Market Segmentation Chapter 9

Market Segmentation What is it? What is it? Segments should Segments should Have common needs Have common needs Respond similarly to a marketing action Respond similarly to a marketing action Product differentiation Product differentiation Market-product grid Market-product grid

Types of Segmentation Market segmentation Market segmentation One product, multiple market segments One product, multiple market segments Costs Costs Multiple products, multiple market segments Multiple products, multiple market segments When to use When to use One segment One segment Mass customization Mass customization Build-to-order Build-to-order CRM v. Synergies CRM v. Synergies

Potential Buyers into Segments All market segments should demonstrate: All market segments should demonstrate: Potential for increased profit and ROI Potential for increased profit and ROI Similarity of needs within segment Similarity of needs within segment Differences of needs between segments Differences of needs between segments Feasibility of marketing action to segment Feasibility of marketing action to segment Simplicity and cost of assigning buyers to segment Simplicity and cost of assigning buyers to segment

Potential Buyers into Segments Ways to Divide the Market Ways to Divide the Market Region Region Age/ household size Age/ household size Lifestyle Lifestyle Benefits sought Benefits sought Usage rate Usage rate 80/20 rule 80/20 rule

Organizational Segmentation Location Location NAICS code NAICS code Number of employees Number of employees Benefits sought Benefits sought

Next Steps Form products to be sold in groups Form products to be sold in groups Develop a market-product grid and estimate market size Develop a market-product grid and estimate market size Select target markets based on Select target markets based on Market size Market size Expected growth Expected growth Competitive position Competitive position Cost of reaching the segment Cost of reaching the segment Compatibility with organization’s objectives and resources Compatibility with organization’s objectives and resources

Analyzing Segments Cross-Tabulations Cross-Tabulations Finding relationships between variables Finding relationships between variables Product Positioning Product Positioning Perceptual map Perceptual map Repositioning Repositioning