1. Market Segmentation This Lecture has been adapted by:
MAXWELL, C. (2014) Marketing – Segmentation. England: South and City College Birmingham.

2. Aim of Today’s Lecture
To introduce the concept of segmentation and how companies target their products and services to different / or all segments of the market.

3. Objectives of Today’s Lecture are:
Explain the concept of segmentation in reference to how companies target their market when selling products/services.
Explain the concept of segmentation with reference to social class / socio economic grouping.

4. What is Segmentation?
Segmentation is about breaking up a larger market in to small, more manageable chunks

5. Definition of Segmentation
Dividing a market into distinct groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes.
(Kotler et al 2001)

6. Market Segmentation
Segmentation is simply the process of dividing a particular market into sections, which display similar characteristics or behaviour.
There are a number of segmentation variables that allow an organisation to divide their market into homogenous groups.

7. Types of Segmentation Psychographic Geographic Demographic
Socio-economic

8. Psychographic Segmentation
This type of segmentation classifies people according to their values, opinions, personality characteristics and interests.
Lifestyle segmentation deals with person instead of a product, and attempts to find out the lifestyle patterns shared by groups of customers.
This can enable a organisation a insight into their preferences for various products and services. Marketing Managers can target products and promotion at particular lifestyle groups.

9. Geographic Segmentation
An area can be divided by the:
Town
the region or the country
If an organisation is working on a global scale they may divide by global regions such as Europe, North America, South America, Asia and Africa.

10. Demographic Segmentation
Age Businesses often target certain age groups. Good examples are toothpaste – look at the variety of toothpaste products for children and adults) and toys (e.g. pre-school, 5-9, 10-12, teen, family)
Gender We all know that males and females demand different types of the same product. Great examples include the clothing, hairdressing, magazine, toiletries and cosmetics markets
Income Many companies target rich consumers with luxury goods (e.g. Lexus, Bang & Olufsen). Other businesses focus on products that appeal directly to consumers on low incomes (e.g. Aldi and Lidl (discounted groceries) and fast-fashion retailers such as TK Maxx)
Social class Many businesses believe that a consumers "perceived" social class influences their preferences for cars, clothes, home furnishings, leisure activities and other products & services

11. D Semi-skilled and unskilled workers E Those dependent on the state.
Social Class Segmentation Divides society into  6 distinct groups based solely on occupation
A    Professional staff
B    Middle management
C1   Junior management
C2   Skilled manual
D     Semi-skilled and unskilled
workers
E     Those dependent on the state.

12. Why Segment the Market? Better matching of customer needs
Customer needs differ. Creating separate products for each segment makes sense and provides customers with a better solution
Better opportunities for growth
Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being introduced to a particular product with an introductory, lower-priced product

13. Cont More effective promotion
By segmenting markets, target customers can be reached more often and at lower cost
Gain a higher share of the market
Through careful segmentation and targeting, businesses can often become the market leader, even if the market is small

14. Segments - holidays Long-haul adventure Summer Sun Cruises for Seniors
Family
Summer
Sun
Family Summer Sun
Cruises for
Seniors UK
Short
Breaks

15. 21/04/2017

16. Limits of Segmentation
Lack of information and data: some markets are poorly researched with little information about what customers want
Difficulty in measuring and predicting consumer behavior: humans don’t all behave in the same way all of the time.
Hard to reach customer segments once identified: it is one thing spotting a segment; it is another reaching target customers with an effective marketing message

17. Requirements of Segmentation
Before an organisation can target a specific segment accurately, it must ask itself a number of questions.
It is important to evaluate the effectiveness of a targeting strategy and the viability of the segment, if this is not done then money will be wasted.

18. The market which is segmented must meet the following criteria:
Measurability of segment:
Can you measure the size and growth of the segment?
Is the segment growing?

19. Cont Accessibility of segment:
Is it easy for you to target and reach your segment?
Can they be reached with basic communication tools such as radio and TV advertising?

20. Cont Suitability of segment:
Is there enough spending power within the segment for the company to sustain itself?
Actionability of segment:
Does the organisation have enough resources to reach their segments?

21. Reasons for choice of target group
Once a business has identified the specific market segment to target, the business needs to consider the following before choosing to market tot he segment.
1. Will the identified segment be accessible? The business must ensure that by having selected a market segment, it can reach the potential customers through effective marketing communication.
2. Will the business be able to service this segment? E.g. A supermarket might identify a market for organic product produced within 30 miles of the store, but it will not be able to service this segment as their is no organic farm in the area.

22. 3. What are the current and future prospects for this segment
3. What are the current and future prospects for this segment? The business must calculate whether the segment to be targeted will provide a good return on the investment.
4. How profitable will this market segment be? It would be pointless targeting the segment with the product or service if the cost of production and distribution were so high.
5. Does the segment fit in with the mission statement of the business? The values of the business are an important consideration.

23. Summary
By answering the above five questions, the business will find the choice of which specific market segment to target easier. E.g. If a business is marketing fancy wheels for sports cars, the target market probably exclude anyone under the age of 17, once the business has narrowed down who they think their specific market segment might be, it is time for them to test the theory.