Segmenting

Market: people or institutions with sufficient purchasing power, authority, and willingness to buy

Market SegmentationDividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Target market: specific segment of consumers most likely to purchase a particular product

Consumer products: goods or services purchased by an ultimate consumer for personal use

Business products: goods or services purchased for use either directly or indirectly in the production of other goods and services for resale

KC MasterpieceProduct Targeted at Selected Consumers

Cattlemen’sProduct Targeted at the Business Market: Comes in 1 and 5 Gallon Containers. Introduced more than 40 years ago to meet the special needs of foodservice operators

The Role of Market SegmentationMarket Segmentation: division of the total market into smaller, relatively homogeneous groupsNo single marketing mix can satisfy everyone. Therefore, separate marketing mixes should be used for different market segments.

Market segmentation procedure

Stage I - Survey stageStage II - Analysis stageStage III - Profiling stage

Basis for segmenting consumer markets

Geographic segmentationRegionCity

PampersThis ad is an example of geographic segmentation. When visiting the web site look for the different countries Pampers markets to.

Demographic segmentationAgeFamily sizeFamily life cycleGenderIncomeOccupationEducationReligion

•Psychographics segmentation–Life style–Personality

Segmenting Consumer Markets

Product-related segmentation: dividing a consumer population into homogeneous groups based on characteristics of their relationships to the product Can take the form of segmenting based on:• Benefits that people seek when they buy• Usage rates for a product• Consumers’ brand loyalty toward a product

Requirements for Effective Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential • Segments must respond differently to different marketing mix elements & programs.

The Market Segmentation ProcessStage I: Identify Segmentation Process

Stage II: Develop Relevant Profile

Stage III: Forecast Market Potential

Stage IV: Forecast Market Share

Stage V: Select Specific Segment

Identify Segmentation Process

Stage II: Develop Relevant Profile

Stage III: Forecast Market Potential

Stage IV: Forecast Market Share

Stage V: Select Specific Segment

Patterns of target market selection

• Single segment concentration• Selective specialisation• Product specialisation• Market specialisation• Full market coverage– Undifferentiated marketing– Differentiated marketing– Concentrated Marketing

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing

Undifferentiated marketing:

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing

• Selecting and Executing a Strategy– No single, best choice strategy suits all firms– Determinants of a market-specific strategy• Company resources• Product homogeneity• Stage in the product life-cycle• Competitors’ strategy

Positioning

• Positioning is the act of designing the company’s offerings and image so they occupy a meaningful and distinct competitive position in the target customers minds

POSITIONING

• Using product characteristics• The price – quality approach• The use or applications approach• The product user approach• The cultural symbol approach

Developing new products

• Once a company has carefully– Segmented the market– Chosen target customer groups– Identified their needs– Determined the market positioning

It is ready to develop and launch appropriate new products

What is a new product…

• New to the world products• New product lines• Addition to existing product lines• Improvements in the existing products• Repositioning