Market Segmentation

• Market segmentation is dividing a potential market into distinct consumer subsets.
• The goal is to select target markets and reach them with a distinct marketing mix.

Three Phases of Marketing Strategy

• Phase 1: Market Segmentation
• Phase 2: Target Market and Marketing Mix Selection
• Phase 3: Product/Brand Positioning

How Segmentation Studies Are Used

• Segmentation studies help discover consumer needs and wants to develop specialized products.
• Segmentation studies identify the best advertising media.
• Ryka produces sneakers specifically for women's feet.

Bases for Segmentation

• Segmentation can be based on geographic factors.
• Segmentation can be based on demographics, such as age and income.
• Segmentation can be based on psychological factors.
• Segmentation can be based on psychographics.
• Segmentation can be based on sociocultural factors.
• Segmentation can be use-related.
• Segmentation can be based on usage situations.
• Segmentation can be based on benefits sought.
• Segmentation can be hybrid.

Table 3.1 Segmentation Variables: Geographic Segmentation

• Region (e.g., Southwest, Mountain States, Alaska, Hawaii)
• City Size (e.g., Major metropolitan areas, small cities, towns)
• Density of area (e.g., Urban, suburban, exurban, rural)
• Climate (e.g., Temperate, hot, humid, rainy)

Table 3.1 Segmentation Variables: Demographic Segmentation

• Age: Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
• Sex: Male, female
• Marital status (e.g., Single, married, divorced, living together, widowed)
• Income (e.g. Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over)
• Education (e.g., Some high school, high school graduate, some college, college graduate, postgraduate)
• Occupation (e.g., Professional, blue-collar, white-collar, agricultural, military)

Table 3.1 Segmentation Variables: Psychological Segmentation

• Needs-motivation (e.g., Shelter, safety, security, affection, sense of self-worth)
• Personality (e.g., Extroverts, novelty seeker, aggressives, innovators)
• Perception (e.g., Low-risk, moderate-risk, high-risk)
• Learning-involvement (e.g., Low-involvement, high-involvement)
• Attitudes (e.g., Positive attitude, negative attitude)

Table 3.1 Segmentation Variables: Psychographic Segmentation

• (Lifestyle) Segmentation: Economy-minded, couch potatoes, outdoors enthusiasts, status seekers

Table 3.1 Segmentation Variables: Sociocultural Segmentation

• Cultures (e.g., American, Italian, Chinese, Mexican, French, Pakistani)
• Religion (e.g., Catholic, Protestant, Jewish, Moslem, other)
• Subcultures Race/ethnic (e.g., African American, Caucasian, Asian, Hispanic)
• Social class (e.g., Lower, middle, upper)
• Family life cycle (e.g., Bachelors, young married, full nesters, empty nesters)

Table 3.1 Segmentation Variables: Use-Related Segmentation

• Usage rate (e.g., Heavy users, medium users, light users, non-users)
• Awareness status (e.g., Unaware, aware, interested, enthusiastic)
• Brand loyalty (e.g., None, some, strong)

Table 3.1 Segmentation Variables: Use-Situation Segmentation

• Time (e.g., Leisure, work, rush, morning, night)
• Objective (e.g., Personal, gift, snack, fun, achievement)
• Location (e.g., Home, work, friend's home, in-store)
• Person (e.g., Self, family members, friends, boss, peers)

Table 3.1 Segmentation Variables: Benefit Segmentation

• Convenience, social acceptance, long-lasting, economy, value-for-the-money

Table 3.1 Segmentation Variables: Hybrid Segmentation

• Demographic/Psychographics: Combination of demographic and psychographic profiles of consumer segments profiles
• PRIZM NE Geodemographics: "Movers & Shakers,” “New Empty Nests,” “Boomtown Singles," "Bedrock America"
• SRI VALSTM: Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors

Segmentation Examples

• Geographic segmentation divides the total market into subgroups based on location.
• Demographic segmentation factors include age, sex, marital status, income, education, and occupation.
• Match.com targets all singles, while The Right Stuff targets only Ivy League graduates.
• Psychological segmentation factors include motivations, personality, perceptions, learning, and attitudes.
• Psychographic segmentation, also known as lifestyle analysis, includes attitudes, interests, and opinions (AIOs).
• Sociocultural segmentation includes family life cycle, social class, and culture.
• Adbusters website is targeted to consumers with a certain attitude toward advertisers

Use-Related Segmentation Subdivisions

• Rate of Usage: Heavy vs. Light
• Awareness Status: Aware vs. Unaware
• Brand Loyalty: Brand Loyal vs. Brand Switchers
• Usage-Situation Segmentation: Segmenting based on special occasions or situations.
• Benefit Segmentation: Segmenting based on the most important and meaningful benefit.

Hybrid Segmentation

• Hybrid segmentation includes psychographic-demographic profiles.
• Geodemographic Segmentation.
• SRI Consulting's VALS (Values, Attitudes, and Lifestyles) framework.

Criteria for Effective Targeting of Market Segments

• Identification.
• Sufficiency.
• Stability.
• Accessibility.

Implementing Segmentation Strategies

• Concentrated Marketing: Focuses on one segment.
• Differentiated: Targets several segments with individual marketing mixes.