Asif Nawaz Afridi

What is Market Segmentation?The process of breaking of buyers into

groups that are different from each other but internally similar

Applicable any marketing situation: Business to business, business to consumer, not-for-profit, politics

Why segment?Starts from the premise that all buyers are

not the same: profit/volume potential, motivations, product uses, needs and desires, etc.

Segmentation allows you to chose which buyers to target and provides important insights as to how to appeal to them.

Significant competitive advantage

Market SegmentationCharacteristicsagegendergeographic locationincomespending patternscultural backgrounddemographicsmarital statuseducationlanguagemobility

Market Segmentation4 commonly used bases for Segmentation

Descriptivegeographic location demographic

Behaviouralpsychographicbenefits

Figure 3.1 Bases for Market SegmentationSlide 3-7

Market Segmentationgeographic location - based upon where people live

(historically a popular way of dividing markets)

demographic - based upon age, gender and income level (very often used)

Market SegmentationPsychographic / lifestyles - based on people’s

opinions, interests, lifestyleseg, people who like hard rock music probably prefer beer to wine

benefits - based on the different expectation that customers have about what a product/service can do for themeg. People who want to but “lite” food cause it will help them lose weight

Geographic Segmentation

The reason why we study geographic segmentation is because WHERE people live has a big effect on their consumption patterns.

Additionally, WHERE people live in a city is also a reflection of their income level and we can make certain assumptions about their ABILITY TO SPEND.

This helps people plan store locations and the location of other services.

Demographic Segmentation

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

• age

• gender (male/female)

• income

• occupation

• education

• household (family - style) size

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

• gender (male/female)gender (male/female)

•gender is an obvious way to divide the market into segments since so many products are gender-specific

• clothing

• medical products

• sports products/services

• entertainment

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

age

• age is another obvious way to divide the market into segments since so many products are based upon “time of life”

• diapers for babies

• toys for children

• entertainment for “over 18”

Demographic Segmentation is the most common approach to Market Segmentation

Variables are:

•household (family - style) size

• Segmenting by the “stages in the family life cycle”

• There are different buying characteristics of people in each stage of the family

•household (family - style) size

BUYING PATTERNS

• 0-5 young children

• 6-19 school children

• 20-34 young adults

• 35-49 younger middle-aged

• 50-64 older middle-aged

• 65+ seniors

• 80+ SUPER seniors

income Segmenting markets on the basis of income and expenditure patterns. Income is possibly the most common basis for segmentation

Upper High ClassHigh ClassUper Middle ClassMiddle ClassLower Middle Class

Toyota • Lexus for high end • Camry for the middle of the roaders • Corolla for low end HUL soaps - Dove for high end, Hamam

Psychographic Segmentation

“The use of psychological attributes, lifestyles and attitudes in determining the behavioral profiles of different customers”

Psychographic Segmentation

Psychographic profiles on a target market segment are obtained by doing a lot of questionnaires and surveys to ask people if they agree/disagree with certain statements made about particular activities, interests or opinions

AIO - activities, interests, and opinions

Behavioural Segmentation

On the basis of occasions, product usage, benefits sought, brand loyalty

Occasions • Y2K Cruises • Hallmark Cards • a greeting card for every occasion - Valentine’s Day Card, Deepavali card

Thank you