Segmentation

Why Segment Markets?

One of the oldest stories about the need for market segmentation comes from the early automobile industry.

Henry Ford developed his Model T, a car he felt would satisfy the needs of everyone.

Ford said, “They can have it in any colour, as long as it’s black.

His strategy was also know as a mass marketing strategy.

In contrast, General Motors began producing different models of cars, each available in different colours, designed to appeal to the preferences of different consumers.

This strategy enabled GM to surpass Ford and become the leading automaker.

In short, most companies segment markets because: people are different and people who are different are likely to have different needs and wants.

Accordingly, smart marketers segment markets so that they can respond more effectively to the specific needs and wants of groups of potential buyers and increase their sales.

Today most marketers believe that:

“Marketing to everyone is marketing to no one.”

Do you agree?

Market Segmentation The marketplace is divided into groups (or segments) that

share certain characteristics.

This means that marketers may concentrate their marketing more specifically on a:

TARGET MARKET:

The specific segment of the general public who are most likely to buy your product/service.

Following are the most common forms of segmentation:

Demographic Age Education Gender Income Household Size / Composition

Segmented by income: housing, clothing, cars & alcoholic beverages.

Target markets for frozen dinners:Michelina: lower-income consumersLeMenu: higher-income consumers

Statistics Canada is a great source of demographic data.

Geographic

Region Urban / suburban / rural City size Climate

Harvey’s serves Quebeckers and Maritimers poutine, not a popular menu item in other parts of Canada.

Psychographic

Personality Lifestyle Interests Values Attitudes

People who enjoy common activities, interests and opinions are grouped together and given a “lifestyle” name.

Such as: Innovators, Esteem Seekers or Traditionalists

Volume

Usage rate Usage status (first-time, regular) Loyalty Status

Heavy users often account for a large portion of a product’s sales.

Kraft ran a $30 million advertising campaign directed at heavy users of Miracle Whip. (A heavy user consumes 550 servings of Miracle Whip a year.)

Market Segmentation

When your target market is identified, then you’ll have an idea of what your key message should be & how to convey it.

TARGET MARKET: