Market Segmentation Overview

Market Segmentation

• A market segment consists of individuals or groups sharing similar characteristics or needs.
• Location Segmentation:
  • Products can be targeted to specific countries, regions, or even local areas.
  • Businesses may tailor products for rural or urban markets, or for different climate zones (e.g., hot vs. cold countries).
• Demographic Segmentation:
  • Statistics concerning population groups facilitate targeted marketing (e.g., book publishers targeting different genres).
• Lifestyle Segmentation:
  • Customers categorized by lifestyles, values, and attitudes (e.g., young professionals vs. parents).
  • Important in marketing products like cars based on consumers' life situations.
• Income Segmentation:
  • Divides the population based on income levels (e.g., low, middle, high).
  • Recognizes disposable income to align products with customers' financial capabilities.
• Age Segmentation:
  • Age brackets (e.g., 0-10, 11-16, etc.) demonstrate varying needs influencing marketing strategies.
• Gender Segmentation:
  • Tailors products specifically for male or female consumers.
  • Distinct marketing strategies observed through color-coded packaging (e.g., blue for men, pink for women).

Competitive Advantage

• Competitive advantage allows a business to outperform competitors and generate higher revenue, focusing on cost or differentiation.
• Concept first articulated by Michael Porter in the 1980s.

Ways to Achieve Competitive Advantage

• Price Leadership: Competing primarily on lower prices, common in retail and travel industries.
• Added Value: Enhancing product features or services to attract customers.
• Innovation: Emphasizing new and unique offerings.
• Reliability: Offering consistent product performance.
• Quality: Providing superior products that stand out.
• Advertising: Investing in marketing to build brand awareness.
• Branding: Creating a strong identity that resonates with consumers.
• Convenience: Offering ease and accessibility in purchasing.
• Customer Service: Focusing on exceptional service to enhance customer satisfaction.

Market Mapping

• Market mapping identifies brand differences within a market and visualizes them on a map to find gaps.
• A market map uses two axes based on relevant industry variables (e.g., luxury vs. economy, high quality vs. low quality).
• Effective for understanding market positioning and identifying opportunities for new entrants or brand repositioning.

Practical Application of Market Mapping

• Example of clothing brands can be plotted to comprehend market positioning.
• Identifies either saturation in certain market segments or potential gaps for new products.
• The North Face exemplifies a shift from a traditional mountaineer brand to appealing to a younger demographic, demonstrating adaptability in market positioning.