Market Segmentation

The Process of dividing the market into

meaningful and similar groups based

needs, characteristics or behaviour

Customer vs Consumer

customer

• Person who buys the

product

consumer• Person who consumes/uses

the product

Sometimes they are the same person, sometimes not.

The 4Ps/Marketing Mix and

Market SegmentationProduct• What is the product and who’s needs/wants does it meet? How does it meet

those needs/wants?

Price• how much are different market segments willing to pay? Is it different for

different segments??

Place (distribution)• Where are the market segment(s) you want to target? Where do they shop?

How do they shop? Where are they geographically?

Promotions• How will you reach your target market segment(s)? How will they know about

your product? What types of promotion will different segments identify with/react to?

Market

• all potential customers who share needs and

wants, and who have the ability and

willingness to buy the product

• Sorting potential buyers into groups with

common needs

• Groups of buyers will respond similarly to your

marketing actions

• Market segment – the groups resulting from

sorting/segmenting

• Target market – the market segment(s) you

want to focus your marketing actions on

Segmenting Your Market

How do we group them?

Segment Market Based On:

• Demographics

• Psychographics

• Geographics

• Put another way, we use [these above] to

describe different segments of the market

Example: Apple iPhone 5s/c

Market segments:

• Adults who are working full-time

– Paid for by work OR mid- to upper-income

– Communicate with colleagues, friends, family

– Tool for improving work/home efficiency

• Students

– High school, college, university

– Communicate with friends and family

– Need portable, multi-functional device

Target Marketing

• Evaluate each market segment’s

attractiveness (profitability)

• Focus marketing decisions on one (or

more) segment of the market

Demographics

Age

Gender

Income

Ethnic background

Statistical data that describes a population

in terms of personal characteristics:

Demographics

Education

Home Ownership

Marital Status

• Group of people bound together by the

sharing of the experience of common

historical events

Generational Cohorts

Cohort: Baby Boomers

• Born 1946-64 (post WWII)

• Associated with wealth/privilege

• Active, physically fit

• Size: 9.6 m in Canada; 76 m in US

Cohort: Gen X

• Born 1965-80

• Greater diversity: race, class,

religion, ethnicity, and sexual

orientation

• Agents of change, strong belief in

individual freedom, tolerance,

and human rights for all

• Size: 7 m in Canada; 61 m in US

Cohort: Millenials

• Born 1981-2000

• Digital natives; trophy kids; boomerang

generation

• “Me” Generation; narcissistic; sense of

entitlement; reject social conventions

• Size: 9 m in Canada; 85 m in US

Other Demographic Descriptors

• Yuppies – Young Upwardly-

mobile Professionals

– 20s or early 30s; middle to

upper class

• DINKS – Dual Income, No Kids

• DEWKS – Dually Employed

with Kids

• HENRYs – High Earners, Not

Rich Yet

Psychographics

Segmentation of a market based on peoples’:

• Lifestyles; attitudes; values; behaviours

• Don’t confuse with DEMOGRAPHICS

Geographics

• segmentation of a market based on where

people live

• City, region, province/state, country,

international trading areas, etc.

• Rural, urban, suburban

Customer Profile

• includes information about the target market with regard to:

• Demographics

• Psychographics

• Geographics

• Does involve stereotyping and making judgements

Examples of Customer Profiles

#1 - Customer Profile Activity

• Make a customer profile for 3 of these people

Sample Customer Profile• Demographics:

– Gender: Male

– Age: 35-50 years old

– Income: $60,000-$80,000 per year

– Marital Status: single

– Level of Education: vocational/skilled trade

– Home Ownership: owns condominium

– Transportation: owns truck

• Psychographics: very eco-conscious,

traditional values, strong work ethic

• Geographics: North American, urban,

#2 - Activity

1. Think of an existing product and then think of the market for this product.

2. Briefly describe the marketing mix for the product.

3. Look at the entire market and try to segment the product’s market into 2 different segments.

4. Analyze the attractiveness of each segmentExample: look at each segment and think about:

Which segment would buy more of the product

Which segment would pay more for the product

Which segment would have more money to spend on the product

5. Compare the two segments based on your analysis

6. Select the segment that you wish to target and explain/summarize why

7. Write up as a report with headings, double spaced.