4.1. market segmentation

1. ][Welcome to
Marketing Strategy
Segmenting, Targeting,
Differentiating, and Positioning
Strategy for Attractive Market

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MARKET SEGMENTATION

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Market A Market Segment
A group of individuals or
organizations (i.e., buyers)
having the willingness and
ability to buy goods and
services to satisfy a class of
want or need
A group of potential
customers in a market
who share similar wants
and needs that are
different from the wants
and needs of consumers
in other segments
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Market Segmentation and Target Marketing
• Most Markets Are Heterogeneous
• Segmentation is important because markets are rarely
homogeneous in benefits wanted, purchase rates, and
price and promotion elasticities, and their response rates
to products and marketing programs differ.
• Variation among market segments in product preferences,
size and growth in demand, media habits, and competitive
structures further affect the differences and response
rates.
• Today’s Market Realities Often Make Segmentation
Imperative
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Why Should Segment Markets And Target
Certain Segments?
• Market segmentation has become increasingly important in the
development of marketing strategies for the following reasons.
•Population growth has slowed, and more product-markets are maturing.
This sparks more intense competition as firms seek growth via gains in
market share as well as in an increase in brand extensions.
•Such social and economic forces as expanding disposable incomes, higher
educational levels, and more awareness of the world have produced
customers with more varied and sophisticated needs, tastes, and lifestyles
than ever before. This has led to an outpouring of goods and services that
compete with one another for the opportunity of satisfying some group of
consumers.
•There is an increasingly important trend toward microsegmentation, in
which extremely small segments are targeted.
•Many marketing organizations have made it easier to implement sharply
focused marketing programs by more sharply targeting their own services.1-5

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Benefits and Drawbacks of Market
Segmentation
Benefits of Market Segmentation:
•It identifies opportunities for new product development.
•It helps in the design of marketing programs that are most effective
for reaching homogeneous groups of customers.
•It improves the strategic allocation of marketing resources.
Drawbacks of Market Segmentation:
•Potential customers who do not fit into the target segment are
missed.
•Marketers may misjudge who their target market is, which could
result in product failure or poor sales.
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Market Segmentation
Traditional Market
Segmentation Approaches
Individualized
Segmentation Approaches
Mass Marketing One-to-One Marketing
Differentiated Marketing Mass Customization
Niche Marketing Permission Marketing
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Criteria for Successful Segmentation
1. Identifiable and Measurable. The characteristics of the segment’s
members must be easily identifiable. This allows the firm to measure
identifying characteristics, including the segment’s size and purchasing
power.
2. Substantial. The segment must be large and profitable enough to make it
worthwhile for the firm. The profit potential must be greater than the costs
involved in creating a marketing program specifically for the segment.
3. Accessible. The segment must be accessible in terms of communication
(advertising, mail, telephone, etc.) and distribution (channels, merchants,
retail outlets, etc.).
4. Responsive. The segment must respond to the firm’s marketing efforts,
including changes to the marketing program over time. The segment must
also respond differently than other segments.
5. Viable and Sustainable. The segment must meet the basic criteria for
exchange, including being ready, willing, and able to conduct business with
the firm. The segment must also be sustainable over time to allow the firm
to effectively develop a marketing strategy for serving the needs of the
segment.

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How Are Market Segments Best Defined?
 Demographic Descriptors
 Geographic Descriptors
 Geodemographic Descriptors
 Behavioural Descriptors
 Innovative Segmentation: A Key to Marketing Breakthroughs

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Defining Market Segments
Customer Segmentation Organizational Markets
Segmentation
Who .. the customers are?
Tools:
Demographic Descriptors
Who?
Tools:
Demographic Descriptors
Where .. they are?
Tools:
Geographic Descriptors
Where?
Tools:
Geographic Descriptors
How they behave?
Tools:
Benefits Sought
Product Usage
Lifestyle/Psychographics
Social Class
How they behave?
Tools:
Benefits Sought
Product Usage
Lifestyle/Psychographics
Social Class
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Identifying Market Segments
Segmenting Consumer
Markets
Segmenting Business
Markets
Behavioral Segmentation Type of Organization.
Demographic Segmentation Organizational Characteristics
Psychographic Segmentation
Benefits Sought or Buying
Processes.
Geographic Segmentation
Personal and Psychological
Characteristics
Relationship Intensity
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 Thank You 
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