© 2004 Mark H. Hansen Market Segmentation

2 The segmentation challenge: dividing the market into homogeneous sub-groups deciding which dimensions should be used as the base of the segmentation

Market Segmentation 3 The motivation to segment: reduce the market acceptance risk for the product increase marketing efficiency direct marketing efforts at those who are more likely to accept the product

Market Segmentation 4 General Segmentation Strategies Concentration Strategy serve one segment Multisegment Strategy serve more than one segment

Market Segmentation 5 Bases of Segmentation Geographic Demographic Usage Psychological

Market Segmentation 6 Organizational Market Segmentation Type of Customer SIC Code End Use Common Buying Factors Buyer Size and Geography

Market Segmentation 7 Effectively Segmenting the Market Single-base vs. Multi-base Art or Science? How would you decide?

Market Segmentation 8 Effective Segmentation Five Criteria: 1 – clear identification 2 - needs 3 – effective demand 4 – economic accessibility 5 – positive response

Market Segmentation 9 The Process of Market Segmentation 1 – identify relevant purchase-decision variables 2 – collect and analyze data to identify potential segments 3 – apply the criteria of a good segment 4 – select one or more segments 5 – develop a plan to reach the desired segment(s)

Market Segmentation 10 The Big Picture Segmentation should allow the marketer to present the product to a market that is ready to buy avoid marketing to customers that are unlikely to buy