Creating Value for Targeted Customers 4 major steps
Market Segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs.
Market Segmentation 4 Major Bases
Geographical segmentation
Marketing mixes are customized geographically
Demographic segmentation
Most popular segmentation
Demographics are closely related to needs, wants and usage rates
Psychographic segmentation
Lifestyle, social class, and personality-based segmentation
Behavioral segmentation
Typically done first
Consumer Market: Geographic Segmentation
Geographic segmentation divides the market into different geographical units such as nations, regions, states, provinces, or cities.
Consumer Market: Demographic Segmentation
Demographic segmentation is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables.
Demographic segmentation variables
> Age
> Occupation
> Income
> Gender
> Education
> Nationality
> Family size
> Religion
> Generation
> Family life cycle
> Race
Consumer Market: Psychographic Segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits.
> Social class
> Lifestyle
> Personality
Consumer Market: Behavioural Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.
Occasion
Benefits sought
User status
Usage rate
Loyalty status
Business Market
In addition to the same segmentation variables as consumers, business can also be segmented by:
Customer-operating characteristics
Purchasing approaches
Situational factors
Personal characteristics
BUSINESS SEGMENT – INDUSTRY CATEGORIES
- Aerospace and Defense
- Automotive
- Banking
- Chemicals
- Computer Hardware
- Computer Software
- Conglomerates Consumer Durables
- Consumer Non-Durables
- Diversified Services
- Drugs
- Electronics
- Energy
- Financial Services
- Food and Beverage
- Health Services
- Insurance
- Internet
- Leisure
- Manufacturing
- Materials and Construction
- Media
- Metals and Mining
- Real Estate
- Retail
- Specialty Retail
- Telecommunications
- Tobacco
- Transportation
- Utilities
- Wholesale
Segmenting international markets
Geographic location
Economic factors
Political and legal factors
Cultural factors
Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries.
Measurable
Size, purchasing power, and profile of segment
Accessible
Can be reached and served
Substantial
Large and profitable enough to serve
Differentiable
Respond differently
Actionable
Effective programs can be developed
