Market Segmentation

Definition
1. Dividing a market into distinct groups of buyers with different needs, characteristics or behaviour who might require separate products or marketing mixes.
Benefits of Segmentation
1. Resources
  1. Uses Finite Marketing Resources more Effectively
2. Information
  1. May highlight Potential gaps in the Market that can be Exploited
3. Customer Needs
  1. Highlighting Segments based on Customer Needs allows for them to be Better met
Basis For Segmentation
1. Behavioural
  1. Benefits Sought, Usage Rate (80:20), Loyalty, Attitude or Ocassions
2. Demographic
  1. Age, Gender, Family Size & Life Cycle, Income, Occupation/Education, Race, Nationality or Religion
3. Geographic
  1. Nations, Regions, Cities & Neighbourhoods
4. Psychographic
  1. Lifestyle & Personality
5. Multivariable
  1. Combination of other Variables, E.g, Geodemograpic
Criteria for Successful Segmentation
1. Distinctiveness
  1. Segments must be Different fromm Eachother. Customers within segment should be Homogenous
2. Measurability
  1. Segmenting Variable must be Measurable (E.g, Age) As should the SIze / Purchasing Power of Segment
3. Accessibility
  1. Segment can be Reached & Served. Promotional Techniques should be CLear
4. Actionability
  1. Company must have the Resources to Exploit the Opportunities in the Segment
5. Profitibility
  1. Segments must be Large enough to serve. Technology helps 'Micro-Segments' exist
Market Positioning
1. Successfully Positioning
  1. Chosen Competitive Advantage / Segment must have: Clarity, Consistency, Credibility & Competitiveness
2. Developing a Strategy
  1. Identify Possible Competitive Advantages, Select Appropriate CA then Effectively Communicate Position to Market
3. Perceptual Mapping
  1. Identify Competitors, Chosen Attributes & Plot where Consumers view the Company
Market Tagetting
1. Customised / Micro-Marketing
  1. Customers Have Sufficient Purchasing Power & Unique Characteristics. Discrete Marketing Mix for Individual Customer
  2. Technological Advancements Key to Strategy. Common in Industrial Market (Airplane Manufatcuring)
2. Concentrated Marketing
  1. Arguably more Efficient as Company Devoted to only One Segment
  2. Adopting One Marketing Mix to Target One Segment. Ideal for Companies with Limited Resources
3. Differentiated Marketing
  1. Exploits Differences between Segments by Developing Specific Marketing Mixes for Each Segment
  2. Can result in a Break-Down in Economies of Scale. Used in Car Industry
4. Undifferentiated Marketing
  1. Absence of Segmentation. No pronounced differences in Consumer Characteristics
  2. Least Costly as only One Marketing Mix needs to be Developed

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Market Segmentation

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	Created by Ryan Kent almost 7 years ago