3. Market Segmentation
Dividing a market into different groups
Each group has different needs/wants
Segments may require different products or same
product with different features
Opposite to ‘mass marketing’
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4. Market Segmentation
Grouping people with similar needs and wants
together for the purpose of serving them better
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5. A Market Segment
A group of people with similar needs who are likely
to respond to a particular product/service in a similar
way
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6. How do we Segment markets?
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7. Geographic Segmentation
Region
Population Density or City Size
Country
Climate
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8. Demographic Segmentation
Age
Gender
Family size
Family life cycle
Income
Occupation
Education
Nationality
Race
Religion
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9. Psychographic Segmentation
Social class
Culture
Lifestyle
Personality
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10. Behavioural Segmentation
Purchase occasion
Benefits sought
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product
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11. Selecting Market Segments
Measurable?
Size and growth potential?
Accessible?
Fit with company objectives/resources?
Competition?
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12. Target Market
The market segments that an organisation ‘aims at’
with its Products or Services
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14. Positioning
Giving your products a clearly-defined position in the
market, compared to competing products, in the
minds of your target market.
In other words, how the customer sees your product
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Therefore, we can say that a market segment is……….
Geographic segmentation means dividing the market into smaller geographic segments. Sometimes different products are produced for different countries and different climates. Clothes are good example. Cars produced for cold climates, like Canada, will have different specifications to those produced for the hot climate of the Middle East. Marketing and promotion will differ according to population density. For example, a new medical service in Dubai is likely to be advertised on Dubai radio channels or other local media. Marketers will use different media to communicate with families on farms in remote areas. Refer to p75 of your book for more details Adapted from Marketing Fundamentals by Nigel Perry
Very simply, demography is the study of populations. Demographic segmentation is the division of the market into segments based on variations in their age, gender, family situation, occupation, income, education, nationality, race and religion. Marketers get detailed demographic data from government census. Check out this website: http://www.tedad.ae/english/results.pdf The life-cycle of a family describes the stage it has reached, for example, young married couple, young married couple with young children, middle couple with teenage children ,‘empty nest’ (‘children have left home) and grandparents. Naturally, people’s needs and wants vary considerably depending on their stage of family life cycle. Refer to p75 of your book for more details on all of the variables above. Adapted from Marketing Fundamentals by Nigel Perry
Psychographic segmentation is the process of dividing a market into segments based on consumers’ social class, culture, lifestyle, attitudes and personality. These variables are difficult to measure but have a significant impact on our needs and wants. Sometimes people from similar demographic backgrounds can be grouped into different psychographic segment for marketing purposes. Review the details about Ahmed and Ali on p81 of your book. Do they have the same demographics profile? What about their psychographic profile? Do you think they would spend their disposable money in the same way? Lifestyle is all about how we lead our lives. Some people like active, outdoor, sporty lifestyles. Others are more interested in culture, theater or the arts. Adapted from Marketing Fundamentals by Nigel Perry
Behaviour segmentation is the process of dividing markets into consumer groups according to their attitude towards the product, their knowledge of the product and the amount of use they make of it. Purchase occasion: regular occasion; special occasion Benefits sought: quality, service, economy, safety, style, status, etc User status: non-user, ex-user, potential user, first-time user, regular user Usage rate: light, medium, heavy Loyalty status: none, medium, strong, absolute Readiness stage: unaware, aware, informed, interested, desirous, intend to buy Attitude towards the product: enthusiastic, positive, indifferent, negative, hostile Adapted from Marketing Fundamentals by Nigel Perry
Dividing markets into segments to understand needs and wants better, is one step. Deciding which segments to target is another. Generally, organisations do not try to satisfy all segments. When assessing market segments to decide which ones to target, organisations take a number of factors into consideration. Measurability: Where possible, the size of a segment should be measurable, in order to assess its importance and potential. For example, if you have defined a segment as ‘Arab women aged 25-45, living in the UAE’, can you measure the size of this segment? Size and Potential for Growth: Assuming you can measure the size of the segment, is it too big or too small? Is that segment likely to expand or contract in the future? Note that some companies deliberately target smaller segments where there is less competition. Large segments often attract a lot of competition. Accessibility : Having identified a market segment and it’s size, can you reach the people in the segment. For example, if you identify sailors working on big ships as a segment with specific needs, can you reach them and serve them? Company Objectives and Resources : Even if a segment appears to be attractive, does it fit with the objectives of the company and does the company have the resources and expertise to satisfy the needs of the segment ?
Undifferentiated marketing occurs when a company decides to ignore different segments and aims at the whole mass market at the same time. Nescafe, for example, make no distinction between genders, nationality, occupation, age or income when they advertise. Nestles advertising and promotion is designed to appeal the largest possible number of buyers. Undifferentiated marketing usually means lower promotion costs. However, mass market segments usually attract more competitors. The current trend is for companies to target more selectively. Differentiated marketing occurs when companies select different segments and design different products and/or different marketing strategies for each. Toyota is an example. Concentrated marketing occurs when a company targets small market segments but aims to win a high share. Big and Tall, for example, sells clothes for tall and portly men only. Can you think of any other examples? Adapted from Marketing Fundamentals by Nigel Perry
Positioning is all about how consumers in a segment you are targeting view your products against all others? For example, will they see your product as ‘high quality’, ‘value for money’, ‘expensive’ or ‘too cheap’ BMW and Porche cars are positioned on ‘performance’, ‘luxury’ and ‘status’. Kellogg's is positioned as a healthy breakfast food. Fairy Liquid is positioned as a gentle and economical detergent for the cleanest dishes.
