literature review on developing an STP (segmentation, targeting, positioning) strategy for launching a new product in the European market. It discusses various academic theories and approaches to segmentation, targeting, and positioning. For segmentation, it describes different variables that can be used, including geographic, demographic, psychographic, behavioral, and multi-factor segmentation. It also discusses criteria for effective segmentation like segments being measurable, accessible, substantial and stable. For targeting, it discusses mass, differentiated, and concentrated targeting strategies. For positioning, it discusses developing positioning concepts for each target segment. The document provides an overview of key considerations for developing an STP strategy to launch a new product successfully in a new market.
This document provides a literature review on developing an STP (segmentation, targeting, positioning) strategy for launching a new product in the European market. It discusses various academic theories and approaches to segmentation, targeting, and positioning. For segmentation, it describes different variables that can be used, including geographic, demographic, psychographic, behavioral, and multi-factor segmentation. It also discusses criteria for effective segmentation like segments being measurable, accessible, substantial and stable. For targeting, it discusses mass, differentiated, and concentrated targeting strategies. For positioning, it discusses developing positioning concepts for each target segment. The document provides an overview of key considerations for developing an STP strategy to launch a new product successfully in a new market.
Market segmentation involves dividing a broad target market into subsets of consumers who have common needs and applications for relevant goods and services. The document discusses criteria for effective market segments and various bases for segmenting consumer and industrial markets, including geographic, demographic, psychographic, and behavioral factors. Segmentation allows firms to better understand customer diversity and satisfy customer needs through targeted marketing strategies.
Module 3 - BackgroundPRINCIPLES OF MARKETINGAll readings are r.docxroushhsiu
Module 3 - Background
PRINCIPLES OF MARKETING
All readings are required unless noted as “Optional” or “Not Required.”
Introduction
In practice, Marketers use various models to describe the different marketing functions. Some of the more popular models are the 7 step model, STP (segmentation, targeting, positioning), or the 4 C's (Consumer Behavior, Company Analysis, Competitor Analysis, and Context). Each has advantages and drawbacks regarding comprehensiveness. Readings describing each of these models are provided in the Optional Reading list at the end of this section. For this module, however, we will use a model that integrates and abridges these other models.
Consumers, Markets, and Competition
Though many people think of marketing as consisting of sales and advertising, one of the most important marketing functions begins even before the final product or service has been developed. In this early stage, the organization conducts research to determine customer needs, how the market is structured, and the number and nature of competitors addressing that need. As you will see below, these three topics are intertwined.
Consumers
The purpose of marketing is to discover how to provide value to consumers while earning a profit. Marketers must understand the entire consumer base: the customer served by the organization, the customer currently served by competitors, and customers who may be served in the future. One way marketers do this is by analyzing buyer behavior (i.e., how consumers get information and how consumers make buying decisions). Consumer behaviors are influenced by a number of considerations such as psychological factors, convenience, competing choices, and cultural preferences. Read the following book chapter on consumer behavior.
Tanner, J., and Raymond, M. (2012). Marketing Principles (v. 2.0). Ch. 3: Consumer behavior: How people make buying decisions. Sections 3.1-3.6. Retrieved from https://2012books.lardbucket.org/pdfs/marketing-principles-v2.0.pdf
Markets
Any business needs to know the characteristics of the markets in which the firm operates. Understanding the customer and the market requires extensive and sophisticated research efforts to gather and analyze social and economic trends, human decision-making, and potential competitors. The goal of market research is to enable the firm to identify opportunities and threats in the business environment as well as the organization’s capacity to exploit its strengths and shore up its weaknesses.
Market research can be either primary (collected directly from the source), or secondary (collected/published by someone outside the organization). Some examples of secondary data include:
· US Census
· www.Data,gov
· Internal data (such as customer cards at grocery stores that collect data on buying patterns)
· Nielsen or Arbitron ratings
· Published articles and reports
· Blog posts
· Social media
The following chart illustrates the differences between primary and secondary market re ...
A Business Market Segmentation Procedure For Product PlanningBrittany Brown
This document outlines a market segmentation procedure for business product planning and marketing. It begins by discussing the need for segmentation in business markets to identify groups of customers with distinct needs. It then reviews past research on business market segmentation, noting shortcomings like a lack of agreement on criteria and difficulties in data collection. The document proposes criteria for an effective segmentation model and outlines a multi-stage procedure using past purchase behavior to identify early adopters. It applies this procedure to the US information processing market as an example.
This chapter discusses developing a target market strategy, which involves analyzing consumer demand, targeting a market segment, and creating a tailored marketing strategy. It outlines the steps: analyzing demand patterns, establishing segmentation bases, identifying potential segments, selecting a target approach, and choosing target markets. Mass, concentrated, and differentiated marketing approaches are contrasted. Sales forecasting methods are also reviewed to aid in target market planning.
Trend-Setting Market Segmentation - A New Wave In The German Born Energy MarketSteven843Summers
1) Some energy companies in Germany are using innovative psychographic segmentation techniques to differentiate themselves in the increasingly competitive energy market. These techniques group customers based on lifestyle and values rather than just demographics.
2) One example is Sinus-Milieus which clusters people into groups based on shared life aspirations, values and lifestyles. Another is semometrie which evaluates how people rate words to quantify their values.
3) These segmentation models help energy companies understand customer needs better to develop tailored products, services and communications for different target segments. Companies using these innovative approaches are showing improved customer retention and market share gains.
The document discusses market segmentation, including defining it as dividing a market into groups with similar characteristics in order to develop tailored marketing mixes. It outlines the market segmentation process, criteria for successful segmentation, levels of segmentation, and bases for segmenting such as demographics. Factor analysis and cluster analysis are presented as techniques for segmenting markets into homogeneous groups. The goal of segmentation is to satisfy varied customer needs through developing distinct offerings for each segment.
This document provides an overview of international market segmentation, targeting, and positioning. It begins by defining the objectives of understanding these concepts and their importance in dividing heterogeneous markets into homogeneous segments. The document then discusses various bases for segmenting international markets, including geographic, demographic, psychographic, and behavioral factors. It also explains strategies for targeting the most attractive market segments and positioning products to best reach targeted customers. The key aspects covered are defining segmentation, targeting, and positioning; the bases used to segment international markets; and the importance of these concepts in effective marketing worldwide.
Market segmentation involves dividing a market into distinct subgroups that have distinct needs, characteristics, or behaviors. Effective segmentation requires groups that are distinct from each other, homogeneous within the group, and respond similarly to market stimuli. While mass marketing treats all consumers alike, segmentation allows targeting specific groups. Key criteria for effective segments include measurability, accessibility, sustainability, and the ability to design appropriate marketing programs for each segment. Common bases for segmentation include geographic, demographic, psychographic, and behavioral factors. Multiple bases can be combined to create hybrid segments. Segmentation provides benefits like improved resource allocation, better positioning, tailored programs, and increased market share.
This document discusses market segmentation, targeting, and positioning. It begins by defining segmentation as the process of dividing a market into subgroups based on characteristics like needs, behaviors, or attributes. The key aspects of segmentation discussed include identifying market segments, developing segment profiles, selecting target segments, and developing positioning for each segment. Demographic and geographic variables that can be used for segmentation are also outlined, such as age, gender, income level, and location. The overall goal of segmentation is to more accurately meet the needs of specific customer groups in a targeted and profitable way.
Market segmentation involves dividing a market into subsets of consumers with common characteristics in order to target specific groups. Segmentation is useful for reducing costs, avoiding head-on competition, and developing specialized products. Segmentation studies discover consumer needs to develop targeted goods and services. Common bases for segmentation include geographic, demographic, psychographic, behavioral, and hybrid approaches. Effective segmentation allows companies to implement concentrated, differentiated, or counter-segmentation marketing strategies.
9Assessing Market Opportunities and Targeting Market Seg.docxfredharris32
9
Assessing Market
Opportunities and Targeting
Market Segments
Fuse/Thinkstock
The aim of marketing is to know and understand the customer so well
the product or service fits him and sells itself.
—Peter Drucker
Learning Objectives
After reading this chapter, you should be able to do the following:
• Delineate the importance of performing a market opportunity analysis, and explain the process of assess-
ing market opportunities.
• Identify the four activities involved in completing a market demand analysis, and discuss commonly used
bases for market segmentation.
• Explain the use of three methods for measuring market potential.
• Discuss the substeps of the market segmentation and target marketing phases and the steps involved in the
market segmentation process.
Section 9.1Market Opportunity Analysis
Introduction
This chapter focuses on the details of identifying market opportunities, evaluating these
opportunities, and then deciding whether to pursue an opportunity. The careful analysis of a
marketing opportunity not only helps the organization grow by pursuing feasible opportuni-
ties, it also helps the organization avoid the costly mistake of pursuing an opportunity that is
not really viable, or one for which the internal resources are insufficient for its sustainment
over the long run.
9.1 Market Opportunity Analysis
Market opportunity analysis is the process of defining the exact nature of the opportunities
available in an organization’s operating environment in terms of external, financial, and internal
considerations. Figure 9.1 presents an overview of this process in terms of the steps involved
in the analysis.
As this diagram depicts, opportunity analysis is a comprehensive analysis of all aspects of
an alternative before decisions are made to pursue it. The results of such an analysis put the
decision-maker in a position of having a strong database from which to choose among the
various alternatives present in the environment in line with financial and internal considerations
that are specified by management.
The analysis begins with a detailed study of the environment in which the proposed business
would operate. This includes not only the political, legal, economic, social, cultural, and tech-
nological environments, but also market size, growth trends, and consumers’ attitudes and
behavior. It also involves a study of current and potential competitors who may be going after
the same customers the organization proposes to attract. These factors are external to the
organization or person contemplating the new venture; therefore, a thorough analysis of these
factors requires a great deal of diligence. The analysis usually involves a substantial commit-
ment of time and money to collect the necessary information. The tools used in the opportu-
nity assessment process are illustrated in Figure 9.1.
If the environmental analysis indicates that these factors are favorable to the potential bus.
Market segmentation is a marketing concept which divides the complete market set up into smaller subsets comprising of consumers with a similar taste, demand and preference.Market segmentation helps the marketers to understand the needs of the target audience and adopt specific marketing plans accordingly. Organizations can adopt a more focused approach as a result of market segmentation.
This document provides an overview of identifying market segment, target, and position strategies. It begins by outlining the learning objectives, which are to understand market segmentation bases, the segmentation process, target market evaluation and selection, positioning strategies, and practices in Nepal. Several key aspects of segmentation are then defined and explained, including the concept, requirements, bases for consumer and industrial segmentation, the segmentation process, target market evaluation, selection, and developing positioning strategies. Specific variables, types, and the process are outlined for each topic.
This document discusses market segmentation, which is the process of dividing a market into distinct groups of consumers based on characteristics like needs, preferences, location, demographics, etc. It defines market segmentation and explains the key criteria for effective segmentation. It also outlines the different levels of segmentation from mass marketing to niche/micro marketing. Finally, it describes three patterns of segmentation - homogeneous preferences where all consumers have similar tastes, diffused preferences where tastes vary widely, and clustered preferences where natural segments emerge. The goal of segmentation is to better target specific groups and develop tailored marketing strategies.
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1. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.9, 2011
The basis of market segmentation: a critical review of
literature
Sulekha Goyat
Department of humanities &social sciences, National Institute of Technology,
Kurukshetra (136109), Haryana
Tele:8529397205. Email:sghangas12@gmail.com
Abstract
This article addresses the research question, what is the best method of consumer market segmentation. It
deals with the issues that are already discussed by the researchers and also identifies the research gap for
the further researches. It focuses on the definition, basis of market segmentation and issues related to
market segmentation in detail. This research paper will provide information about the knowledge gap and
will show a path for future research in the area of market segmentation, which is the heart of marketing
now a day.
Keywords: Market segmentation, basis of segmentation, marketing
1. Introduction
Today where the world is being recognized as global village marketing has become vital ingredient for
every business success. It is almost become difficult to every competitor to survive in market for a
prolonged period because competition is cut to throat. Change or die is the core faith of marketing. That is
why development of right marketing strategy over time is required. Right marketing Strategy is something
that helps companies achieves marketing objectives. Marketing objectives help achieve corporate
objectives and corporate objectives aim to achieve a competitive advantage over rival organizations.
Effective marketing strategies or marketing campaigns often consist of a combination of several marketing
tactics that work together in a synergistic way to establish your brand, reduce sales resistance, and create
interest and desire for your product or service. Today marketing is every where, formally or informally,
people and organization engage in vast number of activity that we call as marketing.
But still there is one constraint before all companies that they can not connect to all customers in large,
broad or diverse market Every company want to focus on customers within there capacity and with
customers intimacy . For this market is to divide into groups of consumers or segments with distinct needs
and wants. This strategy of dividing the market in homogenous group is known as segmentation. Even
companies, who have mass marketing phenomena, are now adopting this new world’s strategy i.e.
segmentation. The purpose of segmentation is the concentration of marketing energy and force on
subdividing to gain a competitive advantage within the segment. It’s analogous to the military principle of
concentration of force to overwhelm energy. Concentration of marketing energy is the essence of all
marketing strategies and market segmentation is the conceptual tool to help in achieving this focus.
The marketer must try to understand the target market’s needs, wants, and demands. Need can be described
as basic human requirements. People need food, air, water, clothing, and entertainment. These needs
become wants when they are directed to specific objects that might satisfy the need. An American needs
food but wants hamburger, French fries and a soft drink. Wants are shaped by one’s society (Kotler, 2000).
Cartwright (2002) is of the opinion that need is something that people cannot do without; a want is the
method by which people would like the need to be satisfied. Demands are wants for specific products
backed by an ability to pay (Kotler, 2000).
Market segmentation was first put forward in the middle of 1950s by Wendell.R.Smith, an American
professor of marketing. “Market segmentation is to divide a market into smaller groups of buyers with
distinct needs, characteristics, or behaviors who might require separate products or marketing mixes.”
(Charles W. Lamb 2003). Segmentation is the process of dividing the market into groups of customers or
consumers with similar needs. The more closely the needs match up, the smaller the segment tends to be,
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2. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.9, 2011
but the higher the premium customers are likely to be prepared to pay to have a product that more exactly
meets their needs (Blythe, 2003). Segmentation allows marketers to identify distinct groups of customers
whose behaviours significantly differ from others. This allows firms to adjust their marketing mix, to cater
to particular needs of different market segments. Four segmentation bases have emerged as the most
popular in segmentation studies (Kotler, Armstrong, Saunders, & Wong, 2002): geographic segmentation
(i.e. markets segmented by geographic region, population density or climate); demographic segmentation
(i.e. markets segmented by age, sex, size and family type, etc.); psychographic segmentation (i.e. markets
segmented by life-style variables); and behavioural segmentation (i.e. markets segmented by purchase
occasion, benefits sought, user status). The segmentation base chosen to subdivide a market will depend on
many factors such as “the type of product, the nature of demand, the method of distribution, the media
available for market communication, and the motivation of the buyers” (Chisnall 1985).
Segment congruence analysis usually progresses in the following manner:
1. Traditional dimension-reducing techniques such as factor and cluster analysis are used to identify a
number of segmentation bases (batteries of variables).
2. These segmentation bases can then serve as categorical variables and a multidimensional, contingency
table is formed.
3. Various categorical data analysis tests are carried out on the multi-way table to assess the nature and
extent of associations among its dimensions.
4. A segmentation base is identified as the distinguished base and a model is developed for predicting this
base from other (possibly external) variables.
The present paper highlights the definition and major basis of market segmentation. This research paper is
broadly divided in to four parts. First part deals with the steps of market segmentation and its basis. Second
part deals with the benefits of market segmentation. Third part includes the theoretical and empirical
evidences in favor of market segmentation. Fourth and the last part discuss about the conclusion.
2. Steps in Market segmentation
According to Charles W. Lamb and Carl McDaniel (2003,), the first step in segmenting markets is to
“select a market or product category for study”. It may be a market in which the firm has already occupied
a new but related market or product category, or a totally new one. The second step is to “choose a basis or
bases for segmenting the market”. This step requires managerial insight, creativity and market knowledge.
There are no scientific procedures for selecting segmentation variables. However, a successful
segmentation plan must produce market segments which meet the four basic criteria: “substantiality,
identifiably, accessibility, and responsiveness”. The third step is “selecting segmentation descriptors”. After
choosing one or more bases, the marketer must select the segmentation descriptors. Descriptors identify the
specific segmentation variables to use. The fourth one is to “profile and analyze segments”. The analysis
should include the segment’s size, expected growth, purchase frequency, current brand usage, brand
loyalty, and long-term sales and profit potential. This information can then be used to rank potential market
segments by profit opportunity, risk, consistency with organizational task and objectives, and other factors
which are important to the company. The fifth step is to “select target markets”. This step is not a part of
the segmentation process but a natural result of it. It is a major decision that affects and often directly
determines the firm’s marketing mix. The last one is “designing, implementing and maintaining appropriate
marketing mixes”. The marketing mix has been described as product, distribution, promotion and price
strategies which are used to bring about mutually satisfying relationships with target markets.
Roger Best (1990) proposes a framework for implementing a market segmentation strategy. He suggests a
set of sequential steps to be taken in a needs-based segmentation process the primary benefit of needs-
based segmentation is that segments are created around specific customer needs. The goal is to determine
what observable demographics and behaviors differentiate one segment from another in order to make
need-based market segmentation actionable.
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3. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.9, 2011
Key Steps in a Needs-Based Market Segmentation Process.
Steps in Segmentation Process Description
Group customers into segments based on similar
1 Needs-Based Segmentation needs and benefits sought by customer in solving a
particular consumption problem.
For each needs-based segment, determine which
2 Segment Identification demographics, lifestyles, and usage behaviors make
the segment distinct and identifiable.
Using predetermined segment attractiveness criteria,
3 Assess Segment Attractiveness determine the overall attractiveness of each segment.
Determine segment profitability (net marketing
4 Evaluate Segment Profitability contribution).
For each segment, create a "value proposition" and
5 Segment Positioning product-price positioning strategy based on that
segment's unique customer needs and characteristics.
Test the attractiveness of each segment's positioning
6 Segment "Acid Test" strategy.
Expand segment positioning strategy to include all
7 Marketing-Mix Strategy aspects of the marketing mix: product, price,
promotion, place, and people.
Source: Best, Roger J (2004),” Market-Based Management”, 3rd edition.
Market segmentation strategy is an adaptive strategy. It consists of the operation of the market with the
purpose of selecting one or more market segments which the organisation can target through the
development of specific marketing mixes that adapt to particular market need.
2.1 Bases of Market Segmentation Strategy:
Consumer market can be segmented on the following customer’s characteristics:
Geographic
Demographic
Psychographic
Behavioural
Geographic Segmentation:
The following are some example of geographic variables often used for segmentation:
Region: By Continent, Country, State or by neighbourhood also
Size of metropolitan area: Segmented according to population size
Population Density
Climate
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4. European Journal of Business and Management www.iiste.org
ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 3, No.9, 2011
Demographic Segmentation:
Demographic segmentation variables include:
Age
Gender
Family Size
Family Life Cycle
Income
Occupation
Education
Generation
Ethnicity
Nationality
Religion
Social Class
Psychographic Segmentation:
Psychographic segmentation variables include:
Interests
Activities
Opinions
Values
Attitudes
Behavioural Segmentation:
Behavioural Segmentation is based on actual customer behaviour towards products.
Some behavioural variables include:
Benefits Sought
Usage Rate
Brand Loyalty
User Status
Readiness to buy
Occasions
(2004) Craft, Stephen Show in his study that in general, customers are willing to pay a premium for a
product that meets their needs more specifically than does a competing product. Thus marketers who
successfully segment the overall market and adapt their products to the needs of one or more smaller
segments stand to gain in terms of increased profit margins and reduced competitive pressures. Small
businesses, in particular, may find market segmentation to be a key in enabling them to compete with larger
firms. Many management consulting firms offer assistance with market segmentation to small businesses.
But the potential gains offered by market segmentation must be measured against the costs, which—in
addition to the market research required to segment a market may include increased production and
marketing expenses.
Markets and the customers who make up those markets are not homogeneous (Claycamp and Massy, 1968;
Smith, 1956). Wendell Smith (1956) suggested that segmentation, the division of a market into groups of
customers who share certain characteristics or propensities toward a product or service, might be an
effective way for an organization to manage diversity within a market. Since that time, a rich literature has
developed suggesting techniques and bases upon which a single domestic market might be effectively
broken into actionable customer segments.
While there is a large literature which focuses on the criteria that can be used for segmenting a market, far
less attention appears to have been paid to the accompanying requirements for what Kotler (1998) terms
effective segmentation. Thomas (1980) argued that any proposed segmentation should pass four tests,
namely with reference to measurability, accessibility, stability and substantiality. However, there are
differences in the number and types of tests.
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Baker (1996) includes uniqueness as an extra condition defining a "viable market". Kotler et al (1998)
omits stability and uniqueness but includes action ability. Each test is variously described as a requirement
or condition for establishing segment viability. The rationale for each test is re-examined and substantiality
is shown to be unique, requiring a more precise definition The formula - segmentation, targeting,
positioning (STP) - is the essence of strategic marketing." (Kotler1994). Market segmentation is an
adaptive strategy. It consists of the partition of the market with the purpose of selecting one or more market
segments which the organization can target through the development of specific marketing mixes that adapt
to particular market needs. But market segmentation need not be a purely adaptive strategy: The process of
market segmentation can also consist of the selection of those segments for which a firm might be
particularly well suited to serve by having competitive advantages relative to competitors in the segment,
reducing the cost of adaptation in order to gain a niche. This application of market segmentation serves the
purpose of developing competitive scope, which can have a "powerful effect on competitive advantage
because it shapes the configuration of the value chain." (Porter 1985).
According to Porter, the fact that segments differs widely in structural attractiveness and their
requirements for competitive advantage brings about two crucial strategic questions: the determination of
(a) where in an industry to compete and (b) in which segments would focus strategies be sustainable by
building barriers between segments (Porter, 1985).
Through market segmentation the firm can provide higher value to customers by developing a market mix
that addresses the specific needs and concerns of the selected segment. Stated in economic terms, the firm
creates monopolistic or oligopolistic market conditions through the utilization of various curves of demand
for a specific product Category (Ferstman C., & Muller E., 1993). This is an expanded application of the
Microeconomic theory of price discrimination, where the firm seeks to realize the highest price that each
segment is willing to pay. In this case the theory's reliance on price is Segmentation as a process consists of
segment identification, segment selection and the creation of marketing mixes for target segments. The
outcome of the segmentation process should yield "true market segments" which meet three criteria: (a)
Group identity: true segments must be groupings that are homogeneous within segments and heterogeneous
across groups. (b) Systematic behaviors: a true segment must meet the practical requirement of reacting
similarly to a particular marketing mix. (c) The third criteria refer to efficiency potential in terms of
feasibility and cost of reaching a segment (Wilkie, 1990). In addition, Gunter (1992) recommends
considering the stability of market segments over time and different market conditions.
In 1964, in “New criteria for market segmentation”, Daniel Yenkelovich asserted that:
Traditional demographic traits such as age, gender, education level and income, no longer said
enough to serve as a basis of market segmentation.
Non-demographic traits such as values, tastes, and preferences were more likely to influence
consumers’ purchasing than demographic traits.
Sound marketing strategy depended upon identifying segments that were potentially receptive to a
particular brand and product.
Most techniques of market segmentation rely only on descriptive factors pertaining to purchasers and are
not efficient predictors of future buyer behavior. The author proposes an approach whereby market
segments are delineated first on the basis of factors with a causal relationship to future purchase behavior.
The belief underlying this segmentation strategy is that the benefits which people are seeking in consuming
a given product are the basic reasons for the existence of true market segments.
Despite the well-documented benefits which segmentation offers, businesses continue to encounter
implementation difficulties. This raises important concerns about the cause of these problems and how they
might be overcome. This paper states that When planning the approach, it is important to think about
segmentation in three stages: before, during and after. This highlights the questions which should be
addressed at each stage. In particular, it is helpful to maintain an awareness of segmentation success
factors. This research paper tries to the answers of the above stated questions with the help of available
literature related to the segmentation.
3. Benefits of market segmentation:
3.1 Why segment your market?
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Companies must work harder to ensure that their marketing has the greatest impact possible. Increasing
competition makes it difficult for a mass marketing strategy to succeed. Customers are becoming more
diversified and firms are constantly differentiating their products relative to competitors. When the focus is
on segmented markets, the company's marketing can better match the needs of that group. Market
segmentation allows firms to focus their resources more effectively, and with a greater chance of success.
Marketing, product and brand managers are continuously being asked to increase their return on
investment. They are constantly searching for new information about their markets, and new ways to
approach them. This is where market segmentation comes in.
3.2 Divide and Conquer
Market segmentation focuses on that subset of prospects that have the greatest potential of becoming
customers and generating revenue. Companies who segment their markets match their strengths and
offerings to the groups of customers most likely to respond to them.
Differentiate your products and services to meet your customer needs and desires.
Design or redesign new products and services to meet your market needs.
Find hidden needs and make improvements to your existing products.
By selecting and focusing on the most responsive segments to the exclusion of others, marketing
can be created to more effectively fit your consumers. Finding, understanding and focusing on the
needs of your best customers can make you a market leader.
Target your marketing mix to the customers most likely to want your products or services
Identify behaviors and buying motives for your products.
Identify your most and least profitable customers.
Help you avoid unprofitable markets.
Increase brand loyalty and decrease brand switching.
Learning more about your competitors makes you more effective
Improve your competitive positioning to be more accurate and better differentiate you from the
competition.
Reduce competition by competing in a more narrowly defined market and establishing a niche.
Market segmentation is a proven way of improving profitability. By focusing on individualized
sub groups, you're better able to meet their needs and gain higher market share and profits.
Refine your pricing to maximize revenue.
Find markets where you can increase your price.
Optimize your marketing resources and get the most impact for your investment
Focus and match your activities to things you can do effectively and profitably When
segmentation is done right, you get the highest return for your marketing expenditure.
4. Theoretical and empirical evidences in favor of market segmentation:
There are many factors which can be responsible for market segmentation traditional as well as modern or
new. Amandeep singh (2011) reveals in his study that earlier demographic factors were considered as best
basis of segmentation but they are no longer effective for segmentation in FMCG sector. An investigation
of 500 consumer’s purchase routine and their demographic attribute are found non-associated in this study.
This study shows that purchasing of FMCG products specially personal care products is indifferent of age,
educational level. But there is an effect of gender and educated and non-educated consumers on the
purchase routine of personal care products. It means there is a need for developing more effecting
marketing segmentation basis. This study is related to only one industry may not be applicable to others.
But it is rightly proved that demographic which are considered as most effective attribute that influence the
purchase of consumer not powerful enough in today life.
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Victoria K. Wells, Shing Wan Chang, Jorge Oliveira (2010) in their study present an idea that benefit
sought are more powerful basis of brand choice. They also reveal the idea that demographic attributes are
not very effective in case of brand choice and in price selection.
The demographic variables of interest were age, gender, household size, occupation, education and level of
income. Results of this study shows the demographic influence on choice of retail outlet is partial with
household size, education and income having a significant effect on the choice of retail outlet selected. This
study shows that some of the demographical factors like education, income and household size effect the
choice of retail outlet and definitely the choice of brands also (Salma Mirza,2010).
In a different way Rajiv kamineni(2009) present the idea that demographic is now failed to effective
segmentation and only psychographic is not sufficient to segment today’s complex market in which
consumers have a different type of ideology. This study gives an idea about new basis of segmentation that
can be applicable with the help of Enneagram that is an ancient technique of personality indicator. This
technique has a combination of psyche and spirituality of personality. This study gave a different idea about
segmentation which is not in practice but can be proved very useful.
Michel wedel (2002) in his editorial article states that market segmentation has now become a necessity of
marketers. One to one marketing is no feasible because it need great amount of money and efforts that
directly affect the profit of the company. This article put stress on an understanding of the dynamic nature
of preferences and market segment composition is essential for strategies focused on the evolution rather
than the proliferation of products and businesses.
Amandeep singh (2010) in his study highlights the need of using a new theoretical foundation of market
segmentation which will help the FMCG companies to segment the market in competition oriented
marketing to gain fruitful results. This research paper proposes 5 golden rule of market segmentation witch
are as:
1. There are “No Rules”: Getting it right isn’t simple at all. But never copy. Each successful segmentation
process is different, unique, and unrepeatable. The "me too" attitude leads to failure. Originality could
possibly break a market open.
2. “Reducing” a market? Sometimes it’s about expanding it. Some of the most successful marketing plans
have chosen a larger market by “expanding” their segmentation, not only reducing it.
3. The “Value” of the segment: The best segments must have Potential, Lifespan, Accessibility, and
Profitability. The key is identifying which segments provide value in terms of potential, lifespan,
accessibility and profitability; because a sales strategy’s effectiveness increases according to our capacity to
size segments, identify them, and dissect them.
4. It must be “Different”: Each company requires a different Market Segmentation. Being original and
efficient with segmentation is the key to the amount of success achieved. We create new and personalized
ways of segmenting, creating Hybrid models that are easy to interpret and explain (causes, value,
behavioral, psychographic, demographic, and attitudinal) in order to obtain the most useful results from
each sectorial situation and each company.
5. Choosing “The Axes” properly: Time segmentation and spending causes, demographic but with
attitudinal axes, and Psychographic but with a behavioral aspect? Surely there is an answer, but to find it
we must investigate, test, and challenge the market.
Higgs, Bronwyn and Ringer, Allison (2007) in their study discusses about the different segmentation basis
and shows that a number of specialized segmentation approaches are emerged in the changing environment.
The author suggests some of the following specialized method of market segmentation:
Finer and Hyper-segmentation
Progressive Profiling
Addressable marketing method
Finer segmentation defined as a more precise way to segment markets into narrow clusters. Progressive
profiling involves incremental data collection across sessions and interaction points typically online.
Addressable marketing exploits the potential of digital communications devices to gather information about
online behaviors including site visitation, site engagement, and content involvement and advertising
exposure.
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However different basis of market segmentation has their importance in different market but in today’s
competing market only traditional basis as demographic, geographic, psychographic and behavioral are not
enough. Other factors as benefit sought, ethnocentric approach etc. are also playing their role to segment
the consumer market.
Russell I. Haley (1968) proves that most techniques of market segmentation rely only on descriptive factors
pertaining to purchasers and are not efficient predictors of future buyer behavior. The author proposes an
approach whereby market segments are delineated first on the basis of factors with a causal relationship to
future purchase behavior. The belief underlying this segmentation strategy is that the benefits which people
are seeking in consuming a given product are the basic reasons for the existence of true market segments.
5. Challenges to the future research:
Finding and choosing the proper bases for market segmentation is an important marketing research issue.
Many researchers have tried to segment the international market since Liander, Terpstra, Yoshino, and
Sherbini presented the first systematic effort towards a quantitative approach to market selection in 1967.
There are millions of consumers all around the world with different needs and wants (Kotler & Armstrong
2001). It is impossible for companies to design a marketing mix that would suite every consumer’s needs,
that will say that the same product, with the same price, place and promotion technique would appeal to
every consumer. In some cases when the product is universally used and unbranded can mass marketing
work. In other situations it is important for a company to recognize the fact that they can not target their
product and advertising to all consumers. Companies need to make a strategic choice and to identify what
part of the market is best suitable for them and their product. Important criteria’s to be considered are that
there are enough consumers in the segment in order for the company to be able to make profit, the
consumer segments purchasing behavior is suitable and that the competition from other companies is not
too great. (Gunter & Furnham 1992) When dividing the market into smaller homogeneous groups based on
geographic, demographic, psychographic or behavioral factors is called market segmentation (Kotler &
Armstrong 2001, Gunter & Furnham 1992). Consumers with similar characteristics and consuming habits
are divided into segments so that the product mix suites the segment and so that the company efficiency is
stable. It is impossible for a company to target all consumers therefore a company must make a strategic
choice. (Weinstein 1994).
Market segmentation is important in order for a company’s marketing strategy to work properly (Weinstein
1994, Gunter & Furnham 1992). This is because old traditional class patterns no longer exist and
consumers have more income to spend. It is therefore important to divide consumers into segments that are
more manageable and based on the needs of the segment. This also enables the further developing of the
product to the right direction. Targeting all consumers would lead to unnecessary effort to attract
consumers and high advertising expenses. It is necessary for companies to understand the consumer
segment that they are focusing on regarding factors as age, values, purchase behavior, attitudes and so
forth, in order to become successful. (Gunter & Furnham 1992).
Demographic segmentation is one of the most widely used ways of dividing consumers into segments
(Gunter & Furnham 1992, Kotler & Armstrong 2001, Weinstein 1994). In general when speaking about
demographic factors mostly demographic and socio-economic factors are combined together as one. Socio-
economic factors differentiate consumers by economical factors and social classes into segments (Gunter &
Furnham 1992, Weinstein 1994). In demographic segmentation the consumers are divided by their age,
gender, income, education, religion and life-cycle stage into different segments (Gunter & Furnham 1992,
Kotler & Armstrong 2001, Peattie 1995).
Demographic segmentation is commonly used by companies as the factors are easy to identify and
measure. For example it is easy to estimate a person’s age and know what gender the person is. This makes
it easier and less costly for companies to gather information about the consumer. (Gunter & Furnham 1992,
Kotler & Armstrong 2001)
However, relying only on demographic factors has been criticized for being an untrustworthy segmentation
strategy. People with the same demographic factors may differ greatly from each other, base on their
beliefs and attitudes. The research results regarding demographic factors and their influence on consumer
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behavior, especially regarding environmental products, are unclear and not always in correlation.
(Straughan & Roberts 1999)
Another method used to identify and study consumer segmentation is psychographic segmentation.
Psychographics where mainly developed by researchers in the late 1960’s in order to provide a better
picture of what consumers think and believe. In the beginning motivation and personality research was
used but because of small samples and low correlation they did not provide accurate information about
consumer behavior and the segments. In psychographic segmentation values and lifestyles of the consumer
are examined. (Gunter & Furnham 1992) However researcher still debate on what constitutes as
psychographics and what does not (Weinstein 1994). The psychographic factors are more difficult to notice
compared to the demographic factors but usually believed to be a more accurate way of identifying
consumer segments. Psychographic factors are for example social class, political orientation, personality
characteristics, altruism and environmental concern. (Straughan & Roberts 1999) Psychographics have also
been called lifestyle or activity and attitude research. Some researchers use activities, interests and opinions
when others values and trends in order to determine psychographic segmentation. (Weinstein 1994)
Psychographics enables the marketing research to draw a better picture of the consumer segments as
psychographics analyses consumer behaviour, what are the motives of the consumers, and why do they act
as they do? Companies many know who buys their product but not why theses specific consumers buy.
(Weinstein 1994) It is necessary for researchers and companies to better understand how the consumer
think and believe. By combining this information to geographic or demographic information a much better
picture of the segments can be obtained. (Gunter & Furnham 1992, Weinstein 1994)
Understanding how the consumer thinks can also help companies to position or repositioning their products
on the market. Psychographics also help to improve products so that they better suite the needs of the
consumers and that the price is set good on a market. Psychographics can further improve communication
methods as advertising channels when the better understands how the consumer feels. Knowing more of the
consumer can also provide companies information to explore new distribution channels or improving old
ones. (Weinstein 1994).
Now the question arises that what should be the basis of market segmentation. The answer of this question
was given by number of researchers in different context but that is not implemented at all. In conclusion,
we can say that two interesting observations found after review of the existing literature related to market
segmentation, which are as:
1. The selection of basis of market segmentation is completely dependent upon the industry and
product type itself.
2. Critically it can be stated that demographic may prove as good basis for segmentation but
everything is dependent upon the psyche of the consumers.
6 Conclusions:
In the literature there is dominance of demographic and psychographic factors for segmentation but
critically I observe that there is great influence of extraneous variables as price, trends, and market
conditions on the purchase of the consumers.
Furthermore, the strength of link between traditional basis and market segmentation depend critically many
more extraneous variables provided by market and consumer’s conditions; hence, research in this line
would add some value to the literature in the area of segmentation. It is also observed that segmentation is
completely dependent upon all four traditional bases not on single one. This facilitate that there is need of
further research in market segmentation area in different specified areas to find the dominating basis of
market segmentation.
References
Russell I. Haley (1968), “Benefit Segmentation: A Decision-Oriented Research Tool”, Journal of
Marketing, Vol. 32, No. 3, pp. 30-35
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Yankelovich Daniel (1964), “New Criteria for market segmentation”. Harvard Business Review,
March/April.
singh A. (2011), “ Impact of demographical factors on the purchasing behaviour of the customers’ with
special reference to FMCG: An empirical study”, International journal of research in commerce &
management Vol.: 2, No: 3.
Victoria K. Wells, Shing Wan Chang, Jorge Oliveira-Castro & John Pallister (2010), “Market
Segmentation from a Behavioral Perspective”, Journal of Organizational Behavior Management.
Salma Mirza (2010), “The influence of Demographic factors on the choice of retail outlet selected for food
and grocery purchases by urban Pakistanis”
Rajeev Kamineni , “Enneagram: A New Typology for Psychographic Segmentation”
Wedel, M., & Kamakura (2002), “ Introduction to the Special Issue on Market Segmentation”, Intern.
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Singh A. (2010), “Market segmentation in FMCG: time to drive new basis for market segmentation”,
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Higgs; Bronwyn, Ringer and Allison. (2007), “Trends in Consumer Segmentation”, Australia New Zealand
Marketing Academy, Conference paper, 3-5 Dec.
Yankelovich D. (1964), “New criteria for market segmentation”, Harvard business reviews.
Best, R.J.(2004), “Market Based Management: Strategies for Growing Customer Value and Profitability”,
3rd ed. Upper Saddle River, N.J.: Prentice Hall.
Craft, S. (2004a), “The international consumer market segmentation managerial decision making process”,
SAM Advanced Marketing Journal, 69(3), 40–46.
Craft, S. (2004b), “A factor analytic study of international segmentation performance measures”, Journal of
Euro marketing, 13(4), 79–89.
Smith, W. (1956), “Product differentiation and market segmentation as alternative marketing strategies”,
Journal of Marketing, 21, 3–8.
Wedel, M., & Kamakura, W.A. (2000), “Market segmentation: Conceptual and methodological
foundations”, (2nd ed.). Boston, MA: Kluwer Academic Publishers.
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of classification; Vol-19, (179-182).
Weinstein, A. (1998), “Defining your market: Winning strategies for high-tech, industrial, and service
firms”, New York: Haworth Press.
Weinstein, A. (2006), “A strategic framework for defining and segmenting markets. Journal of Strategic
Marketing”, 14(2), 115–127.
Eva K. Foedermayr and Adamantios Diamantopoulos (2008), “Market Segmentation in Practice: Review of
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Marketing, Vol. 16, No. 3, July 2008, 223–265.
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