International Masters in International Business (IMIB)

School of International Trade & Economics (SITE) Jiangxi University of Finance and Economics (JUFE)

Jiangxi, PR China

E-Commerce Assignment # 4

Explain the micro-marketing segmentation and give specific example of geographic, demographic and

psychographic segmentation.

Submitted To:

Prof. LI Xingwu E-Mail: liyue7511@163.com

Submitted By Mohammad Tawhidur Rahman

Student ID # 31540051 Bangladesh

Date of Submission: 20 October, 2015

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Question # 4 : Explain the micro-marketing segmentation and give specific example of geographic, demographic and psychographic segmentation.

Answer # 4 : Micro-marketing is a marketing strategy in which advertising efforts are focused on a small group of highly-targeted consumers. Micro-marketing requires a company to narrowly define particular consumers by a particular characteristic, such as ZIP code or job title, and tailor campaigns for that particular segment. It can be a more expensive technique due to customization and lack of an economy of scale. The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants or demand characteristics. Few companies are big enough to supply the needs of an entire market; most must breakdown the total demand into segments and choose those that the company is best equipped to handle. Four basic factors that affect market segmentation are-

Clear identification of the segment, Measurability of its effective size, Its accessibility through promotional efforts, and Its appropriateness to the policies and resources of the company.

The four basic market segmentation-strategies are based on-

1. Geographical, 2. Demographic, 3. Psychographic and 4. Behavioral differences.

The goal of market segmentation is to separate the general market into categories, which can then be targeted and marketed to most effectively. There are three general types of market segmentation: 1. Geographic segmentation – This type of market segmentation divides people on the basis of geography. Potential customers will have different needs based on the geography they are located in. For example people who are located in non municipal areas might require a RO water purifier whereas those located in municipal areas might need UV based purifiers. Thus, the need can vary on the basis of geography. Similarly in cold countries, the same company might be marketing for heaters where as in hot countries, the same company might be targeting air conditioners. Thus, many companies use geographic segmentation as a basis for market segmentation. This type of segmentation is the easiest but it was actually used in the last decade where the industries were new and the reach was less. Today, the reach is high but still geographic segmentation principles are used when you are expanding the business in more local areas as well as international territories. 2. Demographic segmentation – It is one of the simplest and widest types of market segmentation used. Most companies use it to get the right population in using their products. Segmentation generally divides a population based on variables. Thus demographic segmentation too has its own variables such as Age, gender, family size,

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income, occupation, religion, race and nationality. To read more, click on this link for demographic segmentation. Demographic segmentation can be seen applied in the automobile market. The automobile market has different price brackets in which automobiles are manufactured. For example- Maruti has the low price bracket and therefore manufactures people driven cars. Audi and BMW have the high price bracket so it targets high end buyers. Thus in this case, the segmentation is being done on the basis on earnings which is a part of demography. Similarly, Age, life cycle stages, gender, income etc can be used for demographic type of market segmentation. 3. Psychographic segmentation– It is one which uses peoples lifestyle, their activities, interests as well as opinions to define a market segment. Psychographic segmentation is quite similar to behavioral segmentation. But psychographic segmentation also takes the psychological aspects of consumer buying behavior into accounts. These psychological aspects may be consumers lifestyle, his social standing as well as his AIO. Do refer more to Activities, interests and opinions. Application of psychographic segmentation can be seen all across nowadays. For example – Zara markets itself on the basis of lifestyle, where customers who want the latest and differential clothing can visit the Zara stores. Similarly Arrow markets itself to the premium office lifestyle where probably your bosses and super bosses shop for the sharp clothing. Thus, this type of segmentation is mainly based on lifestyle or AIO. If you’re a critical thinker like me, you may be wondering about those people who fall in between, or are made up of a combination of, those segments. My experience on Pandora is a great example. Am I the Chevy or Mercedes demographic? Although market segmentation isn’t a perfect science, it will certainly get you closer to understanding your target audience and increasing your marketing return on investment.

-THANK YOU-