What is Market

Segmentation ?
Aggregating prospective buyers into groups that:
Share a problem
Are similar in terms of demographics, geography, or
psychographics (attitudes and beliefs)
Respond similarly to market forces

What is a Target Market ?

One or more groups toward which a firm focuses its
marketing efforts?
McDonalds
Everyone price conscious, convenience
Happy Meals for kids
Salads for moms

Angus burgers for men

Why Segment the Market?

One size fits all (mass) markets are ineffective
They may please no one
Theyre expensive to serve
Fail to match customer desires with firm competencies

How to Segment the Market.

Identify market needs
Features/ benefits
Price
Options
Form

Pain Reliever Example

Relief from headache,
arthritis, cold, etc
Branded, generic
Large bottle, small bottle
Capsules, pills, liquid,
powder

Tylenol chooses to some segments

to target and develops a product
aimed at each target market

How to Segment Market

Form Segments
Substantial the size and purchasing power of the
segment must have potential for profit

Accessible the segment can be effectively reached

and served (ie. They read the same magazine or
frequent the same stores, etc.)
Actionable programs can effectively be developed to
reach the segment

Segmentation Variables
Demographics
Age cruises focus on seniors
Gender women watching sports
Income bottom of the pyramid
Ethnicity - grocery stores carry more Hispanic foods
Education, life cycle, religion, family size

Segmentation Variables
Geographic
Country
Region NE, SW,
Population density
Climate
Rural versus Urban
MSA

Segmentation Variables
Psychographic
Social class middle class striving
Lifestyle achievers
Personality - introverted

Segmentation Variables
Behavioral
Loyalty
Attitude toward Brand
Usage occasion
Usage rate 80/20
Readiness stage

Targeting Options
Mass market 1 product to all segments
1 product to multiple segments (book translations, split
runs)
Multiple products to multiple segments (Coke, P& G)
Mass customization individualized products (Mac
computers, Sabre)

How Can This Help You

Succeed?
Products targeted at a specific segment are likely
more valuable to that segment
Promotions aimed at a segment convert at higher
rates
Results in better allocation of firm resources

More questions?
Check out other videos in this series
http://www.MarketingThatWorks.TV