Market Segmentation

Raymund Sanchez

Content of the Lesson

Definition of segmentation Purpose of segmentation Types of segmentation Segmentation process Levels of segmentation

Definition
A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.
it is distinct from other segments (heterogeneity across segments) it is homogeneous within the segment (exhibits common attributes) it responds similarly to a market stimuli it can be reached by a market intervention

Measurable Accessible Substantial Differential Actionable

Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served.

Segments must be large or profitable enough to serve.

Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Purpose
Increase marketing efficiency by focusing marketing efforts to a particular group Maximize scarce marketing resources Find a market with limited competition Select the most profitable segment

Segmentation Criteria
Geographic variables
region of the world or country, East, West, South, North, Central, coastal, hilly, etc. country size/country size : Metropolitan Cities, small cities, towns. Density of Area Urban, Semi-urban, Rural. climate Hot, Cold, Humid, Rainy.

Segmentation Criteria
Geographic
Nations, states, regions or cities

Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioral
Occasions, benefits, uses, or responses

Demographic Criteria
Demographic variables
age gender sexual orientation family size family life cycle education income occupation education socioeconomic status religion nationality/race language

Psychographic Criteria
Psychographic variables
personality life style value attitude

Behavioral Criteria
Behavioral variables
benefit sought product usage rate brand loyalty product end use readiness-to-buy stage decision making unit profitability income status

Market Segmentation Process

1. Determine the characteristics of segments in the target market & separate these segments in the market based on these characteristics. 2. Verify the market segments size if adequate enough to support the organization's product. 3. Develop a marketing strategy to target this market.

Market Segmentation Process

6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Measures of Segment Attractiveness

Market Positioning Market Targeting

2. Develop Profiles of Resulting Segments

1. Identify Bases for Segmenting the Market

Market Segmentation

Levels of Segmentation
Mass Marketing Same product to all consumers (no segmentation)

Segment Marketing Different products to one or more segments (some segmentation)

Niche Marketing Different products to subgroups within segments ( more segmentation) Micromarketing Products to suit the tastes of individuals or locations (complete segmentation)