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  1. 1. Market Segmentation Chapter 6
  2. 2. Market Segmentation <ul><li>What is it? </li></ul><ul><ul><li>It is where a company begins to breakdown the target market by specific demographics to find out what customers could be attracted to purchase their product or service </li></ul></ul>
  3. 3. Mass Marketing <ul><li>Where a company markets their product to appeal to a “broad group” of customers </li></ul><ul><ul><li>i.e. one color car for an entire market group </li></ul></ul><ul><ul><li>How would this pertain to advertising a product or service by a hospital? Why or why not </li></ul></ul><ul><li>What is the underlying theme of mass marketing? </li></ul>
  4. 4. Market Segmentation <ul><li>The process of grouping the target market into various demographics to understand how needs or buying behaviors </li></ul><ul><ul><li>Tailoring one or more elements of the marketing mix (4p’s) to gain attractiveness in the market </li></ul></ul><ul><li>Market Segmentation can be defined in two categories: </li></ul><ul><ul><li>Concentration & Multisegment Strategies </li></ul></ul>
  5. 5. Concentration Strategy <ul><li>Concentration Strategy: Where a company heavily or solely targets one market segment </li></ul><ul><ul><li>Attempts to solidify its position in the market place </li></ul></ul><ul><ul><li>Advantages: Smaller businesses can target groups that may not be attractive to larger groups </li></ul></ul><ul><ul><li>Disadvantages: Other competitors may be attracted to the same target market and pull market share away. </li></ul></ul><ul><ul><ul><li>No spread of risk in this strategy </li></ul></ul></ul>
  6. 6. Niche Strategy <ul><li>This is like the concentration strategy however the population or target market is very small with a highly defined set of needs </li></ul><ul><ul><li>i.e. Cardiovascular patients, Stroke patients etc. </li></ul></ul><ul><ul><ul><li>Usually this market has specialized products geared to their needs only </li></ul></ul></ul><ul><ul><ul><ul><li>This narrows the segment almost to the core </li></ul></ul></ul></ul>
  7. 7. Multisegment Strategy <ul><li>Where an organization can market to several different demographics within the market </li></ul><ul><ul><li>Product Differentiation: Where a company alters one or more elements in the marketing mix to satisfy more than one need from the market </li></ul></ul><ul><ul><ul><li>i.e. Taking the same product and varying the price, advertising structure to meet the needs of more than one market </li></ul></ul></ul>
  8. 8. Multisegment Strategy <ul><li>A second option of Product Differentiation: </li></ul><ul><ul><li>Taking more than one product and offering it to more than one market segment at the same time </li></ul></ul>
  9. 9. Bases for Segmentation <ul><li>Sociodemographic – </li></ul><ul><li>Geographic </li></ul><ul><li>Psychographic </li></ul><ul><li>Usage </li></ul>
  10. 10. Bases for Segmentation <ul><li>Sociodemographic – </li></ul><ul><ul><li>Includes Age, Gender and Ethnicity </li></ul></ul><ul><li>Geographic </li></ul><ul><ul><li>Segmenting the market by geography </li></ul></ul><ul><li>Psychographic </li></ul><ul><ul><li>Lifestyles and social class </li></ul></ul><ul><li>Usage </li></ul><ul><ul><li>Based on usage and product purchases </li></ul></ul>
  11. 11. Segmentation – Business Markets <ul><li>Size of the company </li></ul><ul><ul><li>The size of the company can determine pricing, variables of the product and its offerings </li></ul></ul><ul><li>Industry type </li></ul><ul><ul><li>What type of businesses are out there to market to by size, staffing genders, age… </li></ul></ul><ul><li>Customer location </li></ul><ul><ul><li>Where the customers are located </li></ul></ul><ul><ul><ul><li>Primary and secondary service areas </li></ul></ul></ul>
  12. 12. Segmentation – Business Markets <ul><li>Operating Variables </li></ul><ul><ul><li>Technology </li></ul></ul><ul><ul><ul><li>Those who can take advantage of this usually do better in the market both company and consumer </li></ul></ul></ul><ul><ul><li>Product Use </li></ul></ul><ul><ul><ul><li>Companies that use similar products generally have other similarities </li></ul></ul></ul><ul><ul><li>Customer Capabilities </li></ul></ul><ul><ul><ul><li>This depends on where companies are positioned, staffed or lack thereof causing suppliers to market to these areas </li></ul></ul></ul>
  13. 13. Segmentation Summary <ul><li>It can be said that by companies that can provide detailed segmentation data can analyze purchasing trends and market products and service to specific demographics. By doing this they create an edge and can stabilize themselves in the market </li></ul>