Unit 1: MARKETING SEGMENTATION (1) Fda Business

SEGMENTATION Market segmentation is ‘the subdividing of a market into distinct and increasingly homogeneous subgroups of customers, where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix’ (Kotler, 1994) 22/05/2018

SEGMENTATION Marketers need to ‘segment’ their customer base and market to them accordingly, whilst at the same time, taking into consideration their different buying behaviours 22/05/2018

SEGMENTATION CRITERIA Identifiable Measurable Adequate size Accessible 22/05/2018

ADVANTAGES OF MARKET SEGMENTATION Segmentation should bring with it increased benefits to customers/consumers – Q: How? Segmentation enables an organisation to identify those groups which are more likely to buy a given product/service Segmentation should provide greater customer choice across an industry 22/05/2018

TYPES OF SEGMENTATION Geographic Demography Benefits Product usage Multivariable 22/05/2018

GEOGRAPHIC Catchment area analysis Can also consider various cultures, countries and regions Common needs determined by climate, religion, culture in chosen geographic area 22/05/2018

DEMOGRAPHIC The potential level of demand for a product/service within the population UK ‘home’ market now comparable to that of the US, due to the EU Breaks population down into categories according to age; gender; residence similarities to help consider buying behaviours within each 22/05/2018

DEMOGRAPHIC A system to help classify customers demographically is ACORN – looks at similarities between customers regardless of location (geographic) Car ownership; unemployment; purchase of financial services; holidays taken; age profile; life styles 22/05/2018

Exercise 1 - ACORN Have a look at the website www.caci.co.uk – you can register with your email address, wait for your authorisation code then play around with classifications for your own postcode 22/05/2018

BENEFITS Especially useful form of categorisation for fast moving consumer goods (FMCG) Categorises according to perceived benefits customer/end user has Sensory: flavour, appearance of product, feel, sound Sociables: how product helps socially, appearance of self Worriers: how product provides preventative benefits Independent: the price, value for money 22/05/2018

Exercise 2 Complete the table exercise on the benefits classifications for a tube of toothpaste and discuss as a group 22/05/2018

PRODUCT USAGE Classification of how much customers use Heavy user, medium user, light user of a product/service Systems used to help determine usage: Paycheck – income data by post codes People UK – life stage, demographic and lifestyle data InSite – geographic data ACORN – as previous slides Lifestyles UK – lifestyle data on 44+ million UK consumers Monica – age profile data based on christian names, census data and birth registrations 22/05/2018

MULTIVARIABLE USAGE Using 2 or more segmentation criteria at any one time to categorise and identify a target market 22/05/2018

Further research/reading Course book chapter 6 The roles of social status and social class in segmentation The role of the family life cycle in segmentation P390 – P415 Principles of Marketing; Kotler et el (2005) 22/05/2018