1. Unit 1: MARKETING
SEGMENTATION (1)
Fda Business

2. 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)
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3. 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
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4. SEGMENTATION CRITERIA
Identifiable
Measurable
Adequate size
Accessible
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5. 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
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6. TYPES OF SEGMENTATION Geographic Demography Benefits Product usage
Multivariable
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7. GEOGRAPHIC Catchment area analysis
Can also consider various cultures, countries and regions
Common needs determined by climate, religion, culture in chosen geographic area
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8. 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
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9. 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
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10. Exercise 1 - ACORN
Have a look at the website – you can register with your address, wait for your authorisation code then play around with classifications for your own postcode
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11. 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
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12. Exercise 2
Complete the table exercise on the benefits classifications for a tube of toothpaste and discuss as a group
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13. 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
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14. MULTIVARIABLE USAGE
Using 2 or more segmentation criteria at any one time to categorise and identify a target market
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15. 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)
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