Market segmentation. A market is a group of potential customers with similar needs who are willing to exchange something of value with sellers offering.
Post on 24-Dec-2015
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Market segmentatio
n
A market is a group of potential customers
with similar needs who are willing to
exchange something of value with sellers
offering various goods and services that can
satisfy these needs. The marketer has the
option of either approaching the entire set of
customers with a uniform marketing
approach or adopting a differentiated
approach for different sets of customers.
While the former refers to mass marketing
the latter refers to the strategy of market
segmentation
• Market segmentation is
the process of dividing the
heterogeneous total
market into small groups
of customers who share a
similar set of wants. Each
of these smaller groups
posses somewhat
homogeneous
characteristics.
• At its most basic level, the term “market
segmentation” refers to subdividing a market
along some commonality, similarity. That is,
the members of a market segment share
something in common. The purpose of
segmentation is the concentration of
marketing energy and force on the
subdivision (or the market segment) to gain a
competitive advantage within the segment.
•
Customers in a Segment Must Have:
• similar needs• They all must seek
similar benefits• They should all be
satisfied by a similar retail offering
• The needs of this customer group should be different from the needs of customers in other segments.
Definition
• A market segment is a subgroup of
people or organizations sharing one
or more characteristics that cause
them to have similar product needs.
it is distinct from other segments
(heterogeneity across segments)
it is homogeneous within the segment
(exhibits common attributes)
it responds similarly to a market stimuli
The Fundamental Criteria for Evaluating a Retail Market Segment:
• Identifiability: is important because it permits
the retailers to determine (1) the segments size
and (2) with whom the retailer should
communicate when promoting its retail offering.
• Actionability: means that the definition of a
segment must clearly indicate what the retailer
should do to satisfy its needs.
• Accessibility: The target market segment must
be reachable so as to serve them effectively.
• Size, purchasing power, profiles of segments can be measured.
• Segments must be effectively reached and served.
• Segments must be large or profitable enough to serve.
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
ActionableActionable
• Segments must respond differently to different marketing mix elements & actions.
• Must be able to attract and serve the segments.
Purpose• Increase marketing
efficiency by focusing marketing efforts to a particular group
• Maximize scarce marketing resources
• Find a market with limited competition
• Select the most profitable segment
Approaches for Segmenting Markets:• Geographic Segmentation: This
is perhaps the most common form of market segmentation, wherein companies segment the market by attacking a restricted geographic area. For example; corporations may choose to market their brands in certain countries, but not in others.
•
• Price Segmentation: Price segmentation is common and widely practiced. Variation
• in household incomes creates an opportunity for segmenting some markets along a price dimension. If personal incomes range from low to high, then a company should offer some cheap products, some medium-priced ones, and some expensive ones.
Demographic Criteria
• Demographic variables
– age
– gender
– education
– income
– occupation
– education
– socioeconomic status
– religion
– culture
• Demographic Segmentation- Gender, age, and education level are common demographic variables. Some brands are targeted only to women, others only to men. Music downloads tend to be targeted to the young, while hearing aids are targeted to the elderly.
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