MARKETING PRINCIPLES UNIT Market Segmentation What is Market Segmentation? Identifying a target...
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Transcript of MARKETING PRINCIPLES UNIT Market Segmentation What is Market Segmentation? Identifying a target...
What is Market Segmentation?
Identifying a target market by dividing the market into segments according to customer needs and characteristics.
Market segmentation helps marketers sell more efficiently. HOW?
Market Segmentation
The aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action.
Used to identify different market segments: Homogeneity (common needs within segment) Distinction (unique from other groups) Reaction (similar response to market)
Market Segmentation in Detail
Consumer Market Segmentation Demographics Geographics Psychographics Behavioral
Business Market Segmentation Geographics Customer Type Buyer Behavior
Consumer Market Segmentation
Allows an organization to construct market segments for evaluation to help select appropriate target markets.
Consumer Market
Segmentation
Demographics
Geographics
Psychographics Behavioral
Demographic Variables
Characteristics about the consumer: Age:
76 million “Baby Boomers” 1946- 1964 51% of wealth 40 million “Generation X” 1965- 1976 Conservative $ 77 million “Generation Y” 1977- 1997 Computerized
Gender: Male vs. Female Income:
Disposable income: Money after taxes Discretionary income: Money after paying all living costs
Ethnicity: US Population is changing: California 1st state in which
Caucasians are the minority.
Geographic Variables
Statistics about where people live. People who live in the same area usually have similar needs.
Businesses look at four (4) states for Hispanic markets: NY, TX, CA, and FL.
It is said that one-half of the American population will be living in CA, TX, and FL in the near future. Why do you think this would be true or false?
Psychographic Variables
Personalities and LifestylesUsed when segmentation by age and gender
is not sufficient. Involves family criteria. Focuses on attitudes and values.
Behavioral Variables
Breaks down the areas of consumer usage rates and purchasing patterns, price sensitivity, brand loyalty, and benefits sought.
The Circle of Life Marketing
Think about Market Segmentation in this manner:
Can you say Hakuna Matata for Market Segmentation?
Business Market Segmentation
Smaller number of potential customers than Consumer Markets.
More likely to be price driven rather than brand driven. Demand in business markets tends to be more volatile than
consumer markets. Examples: Banks, Airlines, Commercial Foods
Business Market Segmentation
Geographics
Customer Type
Buyer Behavior
Geographic Segmentation
Based on regional variables: Customer Concentration Regional Industrial Growth Rate International Macroeconomic Factors
Customer Type
Depends upon the size of the organization/business, the industry, and position in the value chain. Can an organization provide enough products to reach
low, mid-range, and high-value customers? Does the industry cater to various types of customers? Is there value to the customer for this
product/service?
Buyer Behavior
Customers are affected by the following: Loyalty to suppliers Usage patterns Order size
Questions to Ask
How have values in terms of marketing have changed over the past 10 years?
How has this influenced marketers?
What are some of the changes experienced towards values?
Disadvantages of Market Segmentation
Costs more to differentiate packaging, promotion, etc. to more than one market.
Research and identification is costly.Production costs increase when the product is
changed to meet the needs of more than one market.
Only used when the potential sales will exceed sales from marketing to one larger group.
Risk is involved with smaller, diversified markets.
Market Identification
The process of a marketer in identifying the most profitable areas to offer a new product or service.
Uses market segmentation strategies. Consumer Market Segmentation Business Market Segmentation