Market Segmentation Fundamentals

Market Segmentation

Definition

• Market segmentation is the process of dividing a larger market into smaller, distinct groups of consumers with similar needs, characteristics, or behaviors.
• It helps businesses to better understand their target audience and tailor their marketing strategies to meet their needs.

Importance

• Allows businesses to focus on a specific group of customers, increasing efficiency and effectiveness of marketing efforts.
• Helps to identify opportunities to innovate and create new products or services that meet specific needs.
• Enables businesses to differentiate themselves from competitors and establish a unique market position.

Criteria for Segmentation

• Demographic:
  • Age
  • Gender
  • Income
  • Occupation
  • Education
• Geographic:
  • Location
  • Climate
  • Language
• Psychographic:
  • Lifestyle
  • Values
  • Attitudes
  • Interests
• Behavioral:
  • Purchase behavior
  • Usage rate
  • Loyalty
• Firmographic (for B2B):
  • Company size
  • Industry
  • Job function

Types of Market Segmentation

• Mass marketing: targeting the entire market with a single marketing strategy.
• Niche marketing: targeting a small, specific segment with a tailored marketing strategy.
• Segment marketing: targeting one or more segments with a tailored marketing strategy.

Steps in Market Segmentation

1. Segment identification: identifying potential segments based on market research and analysis.
2. Segment profiling: creating detailed profiles of each segment, including characteristics, needs, and behaviors.
3. Segment evaluation: evaluating the attractiveness and feasibility of each segment.
4. Segment selection: selecting the most attractive segments to target.
5. Segment positioning: developing a unique marketing strategy for each selected segment.

Market Segmentation

Definition and Importance

• Market segmentation is the process of dividing a larger market into smaller groups of consumers with similar needs, characteristics, or behaviors to better understand the target audience and tailor marketing strategies.
• It increases efficiency and effectiveness of marketing efforts by focusing on a specific group of customers.
• Market segmentation helps identify opportunities to innovate and create new products or services that meet specific needs.
• It enables businesses to differentiate themselves from competitors and establish a unique market position.

Criteria for Segmentation

Demographic Criteria

• Age
• Gender
• Income
• Occupation
• Education

Geographic Criteria

• Location
• Climate
• Language

Psychographic Criteria

• Lifestyle
• Values
• Attitudes
• Interests

Behavioral Criteria

• Purchase behavior
• Usage rate
• Loyalty

Firmographic Criteria (for B2B)

• Company size
• Industry
• Job function

Types of Market Segmentation

• Mass marketing: targets the entire market with a single marketing strategy.
• Niche marketing: targets a small, specific segment with a tailored marketing strategy.
• Segment marketing: targets one or more segments with a tailored marketing strategy.

Steps in Market Segmentation

Segment Identification

• Identify potential segments based on market research and analysis.

Segment Profiling

• Create detailed profiles of each segment, including characteristics, needs, and behaviors.

Segment Evaluation

• Evaluate the attractiveness and feasibility of each segment.

Segment Selection

• Select the most attractive segments to target.

Segment Positioning

• Develop a unique marketing strategy for each selected segment.

Learn about the process of dividing a larger market into smaller groups of consumers with similar needs, characteristics, or behaviors and its importance in marketing strategies.