Dr.P.Saradhamani

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

How Segmentation fits with other business activity SegmentationStrategyTactics

Segmentation has great impact on strategy and tactical development Strategy Target Market(s) Offering Strategy Offering Product Line Associated Service Bundle Marketing Tactics Advertising and other communication (message and media) Distribution Channels Pricing Sales force allocation Promotion

Market Segmentation Characteristics age gender geographic location income spending patterns cultural background demographics marital status education language mobility

Market Segmentation 4 commonly used bases for Segmentation Descriptive geographic location demographic Behavioural psychographic benefits

Figure 3.1 Bases for Market Segmentation Slide 3-7

Market Segmentation geographic 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 Segmentation Psychographic / lifestyles - based on people’s opinions, interests, lifestyles eg, 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 them eg. 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 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 0-5young children 6-19 school children 20-34young adults 35-49younger middle-aged 50-64older 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 Class High Class Uper Middle Class Middle Class Lower 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 Wedding Cards Hallmark Cards a greeting card for every occasion - Valentine’s Day Card, Deepavali card

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