Market Segmentation Types

Market Segmentation

• Dividing a market into smaller segments with distinct needs, characteristics, or behavior that might require separate marketing strategies or mixes.
• Four major areas for market segmentation:
  • Segmenting consumer markets
  • Segmenting business markets
  • Segmenting international markets
  • Requirements for effective segmentation

Types of Segmenting Consumer Markets

• Four types:
  • Geographic segmentation (divides market into different geographical units)
  • Demographic segmentation (divides market into groups based on variables such as age, gender, family size, etc.)
  • Psychographic segmentation (divides buyers into different groups based on social class, lifestyle, or personality traits)
  • Behavioral segmentation (divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product)

Behavioral Segmentation

• Five types:
  • Occasions
  • Benefits sought
  • User status
  • Usage rate
  • Loyalty status

Multiple Segmentation

• Used to identify smaller, better-defined target groups
• Inter-market segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries

Requirements for Effective Segmentation

• Five requirements:
  • Measurable
  • Accessible
  • Substantial
  • Differentiable
  • Actionable

Target Market

• Consists of a set of buyers who share common needs or characteristics that the company decides to serve

Evaluating Market Segments

• Three classifications:
  • Segment size and growth
  • Segment structural attractiveness
  • Company objectives and resources

Target Marketing Strategies

• Two types:
  • Undifferentiated marketing (targets the whole market with one offer)
  • Differentiated marketing (targets several different market segments and designs separate offers for each)

Micromarketing

• The practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations
• Two types:
  • Local marketing (involves tailoring brands and promotion to the needs and wants of local customer groups)
  • Individual marketing (involves tailoring products and marketing programs to the needs and preferences of individual customers)

Product Position

• The way the product is defined by consumers on important attributes—the place the product occupies in consumers’ minds relative to competing products

Choosing a Differentiation and Positioning Strategy

• Four steps:
  • Identifying a set of possible competitive advantages to build a position
  • Choosing the right competitive advantages
  • Selecting an overall positioning strategy
  • Communicating and delivering the chosen position to the market

Competitive Advantage

• An advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices