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Market SegmentationMarket Segmentation

Selecting Target Selecting Target MarketsMarkets

PositioningPositioning

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What is What is Market Segmentation?Market Segmentation?

A A marketmarket is people or organizations is people or organizations with needs to be satisfied, money to with needs to be satisfied, money to spend and the willingness to spend spend and the willingness to spend it.it.

But buyers of a single product or But buyers of a single product or service differ. This is the logic behind service differ. This is the logic behind market segmentationmarket segmentation..

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Six End-User MarketsSix End-User Markets1.1. The retail or The retail or consumer marketconsumer market

(households, families)(households, families)2.2. The The institutional marketinstitutional market (hospitals, (hospitals,

schools, prisons, day-care centers)schools, prisons, day-care centers)3.3. The The commercial market commercial market (retailers, (retailers,

wholesalers, and business-to-business wholesalers, and business-to-business services) and services) and industrial market industrial market (manufacturers, processors and natural (manufacturers, processors and natural resources)resources)

4.4. The The government marketgovernment market (municipal, (municipal, provincial and federal departments and provincial and federal departments and agencies)agencies)

5.5. The The agribusiness marketagribusiness market (farms) (farms)6.6. The The export marketexport market (other countries) (other countries)

(These may be potential markets for your product)(These may be potential markets for your product)

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Market SegmentationMarket Segmentation

First:First: Inquire about the existence and Inquire about the existence and satisfaction of needs/ wants and satisfaction of needs/ wants and benefits sought in each of the six benefits sought in each of the six potential end-user markets.potential end-user markets.

Second: Second: Look specifically in each Look specifically in each market for detailed characteristics of market for detailed characteristics of buyers in that market.buyers in that market.

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Ways the Consumer MarketWays the Consumer Marketmight be Segmentedmight be Segmented::

DemographicsDemographics (characteristics of (characteristics of buyers)buyers)

Behavior Behavior

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DemographicsDemographics Age groupAge group GenderGender Size of HouseholdSize of Household Marital StatusMarital Status Presence of Presence of

ChildrenChildren Family Life CycleFamily Life Cycle Education LevelEducation Level

OccupationOccupation ReligionReligion Language(s) SpokenLanguage(s) Spoken RaceRace NationalityNationality Geography (region, Geography (region,

urban, rural, urban, rural, climate)climate)

IncomeIncome LifestyleLifestyle

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BehaviorBehavior Benefits SoughtBenefits Sought (for example: for (for example: for

toothpaste-whiter teeth, no cavities, toothpaste-whiter teeth, no cavities, fresher breath)fresher breath)

Usage LevelUsage Level (light, medium, heavy) (light, medium, heavy) User Status/ Patronage LevelUser Status/ Patronage Level (non-user, (non-user,

ex-user, potential user, regular user)ex-user, potential user, regular user) Readiness Level / Intention to PurchaseReadiness Level / Intention to Purchase

(unaware, aware, informed, interested)(unaware, aware, informed, interested) Current OwnershipCurrent Ownership (have none, one, two, (have none, one, two,

types or brands owned)types or brands owned) Loyalty StatusLoyalty Status (brand loyal, store loyal, (brand loyal, store loyal,

“deal” loyal, switcher) “deal” loyal, switcher)

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Bases of Market SegmentationBases of Market Segmentation

The basis of Market Segmentation is to The basis of Market Segmentation is to select the market segment that is select the market segment that is most most meaningfulmeaningful, to better satisfy more people., to better satisfy more people.

Many Many market segments are uniquemarket segments are unique to a to a particular product or market (example: particular product or market (example: Hair color matters to manufacturers of Hair color matters to manufacturers of tinting products or the number of children tinting products or the number of children in a household participating in minor in a household participating in minor hockey matters to summer hockey hockey matters to summer hockey schools).schools).

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Classifying Potential CustomersClassifying Potential Customers

The Key is to find one or more ways The Key is to find one or more ways of of classifying classifying or grouping users or or grouping users or potential users that really matter in potential users that really matter in terms of reaching them and meeting terms of reaching them and meeting (satisfying) their needs.(satisfying) their needs.

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Selecting Target MarketsSelecting Target Markets

The key The key reasonreason to do segmentation to do segmentation analysisanalysis is to identify potential is to identify potential Target Target Markets:Markets:

1.1. Your unique package of benefits as Your unique package of benefits as compared to your direct or indirect compared to your direct or indirect competition.competition.

2.2. The size, location and needs of various The size, location and needs of various buyer groups (segments)buyer groups (segments)

3.3. Your resources and ability to efficiently Your resources and ability to efficiently reach any particular buyer group (segment)reach any particular buyer group (segment)

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Select a Market Segment (group)Select a Market Segment (group)

That is big enough to warrant attentionThat is big enough to warrant attention That is not as satisfied as they want to That is not as satisfied as they want to

bebe That are relatively easy to reach via That are relatively easy to reach via

available channels of distribution and available channels of distribution and advertisingadvertising

These groups are your Target Markets These groups are your Target Markets (each target market is unique and (each target market is unique and defines who, when and where of a defines who, when and where of a marketing strategy)marketing strategy)

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PositioningPositioning

Positioning offers some Positioning offers some advantage advantage over the competitionover the competition in a way that in a way that matters to a particular target market.matters to a particular target market.

Entrepreneurs must design a Entrepreneurs must design a package of benefits- package of benefits- product, price, product, price, place, promotionplace, promotion that offers an that offers an advantage over the competition.advantage over the competition.

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Positioning Questions:Positioning Questions: Does your toothpaste reduce cavities better Does your toothpaste reduce cavities better

than other brands?than other brands? Is your accounting software package fully Is your accounting software package fully

compatible with the leading data base compatible with the leading data base software?software?

Is your ice cream really richer or more Is your ice cream really richer or more flavorful?flavorful?

Can your product be on any customer’s Can your product be on any customer’s doorstep in 24 hours?doorstep in 24 hours?

Do you offer unique sizes?Do you offer unique sizes? Is the image or personality of your store or Is the image or personality of your store or

product appealing to a large group of buyers?product appealing to a large group of buyers?

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How are You How are You BetterBetter??

The The market positioningmarket positioning for any product , for any product , service or store is how you wish o be seen service or store is how you wish o be seen in the eyes of members of your target in the eyes of members of your target markets compared to other products, markets compared to other products, services or stores.services or stores.

Your Your market positioningmarket positioning statement should statement should catch your buyer’s attention and indicate catch your buyer’s attention and indicate how you are how you are different different from and from and betterbetter than than available alternatives!available alternatives!

Advertising Slogans often reveal market Advertising Slogans often reveal market positions.positions.