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Definition
Segmentation: Aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
Although not all these consumers are completely alike, they share relatively similar needs and wants Marketing action: involves efforts, resources, and decisions--product, distribution, promotion, and price
Markets consist of buyers, and buyers differ in one or more respects, including...
Wants Resources Buying attitudes Buying practices Geographical locations
Segmentation Variables
There is no single way to segment a market. A marketer has to try different segmentation variables, singly and in combination.
Geographics Demographics Psychographics Purchase Behavior Category Networking
No market Segmentation
a a a
b b
Complete Segmentation
1 1 1 3 2 2
Market Segmentation by Income Classes 1, 2, and 3
1a 2b 1b 3a 3b
Multi-dimensional Market Segmentation By income-age class
Sweetness
Creaminess
Sweetness
Sweetness
Homogeneous Preferences
Diffused Preferences
Cluster Preferences
Geography
Region of the world Country Region of the country State City
Demography
age gender family size occupation
education
ethnicity nationality
Psychographics
social class lifestyle personality
Behavior
purchase occasions benefits sought user status usage rate loyalty status readiness stage
Purchase Behavior
Buyers are divided into groups on the basis of their knowledge, attitude, use or response to a product.
Use occasion Regular occasion, special occasion Benefits sought Quality, service, economy User status Nonuser, ex-user, potential user, first-time, regular user Loyalty status None, medium, strong, absolute Readiness stage Unaware, aware, informed, interested, desirous, buyer Attitude toward product Enthusiastic, positive, indifferent, negative, hostile
Basic Level
Soft Drink
Subordinate Level
All natural soft drink Diet Cola Orange juice High preservative fruit juice
SUPERORDINATE LEVEL
Network Category
BEVERAGE
Liquid Thirst quenching Good with Food
B A S I C
carbonated
cold SOFT DRINK
cola
fruit
nutritious
SOFT DRINK cold
slightly sweet
All Natural Soft Drink unusual healthy
Preservatives
slightly sweet
all natural
Orange Juice Fruit Juice w/ Preservatives breakfast artificial taste unhealthy stores well
SUBORDINATE LEVEL
Benefit Segments
Economy (low price) Medicinal (prevent decay) Cosmetic (bright teeth) Taste (good Tasting)
Brand
Network
Men Heavy users High autonomy value oriented Hypochondriac, conservatives High sociability, active High selfinvolvement, hedonistic Sale Brands Crest
Heavy users
Smokers
Spearmint lovers
Demography
industry company size location
Operating variables
customer technologies usage rate user status customer service requirements
Purchasing approaches
centralized vs. decentralized purchasing current vs. potential customers purchasing criteria
Situational factors
urgency of need application of product size of order
Measurability The degree to which the size and purchasing power of the segments can be measured. Some segments are hard to measure. (Teen smokers who are rebelling) Accessibility The degree to which the segments can be effectively reached and served. (Perfume and single women who frequent bars late at night.) Substantiality The degree to which the segments are large, homogenous, and/or profitable enough. (Cars for people who are 4 feet tall) Actionability The degree to which effective programs can be formulated for attracting and serving the segments. (Airlines with small staff serving seven segments.)
Segments--Examples (1)
Air Travel
Business/Executive: Inflexible; relatively price insensitive (Small number of people, but travel often) Leisure Traveler/Student: Relatively flexible; very price sensitive (other methods of travel--e.g., bus, car, train--are feasible; travel may not be essential) (Very large segment) Comfort Travelers: Comfort (e.g., space, food) important; willing to pay (Small segment)
Examples (2)
SEGMENTATION FOR COSMETICS
Over the last decade, women have become more confident and the negatives attached to a well-dressed woman are on the wane. People have accepted color cosmetics as an essential part of daily grooming.
The color cosmetics market can be broadly divided into two segments: * Organized sector dominating 36%of the market. * Unorganized sector catering to 64% of the market
The segments that are targeted are as follows: * Age Youth segment (15 - 24yrs): Elle 18 Core target (24+): Lakme Radiance * Purchasing power Affluent segment: Aviance, Orchids Middle segment: Lakme Radiance Lower segment: Lakme does not exactly cater to the lower segment but the Elle-18 range it offers is low-priced and hence can satisfy this end of the market also.