Market Segmentation

Market Segmentation

1. Definition

   • Dividing a market into distinct groups of buyers with different needs, characteristics or behaviour who might require separate products or marketing mixes.

2. Benefits of Segmentation

   • Resources
     • Uses Finite Marketing Resources more Effectively
   • Information
     • May highlight Potential gaps in the Market that can be Exploited
   • Customer Needs
     • Highlighting Segments based on Customer Needs allows for them to be Better met

3. Basis For Segmentation

   • Behavioural
     • Benefits Sought, Usage Rate (80:20), Loyalty, Attitude or Ocassions
   • Demographic
     • Age, Gender, Family Size & Life Cycle, Income, Occupation/Education, Race, Nationality or Religion
   • Geographic
     • Nations, Regions, Cities & Neighbourhoods
   • Psychographic
     • Lifestyle & Personality
   • Multivariable
     • Combination of other Variables, E.g, Geodemograpic

4. Criteria for Successful Segmentation

   • Distinctiveness
     • Segments must be Different fromm Eachother. Customers within segment should be Homogenous
   • Measurability
     • Segmenting Variable must be Measurable (E.g, Age) As should the SIze / Purchasing Power of Segment
   • Accessibility
     • Segment can be Reached & Served. Promotional Techniques should be CLear
   • Actionability
     • Company must have the Resources to Exploit the Opportunities in the Segment
   • Profitibility
     • Segments must be Large enough to serve. Technology helps 'Micro-Segments' exist

5. Market Positioning

   • Successfully Positioning
     • Chosen Competitive Advantage / Segment must have: Clarity, Consistency, Credibility & Competitiveness
   • Developing a Strategy
     • Identify Possible Competitive Advantages, Select Appropriate CA then Effectively Communicate Position to Market
   • Perceptual Mapping
     • Identify Competitors, Chosen Attributes & Plot where Consumers view the Company

6. Market Tagetting

   • Customised / Micro-Marketing
     • Customers Have Sufficient Purchasing Power & Unique Characteristics. Discrete Marketing Mix for Individual Customer
     • Technological Advancements Key to Strategy. Common in Industrial Market (Airplane Manufatcuring)
   • Concentrated Marketing
     • Arguably more Efficient as Company Devoted to only One Segment
     • Adopting One Marketing Mix to Target One Segment. Ideal for Companies with Limited Resources
   • Differentiated Marketing
     • Exploits Differences between Segments by Developing Specific Marketing Mixes for Each Segment
     • Can result in a Break-Down in Economies of Scale. Used in Car Industry
   • Undifferentiated Marketing
     • Absence of Segmentation. No pronounced differences in Consumer Characteristics
     • Least Costly as only One Marketing Mix needs to be Developed

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