Market Segmentation
• A Market is composed of individuals or
organizations with the ability and willingness to
make purchases to fulfill their needs or wants.
• A Market Segment is a subdivision or part of an
overall market with specific and distinctive
characteristics.
• Opposite to the Mass Marketing where
marketing activities are directed to the entire
market
• Market Segmentation involves grouping various
customer into segments that have common needs
or will respond similarly to a marketing action
• Segmentation involves finding out what kinds of
consumers with different need exists.
Segmentation, targeting and Positioning
3 Approaches to Marketing
Undifferentiated strategy, all consumers are treated
as the same, with firms not making any specific efforts
to satisfy particular groups. Usually, this is the case
only for commodities
Concentrated strategy, one firm chooses to focus on
one of several segments that exist while leaving other
segments to competitors.
Differentiated strategy: They offer high priced
tickets to those who are inflexible in that they cannot
tell in advance when they need to fly and find it
impractical to stay over a Saturday.
Market Segmentation
Market Segmentation tries to quantify the ways in
which different groups assign value to a product or
service. In this sense, it allows companies to reach the
greatest number of consumers through greater
awareness of how people respond to advertising.
Criteria for a successful Segmentation:
1. Substantiality – The targeted segment needs to
be large enough to justify creating and maintaining
a customized marketing mix.
2. Measurability- The company must be able to
identify this specific segment and its size
measurable.
3. Accessibility- The company must have access to
its targeted segment with its specific marketing
mix.
4. Differentiable – the best market segment should
be internally homogeneous. Internal
homogeneous means all customers within the
segment have similar preferences and
characteristics but in externally heterogeneous.
5. Actionable- The market segment must have
practical value. Its characteristics must provide
supporting data for a marketing position or sales
approach.
Bases for Segmenting Consumer Market
 Geographic Segmentation
Segregating markets by region of the country
or the world, market size, market density or climate.
Market Density is the number of people within
a unit of land like census tract.
Climate is normally used for geographic
segmentation because of its tremendous effect on
residents needs and purchasing behavior.
 Demographic Segmentation
Market segmentation according to age, race,
religion, gender, family size, ethnicity, income
and education.
The following are the variables of demographic factors
used in market segmentation:
1. Age- age segmentation is the use of marketers
of a variety of terms to refer different age
groups.
o School-age-children – This extent
substantial influence over family purchases
specifically in food. As young as two years
old, children pick their choices on what they
want to eat, play with and wear.
o Generation Y/ Millennials (Tweens/Teens)-
Members of this generation were born
between 1982 and 2003. Tweens are also
called preteens
o Generation X- Members of this generation
were born between 1981 and 1965
 This group is very family
oriented, well educated and
optimistic
o Baby Boomers- Members of this generation
were born between 1946 and 1964
o Seniors- Members of this generation were
born beyond 1946. Mostly they are composed
of retirees living on modest income (pensions)
2. Gender- Gender Segmentation is dividing market
into different segment based on gender.
3. Income- Income Segmentation is dividing a market
into different income segments.
4. Family Life cycle- The family life cycle is a series if
stages established through a combination if age,
marital status and the presence or absence of
children.
Family Life Cycle
1.Young Singles
Young singles may live alone, with their nuclear
families, or with friends
2. Newly married couples:
Newly married couples without children are usually
better off financially than they were when they were
single,
3. Full Nest I:
With the arrival of the first child, parents being to
change their roles in the family, and decide if one
parent will stay to care for the child or if they will both
work and buy daycare services
4. Full Nest II
The youngest child has reached school age, the
employed spouse’s income has improved, and the
other spouse often returns to part-or full-time work
outside the home.
5. Full Nest III
As the family grows older and parents enter their min-
40s, their financial position usually continues to
improve
6. Empty nest
Older married with no children living with them.
7. Solitary survivor
Older single retired people. Retired people living alone
after the death of a partner.
Psychographic Segmentation
Psychographic segmentation divides buyers into
different segments based on internal characteristics —
personality, values, beliefs, lifestyle, attitudes,
interests, social class — so you can market
accordingly
1. Personality- person’s traits, attitudes and habits.
2. Motives- is a need that is sufficiently pressing to
direct the persons to seek satisfaction. Marketers
appeal to consumers’ emotional motives when
selling baby products and life insurance.
3. Lifestyle- a persons way of living and describes
how an individual spends his time, the importance
of things around him, his beliefs and
socioeconomic characteristics like income and
education.
4. Geodemographics- divides the potential market
into neighborhood lifestyle. This segmentation
combines geographic, demographic and lifestyle
segmentation
Behavioral Segmentation
• Behavioral Segmentation divides buyers into
segments based on their knowledge, attitudes,
uses or responses to a product.
• Many marketers believe that behavior variables
are the best starting point for building market
segments.
• Occasion oriented: When a product is used or
purchased for a particular occasion only.
• Usage oriented: The grouping can be on the
basis of how much a product is being
used/consumed by the customer.
• Loyalty oriented: Markets are segmented
based on the retention rates of the consumers
which is a fair indication of brand loyalty among
them.
• Benefits sought: grouping buyers according to
different benefits that they seek from a product.
Market Targeting
Involves breaking a market into segments and then
concentrating marketing efforts on one or few key
segments.
1. Undifferentiated Targeting
It views the market as one big market with no
individual segments.
2. Concentrated Targeting
Focused marketing allows R&D expenditure to be
concentrated on meeting needs of one set of
customers and managerial activities are devoted to
understanding and catering to their needs.
3. Multi Segment Targeting
Company following multi-segment targeting strategy
serves two or more well- defined segments and
develops a distinct marketing mix for each one of
them. Separate brands are developed to serve each
of the segments.
4. Customized Marketing
Customized marketing is associated with close
relationships between the supplier and customer
because the high value of an order justifies large
marketing and sales efforts being focused on each
buyer.
Market Positioning
 Placing a product at a certain point or location
within a market in the minds of prospective buyers
 Market Positioning refers to the ability to influence
consumer perception regarding a brand or product
relative to competitors.
 The objective of market positioning is to establish
the image or identity of a brand or product so that
consumer perceive it in a certain way
Types of Positioning Strategies
There are several types of positioning strategies. A
few examples are positioning by:
• Product attributes and benefits: Associating
your brand/product with certain characteristics
or with certain beneficial value
• Product price: Associating your brand/product
with competitive pricing
• Product quality: Associating your
brand/product with high quality
• Product use and application: Associating
your brand/product with a specific use
• Competitors: Making consumers think that
your brand/product is better than your
competitors
A Perceptual Map in Market Positioning
 A technique of attempting to determine through
graphing how different products brands are
perceived by consumers when mapped or
compared against two or more products
dimensions
1. Attributes- highlight a product feature or
customer benefit.
2. Price and quality- stress high price as an
indication of quality or emphasize low price as
a signal of value.
3. Use or application- stress unique use/s
4. Product user- focuses on a personality or
type of user
5. Product Class- associate with particular
category of products
6. Competitor- an explicit or implicit frame or
reference of one or more competitors
7. Emotion- focuses on how the product makes
customer feels.