Introduction to Market Segmentation

Market Market SegmentationSegmentationRaymund SanchezRaymund Sanchez

Content of the LessonContent of the Lesson

Definition of segmentationDefinition of segmentation Purpose of segmentationPurpose of segmentation Types of segmentationTypes of segmentation Segmentation processSegmentation process Levels of segmentationLevels of segmentation

DefinitionDefinition

A A market segmentmarket segment is a subgroup of people or is a subgroup of people or organizations sharing one or more organizations sharing one or more characteristics that cause them to have similar characteristics that cause them to have similar product needs. product needs. it is distinct from other segments (heterogeneity it is distinct from other segments (heterogeneity

across segments)across segments) it is homogeneous within the segment (exhibits it is homogeneous within the segment (exhibits

common attributes)common attributes) it responds similarly to a market stimuliit responds similarly to a market stimuli it can be reached by a market interventionit can be reached by a market intervention

• 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.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & actions.

• Must be able to attract and serve the segments.

PurposePurpose

Increase marketing Increase marketing efficiency by focusing efficiency by focusing marketing efforts to a marketing efforts to a particular groupparticular group

Maximize scarce Maximize scarce marketing resourcesmarketing resources

Find a market with Find a market with limited competitionlimited competition

Select the most Select the most profitable segmentprofitable segment

Segmentation CriteriaSegmentation Criteria

GeographicGeographic variables variables regionregion of the world or country, East, West, of the world or country, East, West,

South, North, Central, coastal, hilly, etc. South, North, Central, coastal, hilly, etc. countrycountry size/country size : Metropolitan size/country size : Metropolitan

Cities, small cities, towns. Cities, small cities, towns. Density of AreaDensity of Area Urban, Semi-urban, Rural. Urban, Semi-urban, Rural. climateclimate Hot, Cold, Humid, Rainy. Hot, Cold, Humid, Rainy.

Geographic

DemographicAge, gender, family size and life cycle, or income

PsychographicSocial class, lifestyle, or personality

BehavioralOccasions, benefits, uses, or responses

Nations, states, regions or cities

Segmentation CriteriaSegmentation Criteria

Demographic CriteriaDemographic Criteria

DemographicDemographic variables variables ageage gendergender sexual orientationsexual orientation familyfamily size size family life cycle family life cycle educationeducation incomeincome occupationoccupation educationeducation socioeconomicsocioeconomic status status religionreligion nationalitynationality//racerace languagelanguage

Psychographic CriteriaPsychographic Criteria

PsychographicPsychographic variables variables personalitypersonality life stylelife style valuevalue attitudeattitude

Behavioral CriteriaBehavioral Criteria

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

Market Segmentation Market Segmentation ProcessProcess

1.1. Determine the characteristics of segments in Determine the characteristics of segments in the target market & separate these segments the target market & separate these segments in the market based on these characteristics. in the market based on these characteristics.

2.2. Verify the market segments size if adequate Verify the market segments size if adequate enough to support the organization's product. enough to support the organization's product.

3.3. Develop a marketing strategy to target this Develop a marketing strategy to target this market. market.

1. Identify Basesfor Segmenting the Market

2. Develop Profilesof Resulting Segments

3. Develop Measuresof Segment Attractiveness

4. Select TargetSegment(s)

5. Develop Positioningfor Each Target Segment

6. Develop MarketingMix for Each Target Segment Market

Positioning

MarketTargeting

Market Segmentation

Market Segmentation Market Segmentation ProcessProcess

Mass MarketingSame product to all consumers

(no segmentation)

Mass MarketingSame product to all consumers

(no segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

Segment MarketingDifferent products to one or more segments

(some segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

MicromarketingProducts to suit the tastes of individuals or locations

(complete segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Niche MarketingDifferent products to subgroups within segments

( more segmentation)

Levels of SegmentationLevels of Segmentation