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.

This quiz explores the concept of market segmentation, detailing how businesses identify and target specific groups within the market based on shared characteristics and needs. It covers segmentation criteria, including location-based targeting strategies that influence business decisions and marketing approaches.