Segmenting and Targeting Markets
What are Markets?
• Market: people or institutions with sufficient purchasing power, authority, and willingness to buy
• Types of Markets
Requirements of a Markets
Role of Market Segmentation
Market Segmentation: division of the
total market into smaller, relatively homogeneous groups
Levels – Mass, Segment, and Niche
Most effective Many Groups of One
The Importance of Market
Markets have a variety of product
needs and preferences.
Marketers can better define
Decision makers can define objectives
and allocate resources more accurately. No Market Segmentation
Segmented by Gender
Segmented by Age
• Marketers follow two methods to determine the bases on which to identify markets:
– Segments are predefined by managers based on their observation of the behavioral and demographic characteristics of likely users
– Segments are defined by asking customers which attributes are important and then clustering the responses
Criteria for Effective
Most important point
In relation to responsiveness to different
marketing mixes, segments must be:
Bases for Segmenting Consumer
Characteristics of individuals, groups, or organizations used to divide a total market into segments.
Bases for Segmentation
• Geographic Segmentation: Dividing an overall market into homogeneous groups on the basis of their locations
• Demographic segmentation: dividing consumer groups according to characteristics such as gender, age, income, occupation, education, ethnicity, household size, and stage in the family life cycle.
Family Life Cycle
• Psychographic Segmentation: dividing a population into groups that have similar psychological characteristics, and lifestyles.
• Lifestyle: people’s decisions about how to live their daily lives, including family, job, social, and consumer activities
Segmenting potential customers into neighborhood lifestyle categories.
Combines geographic, demographic, and psychographic segmentation.
The process of grouping customers into market segments according to the benefits they seek from the product. Usage Rate Segmentation
Dividing aa market market by by the the amount amount of of product product bought bought or or consumed. consumed. Bases for Segmenting Business
Steps in Segmenting Markets
Select a market for study
Choose bases for segmentation Select descriptors Profile and analyze segments 5
target markets 6
implement, maintain marketing mix Note that steps 5 and 6 are actually marketing activities that follow market segmentation (steps 1 through
Choosing one or more segments for which
to design your marketing operations
Identify the Appropriate Targeting Strategy
Marketing Mix 1
Marketing Mix 2
Situation that occurs when sales of a