LESSON 5: MARKET SEGMENTATION

• Market segmentation


  The process of dividing a target market into smaller, more precisely defined groups of consumers or organizations who have common needs and are expected to respond similarly to a marketing action
• Methods of Segmenting Consumer Markets

  • Geographic Segmentation
  • Demographic Segmentation
  • Behavioral Segmentation
  • Psychographic Segmentation
• Geographic Segmentation


  • Dividing the market based on where your customers or potential customers live
• Demographic Segmentation


  • The marketer will divide the market into smaller groups, generally on the basis of common demographic factors
• Behavioral Segmentation

  • Benefit Segmentation
  • Usage-Based Segmentation
  • Occasion Segmentation
• Benefit Segmentation


  • Focuses on which benefits or features of a product or service are most applicable to the customer
• Usage-Based Segmentation


  • Identifies various segments of users based on how much they use a product. Consumers are typically divided into groups of non-, light, medium, and heavy product users
• Occasion Segmentation


  • Divides consumers (or potential consumers) on the basis of the occasions when they make purchases or plan to buy
• Psychographic Segmentation


  • Breaks down consumer groups into segments that influence buying behaviors
• VALS Framework Categories

  • Innovators
  • Thinkers
  • Believers
  • Achievers
  • Strivers
  • Experiencers
  • Makers
  • Survivors
• Innovators


  • High-income individuals with distinct preferences who seek luxury
• Thinkers


  • Knowledgeable consumers with resources who make their own decisions
• Believers


  • Seek affirmation from peers, have fewer resources than Innovators or Thinkers
• Achievers

  • High-resource consumers focused on success, prefer established brands
• Strivers


  • Lower-resource consumers with similar values as Achievers
• Experiencers

  • Young adults with resources, seek uniqueness
• Makers


  • Desire self-expression but lack resources, prioritize family over spending
• Survivors


  • Least resources, brand loyalty, unlikely to adopt innovation
• Methods of B2B Market Segmentation

  • Firmographics
  • Technographics
  • Needs-Based Segmentation
  • Values-Based Segmentation
  • Behavioral Segmentation
• Firmographics


  • Sorting businesses by traits like industry, size, and location to understand their needs in the B2B market
• Technographics


  • Identifying businesses based on the technology they use, crucial for tech vendors targeting specific needs
• Needs-Based Segmentation


  • Grouping businesses by their unique problems to offer tailored solutions
• Values-Based Segmentation


  • Categorizing businesses according to their core beliefs to match with products or services that align with those values
• Behavioral Segmentation


  • Dividing businesses by their past actions and interactions to predict future behavior and tailor marketing approaches
• International Market


  The buying and selling of goods and services between countries. It involves trade across borders, where companies in one country engage in business activities with customers or other businesses in different countries
• Challenges of Segmenting International Markets

  • Cultural Differences
  • Economic Variability
  • Political Environment
  • Diverse Consumers
  • Income Disparity
  • Population Diversity
  • Lifestyle Variations
• Cultural Differences


  • Varying cultures make it hard to use one-size-fits-all marketing
• Economic Variability


  • Fluctuating economies affect pricing and product strategies
• Political Environment


  • Different regulations and policies can impact business operations
• Diverse Consumers


  • International markets have varied preferences and lifestyles
• Income Disparity


  • Wide income gaps require flexible pricing
• Population Diversity


  • Larger and diverse populations need targeted segmentation
• Lifestyle Variations


  • Diverse lifestyles demand customized strategies
• Target Market


  Specific group of people or businesses a company wants to sell its products or services to. They share similar traits and preferences, making them likely customers
• Target Market Strategies

  • Undifferentiated Marketing
  • Differentiated Marketing
  • Concentrated Marketing
  • Micromarketing
• Undifferentiated Marketing


  • Also known as MASS Marketing. This is a strategy where a company decides to ignore market segmentation and target the entire market with a single product or service offering
• Differentiated Marketing


  • Also known as TARGETED Marketing. This is a strategy where a company targets different segments of the market with different product or service offerings
• Concentrated Marketing


  • This is a strategy where a company targets a specific segment of the market with a highly specialized product or service offering
• Micromarketing


  • Customizing products or services for individual customers or small groups. It's about making things personal for better customer satisfaction and loyalty
• Product Positioning


  The process of deciding and communicating how an organization wants its market to think and feel about a product or service