Market Segmentation

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Definition Market Segmentation?

Market Segmentation is the marketing process of identifying and breaking up the total market into groups of potential customers with similar motivations, needs, characteristics or behavior, who are likely to exhibit homogeneous purchase behavior.

Undertaking this process allows marketing efforts to be targeted at select groups. In determining their segmentation strategy, organizations can choose to pursue the whole market with a single offer (Undifferentiated Marketing), pursue only certain segments with specific offers (Niche Marketing) or pursue individual customers with specific offers designed just for them (Customization).

The process enables a company to develop a suitable Marketing Mix for each of the chosen market segments.

A Market Segment is a (relatively) homogeneous group of customers with similar characteristics, wants, needs or behaviors which is likely to respond similarly to a given marketing mix.
 

5 Ways or bases of market segmentation

1. Geographic Segmentation (continents, countries, nations, states, regions, counties, or cities).

2. Demographic Segmentation (age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation, etc). Compare: JICNARS Scale

3. Psychographics Segmentation (values, attitudes, social class, lifestyle, personality characteristics, aspirations). Compare: Values and Lifestyles

4. Behavioral Segmentation (consumer knowledge, attitudes, uses, or responses to a product, occasion, benefits sought, loyalty status, user status, buyer readiness).

5. Product differences.

Steps in segmentation. Process

1. Identify the total market.

2. Determine the segmenting dimensions.

3. Profile each segment.

4. Assess segment attractiveness.

5. Select target market.

6. Determine positioning (marketing mix) for each segment.

Segmentation Requirements

To be useful, market segments must be:

• Measurable
• Accessible
• Substantial
• Differentiable
• Actionable

Strengths of Segmentation. Benefits

• Organization get to know its customers better.

• Provides guidelines for resource allocation.

• It helps focus the strategy of the organization.

Limitations of Segmentation. Disadvantages

• Targeting multiple segments increases marketing costs.

• Segmentation can lead to proliferation of products.

• Narrowly segmenting a market can hamper the development of more broad brand equity.

Book: Dowling, G. - The art and science of marketing; Marketing for marketing managers

Book: Kotler, P., Brown, L., Adams, S. & Armstrong, G. - Marketing, 6th edition

Book: Simpson, P.M. - Marketing segmentation and target markets; Marketing best practices; 2nd edition

Forum Forum about Market Segmentation. Disadvantages of Segmentation I kindly request you to please provide with some more limitations or disadvantages of segmantation.Thank you... 13   2 comments Disadvantages of Demographic Segmentation I need to know the drawbacks of demographic segmentation. Thanks... 11   Forward and Backward Segmentation When you have selected the data, segments should be deduced. Two types or approaches of segmentation exist: 1. Forward Segmentation (also called A Priori Segmentation): customers are first classified... 10   Segmentation Examples I need 2 examples of segmentation process for psychographic and behavioral in retail consumer products goods Thanks.... 7   Is Segmentation of Taxpayers Possible? How successfully could segmentation be applied to servicing taxpayers treated as customers of the government. What could be the negatives and futility of such an approach and what could be the possibl... 7   Industrial Segmentation Variables | B2B Segmentation Business (industrial, B2B) markets can be segmented with similar variables like those being employed in consumer market segmentation, such as: geography, benefits, and usage rate. Yet business m... 6   🔥 Marketing Implications of Generation Z Generation Z is an umbrella term used for the people born from 1995 to 2010. They are considered the first digital natives, because they have been exposed all their life to the era of the internet, so... 6   4 comments Segmentation and Marketing Mix How are Segmentation and the Marketing Mix interrelated?... 6   1 comments Behavioral Segmentation Behavior of people is important from the perspective of both companies and people. Humans interpret other humans based on their behavior and determine our fondness or friendliness upon it. Sim... 5   3 comments Market Segmenting Process This article discusses and explains the various steps in the market segmentation process and criteria used in determining and selecting competitive segments.... 4   Conditions for a Segment A group of potential buyers or customers can be called a "segment" if the following four conditions are met: 1. Homogeneity; in a segment the response to an activity should be as homogeneous as possi... 4   Market Segmentation and Target Marketing The concepts of market segmentation and target marketing, are they the same?... 3   Ideas for Demand Segmentation based on the Total Need for a Product Traditionally, marketers have been interested in cracking demand by making more sales using tools like increased sales force, increased visibility and by direct marketing tools. These have been instru... 2   1 comments Segmentation Requirements Market segmentation requires accurate and reliable info, and a triangulation of the major environmental factors.... 1   Target Groups of Puma I am trying to find out what are the target groups of Puma. Which consumers are buying their shoes, clothes, etc. Who can help me with some ideas?... 1   Trading Market Analysis I have been asked to put together a presentation with this title: What does a ".Company's Name" Trading Market look like? This large group is a well known large builders merchant in the UK part of a ... 0   Start a new topic about Market Segmentation Sign up for free

Courses about Market Segmentation. Beginners Course Advanced Course Course for Experts

Expert Tips Advanced insights about Market Segmentation. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips The Importance of Customer Differences in Markets with Network Effects: the Limits of Scale Network Effect, Network Strategy, First Mover Advantage, Second-mover Strategy, Customer Intimacy, Market Segmentation The network effect (Metcalfe's Law) is the phenomenon that the value of a product or service increases (exponentially) w...

Information Sources Various sources of information regarding Market Segmentation. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Target Marketing and Market Segmentation Target Marketing, Market Segmentation, Strategy Presentation about Target Marketing. The presentation explains the need for market segmentation, the levels of market se... Marketing Research: Introduction and Techniques Marketing Research, Qualitative Marketing Research Methods, Research Experiments This presentation provides an overview of Marketing research and its techniques, including focus groups. The presentatio... Marketing Strategy: Opportunity Analysis; Targeting and Segmentation Marketing Strategy, Target Marketing, Market Segmentation Presentation about Market segmentation, target marketing and opportunity analyses. The presentation includes the followi... Customer Segmentation by Emotion: The EMO-index Consumption Behavior Emotions are an important part of customers' overall experience and final decision making; therefore they contribute to ...

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Compare with: 3 C's (Ohmae)  |  Multi Channel Marketing  |  Target Marketing  |  Positioning  |  Marketing Mix  |  Extended Marketing Mix (7-Ps)  |  4S Web Marketing Mix  |  Competitive Environment  |  Competitive Intelligence  |  Competitive Position  |  Values and Lifestyles  |  Profit Pools  |  SOSTAC

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