Market segmentationAvi Chemay presents

Ultimate aim of market segmentation

The aim of market segmentation is to increase sales, market share and profits

This is done by better understanding and responding to the desires of different target customers

Process of market segmentation

Market segmentation involves dividing the total market into segments

Once the market has been segmented. A segment of the market is chosen to be the target market.

Target market

Segment 1

Segment 2

Segment 3

Ways of segmenting consumer markets

Demographic segmentationGeographic segmentation Psychographic segmentationBehavioral segmentation

Demographic segmentation

Dividing the total market according to particular features of a population such as age or gender

It is easy to measure demographics, therefore it is commonly used among marketers

Age and gender are the most common

For example coca cola targets 15-35 year old males while Fanta targets 13-16 year olds

Geographic segmentation Geographic segmentation divides the total

market according to geographic locations A business may divide the market into regions Different geographical locations have

different needs and tastes A city size will impact location, for example a

fast food chain will not open in a city with a population of 25,000

Climate will also impact segmenting markets for a business selling heating or cooling systems

Psychographic segmentation Psychographic segmentation is the process of

dividing the total according to personality Characteristics such as motives, opinions,

socioeconomic groups and lifestyle To segment this market a business would

research preferences such as TV shows, movies and music

Psychographic variables can be combined with other segmentation variables

This segmentation focuses on why people behave the way they do

This method of segmentation is difficult to measure

Behavioral segmentation Behavioral segmentation is the process of

dividing the total market according to customer relationships to the product

This includes the customers knowledge of, attitude and benefits of the product

This type of segmentation identifies what the customers want from the product

By understanding what customers want from the product, marketers can design their product to satisfy the needs of their target market

Common variables of market segmentation

Demographic Geographic Psychographic Behavioral

• Age • Gender • Education• Occupation • Income • Social class• Ethnicity • Religion

• Region• Urban • Suburban • Rural • City size• Climate • Land forms

• Lifestyle • Personality • Motives • Socioeconomic

group• Consumer

opinions and interests

• Purchase occasion

• Befits sought • Loyalty • Usage rate• Price sensitivity

Diagram of market segmentation

Segment 1 Segment 2

Segment 3

Whole Market

Market segmentation case study: Holden shifts gear and goes all girly (Page 205)

Holden is the second largest car manufacturer in Australia They now want to sell cars to young female drivers Using social media Holden is best known for their top selling car the commodore Holden has launched a social media campaign to launch the

Briana Spark This is due to changing consumer preferences Holden wanted to deliver a selection of cars that met with

the changing consumer preferences Holden has began to lean towards digital advertising The spark is priced at 12,490 The digital strategy is a large part of their marketing strategy The campaign allows users to design their car online and

share it on twitter and Facebook

QUESTION TIME!

1. Distinguish the four main ways of segmenting consumer markets.

2. Describe the link between market segmentation and the target market