The document discusses market segmentation, which is dividing the overall market into smaller subgroups. This allows companies to target specific segments more effectively, as it would be too costly to market to the entire world. The document provides an example of segmenting the market for bird feeders by geography (targeting a specific area), age (those over 30), economic life cycle (homeowners), and family life cycle (empty nesters/no kids). This segmentation approach helps companies identify the most relevant buyer groups to focus their marketing efforts on.

1. Segmenting the Market

2. Market Segmentation
What Does it Mean?
the world becomes your market … but the cost to market to the
world would be prohibitive
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3. Market Segmentation
What Does it Mean?
That is why marketers will segment the market – or in other words,
divide the market in smaller groups (segments)
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4. Market Segmentation Example
Opening a retail operation in the Far West End
to sell bird feeders
We have just made a “geographic” segmentation by
dividing the consumer market into a geographical area

5. Market Segmentation Example
But the market is still too big to pick up a good ROI
So let’s divide the market again by age
We are going to make the assumption that consumers
over the age of 30 are more apt to buy birdfeeders. So
we will segment the Far West End market by age.

6. Market Segmentation Example
So let’s look at what we have …
We have segmented the consumer market by geographical
location and by age. That narrowed our market down from
a global market to more defined market.

7. Market Segmentation Example
But we can probably do another segmentation to really
find our buyer … this time by economic life cycle
This segmentation will be those consumers who own a
home and who are over the age of 30 and reside in the Far
West End.

8. Market Segmentation Example
Let’s try another segmentation …
We are going to segment our market further by home
owners who are empty nesters or couples without children.
This is a family-life segmentation

9. Market Segmentation Example
So let’s look at what we have … we have segmented
the consumer market into these aggregate segments …
• living in Richmond Far West End (geographic)
consumers who are over the age of 30 (age)
consumers who are homeowners (economic life-cycle)
consumers who are empty-nesters or with no kids
This becomes the market that you will target your product
offering – bird feeders and other bird-loving supplies

10. Why Market Segmentation
To divide the market into smaller segments where marketers can
test new products, price discounts, promotional media, and
distribution outlets.

11. Types of Market Segmentation
The most common method of segmentation is the use of “physical
descriptors” as illustrated below:
Geographic location Occupation
Age Economic position
Gender Family life cycle
Race/Ethnic Origin Income
Education And more

12. Business-to-Business Segmentation
In B-to-B, marketers and sales managers will segment the
business market using similar descriptors:
Geographic location Application of Product
Company Size Organization Structure
SIC Category And More
These segmentation descriptors (for both consumer and
business) can be easily purchased or obtained from census
data and other data collection agencies.

13. Segmenting the Market
In summary, segmentation allows business owners to narrow
their market to maximize overall sales by developing new
products, pricing, media promotion and distribution outlets.