This document discusses market segmentation and targeting markets. It defines market segmentation as dividing a market into meaningful, relatively similar, identifiable segments. There are various bases for segmentation including demographics, benefits sought, usage rates, and psychographics. The key aspects of segmentation are that segments must be substantial, identifiable, measurable, accessible, and responsive to marketing efforts. The document outlines different segmentation strategies and discusses how market segmentation allows companies to better meet customer needs through tailored marketing mixes.
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Market SegmentationMarket Segmentation
MarketMarket
Market
Segment
Market
Segment
Market
Segmentation
Market
Segmentation
People or organizations with
needs or wants and the ability and
willingness to buy
People or organizations with
needs or wants and the ability and
willingness to buy
A subgroup of people or
organizations sharing one or more
characteristics that cause them to
have similar product needs.
A subgroup of people or
organizations sharing one or more
characteristics that cause them to
have similar product needs.
The process of dividing a market
into meaningful, relatively similar,
identifiable segments or groups.
The process of dividing a market
into meaningful, relatively similar,
identifiable segments or groups.
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A Market is...A Market is...
(1) people or organizations with
(2) needs or wants, and with
(3) the ability and
(4) the willingness to buy.
A group of people that lacks any one of
these characteristics is NOT a market.
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The Importance ofThe Importance of
Market SegmentationMarket Segmentation
Markets have a variety of product
needs and preferences
Marketers can better define
customer needs
Decision makers can define objectives
and allocate resources more accurately
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Criteria for SegmentationCriteria for Segmentation
SubstantialitySubstantialitySubstantialitySubstantiality
IdentifiabilityIdentifiability
MeasurabilityMeasurability
IdentifiabilityIdentifiability
MeasurabilityMeasurability
AccessibilityAccessibilityAccessibilityAccessibility
ResponsivenessResponsivenessResponsivenessResponsiveness
Segment must be large
enough to warrant a special
marketing mix.
Segment must be large
enough to warrant a special
marketing mix.
Segments must be identifiable
and their size measurable.
Segments must be identifiable
and their size measurable.
Members of targeted segments
must be reachable with
marketing mix.
Members of targeted segments
must be reachable with
marketing mix.
Unless segment responds to a
marketing mix differently, no
separate treatment is needed.
Unless segment responds to a
marketing mix differently, no
separate treatment is needed.
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Segmentation BasesSegmentation Bases
Characteristics of individuals,Characteristics of individuals,
groups,groups,
or organizations usedor organizations used
to divide a total marketto divide a total market
into segments.into segments.
(variables)(variables)
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Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
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Benefits of RegionalBenefits of Regional
SegmentationSegmentation
New ways to generate sales in sluggishNew ways to generate sales in sluggish
and competitive marketsand competitive markets
Scanner/POS data allow assessment ofScanner/POS data allow assessment of
best selling brands in regionbest selling brands in region
Regional brands appeal to localRegional brands appeal to local
preferencespreferences
React more quickly to competitionReact more quickly to competition
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Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
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Lifestyle SegmentationLifestyle Segmentation
How time is spentHow time is spent
Importance of thingsImportance of things
around themaround them
BeliefsBeliefs
SocioeconomicSocioeconomic
characteristicscharacteristics
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Geodemographic SegmentationGeodemographic Segmentation
Segmenting potentialSegmenting potential
customers into neighborhoodcustomers into neighborhood
lifestyle categories.lifestyle categories.
Combines geographic,Combines geographic,
demographic, and lifestyledemographic, and lifestyle
segmentation.segmentation.
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Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
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Benefit SegmentationBenefit Segmentation
The process of groupingThe process of grouping
customers into marketcustomers into market
segments according tosegments according to
thethe benefits they seekbenefits they seek
from the product.from the product.
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Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography
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The 80/20 PrincipleThe 80/20 Principle
A principle holding thatA principle holding that
20 percent of all customers20 percent of all customers
generate 80 percentgenerate 80 percent
of the demand.of the demand.
TargetTarget
customerscustomers
20%20%Share ofShare of
customerscustomers
TargetTarget
customerscustomers
80%80%
Share ofShare of
salessales
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Business Marketing SegmentationBusiness Marketing Segmentation
Four segments of business markets:Four segments of business markets:
Producers / manufacturersProducers / manufacturers
ResellersResellers
GovernmentsGovernments
InstitutionsInstitutions
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Steps in Segmenting a MarketSteps in Segmenting a Market
Select
a
market
for
study
Choose
bases
for
segmen
-tation
Select
descri
p-tors
Profile
and
analyze
segment
s
Select
target
markets
Design,
imple-
ment,
maintain
mktging
mix
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Target MarketTarget Market
A group of people orA group of people or
organizations for which anorganizations for which an
organization designs,organization designs,
implements, and maintains aimplements, and maintains a
marketing mix intended tomarketing mix intended to
meet the needs of that group,meet the needs of that group,
resulting in mutually satisfyingresulting in mutually satisfying
exchanges.exchanges.
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Concentrated Targeting StrategyConcentrated Targeting Strategy
A strategy used to select oneA strategy used to select one
segment of a market (asegment of a market (a
nicheniche) for targeting marketing) for targeting marketing
efforts.efforts.
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Concentrated Targeting StrategyConcentrated Targeting Strategy
AdvantagesAdvantages:
Concentration of resources
Meets narrowly defined
segment
Small firms can compete
Strong positioning
DisadvantagesDisadvantages:
Segments too small, or
changing
Large competitors may
market to niche segment
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PositionPosition
The place a product, brand,The place a product, brand,
or group of products occupiesor group of products occupies
in consumers’ minds relativein consumers’ minds relative
to competing offerings.to competing offerings.
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PositioningPositioning
Developing a specificDeveloping a specific
marketing mix to influencemarketing mix to influence
potential customers’ overallpotential customers’ overall
perception of a brand, productperception of a brand, product
line, or organization inline, or organization in
general.general.
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Product DifferentiationProduct Differentiation
A positioning strategy thatA positioning strategy that
some firms use to distinguishsome firms use to distinguish
their products from those oftheir products from those of
competitors.competitors.
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Perceptual MappingPerceptual Mapping
A means of displaying orA means of displaying or
graphing, in two or moregraphing, in two or more
dimensions, the location ofdimensions, the location of
products, brands, or groups ofproducts, brands, or groups of
products in customers’ minds.products in customers’ minds.
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Perceptual Map and PositioningPerceptual Map and Positioning
Strategy for Levi Strauss ProductsStrategy for Levi Strauss Products