Market segmentation Module 3 Dr. Mohamed Zamil AL-Akhtaby.

Market segmentation

Module 3

Dr. Mohamed Zamil AL-Akhtaby

Market segmentation

Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more effectively and efficiently with products and services that match their unique needs

Market Segmentation

SegmentationDivide the total market into smaller segments

PositioningPosition the market offering in the minds of target customers

TargetingSelect the segment or

segments to enter

Create Value for targeted Customers divide the

total market into smaller segments

DifferentiationDifferentiate the market

offering to create superior customer value

Market Segmentation

Segmenting consumer markets Segmenting business markets Segmenting international markets Requirements for effective segmentation

Market Segmentation

Segmenting Consumer Markets

Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

Market Segmentation

Segmenting Consumer Markets

Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities

Segmenting Consumer Markets Demographic segmentation: Dividing the market into groups

based on variables such as: Age Gender Income Occupation Education Religion Race Generation Nationality

Market Segmentation

DemographicDescriptors

DemographicDescriptors

Age

Gender

Education

9.2 How Are Market Segments Best Defined?

Familysize

Occupation

Income

9.2 How Are Market Segments Best Defined?

DemographicDescriptors

DemographicDescriptors

Few financial commitment. Recreation and fashion oriented.

Buys cars, entertainment items, and holidays.

Better off financially. High purchase rate of consumer

desirables.Buy cars, white goods and furniture.

House buying is at peak. Liquid assets are low.

Dissatisfied with level of savings and financial position.

Buy medicine, toys, school tuition, and white goods.

Home ownership is at peak. Financial situation, and savings have

improved. Interest in travel, recreation, and self-

education.Not interested in new products.

Buy holidays, luxuries, and home improvements

Fam

ily

life

cycl

e

9.2 How Are Market Segments Best Defined?

Race

Nationality

Religion

9.2 How Are Market Segments Best Defined?

DemographicDescriptors

DemographicDescriptors

Market Segmentation

Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits

Segmenting Consumer Markets

Segmenting Consumer Markets

Market Segmentation

Behavioral segmentation: Dividing the market into groups based on variables such as:

Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product

Country

Region

City

Metro size

Density

Climate

Country

Region

City

Metro size

Density

Climate

Social Class

Life style

Personality

Social Class

Life style

Personality

Age

Gender

Family life cycle

Family size

Income

Occupation

Education

ReligionRace

Nationality

Age

Gender

Family life cycle

Family size

Income

Occupation

Education

ReligionRace

Nationality

Occasions

Benefits

User status

User rates

Loyalty status

Readiness stage

Attitude towardThe product

Occasions

Benefits

User status

User rates

Loyalty status

Readiness stage

Attitude towardThe product

Geographic Demographic Psychographic Behavioral

Market Segmentation

Segmenting Business Markets

Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries

Market Segmentation

Factors Used to Segment

International Markets

Geographic Location

EconomicFactors

Cultural Factors

Political and Legal Factors

Segmenting International markets

Market Segmentation

• Size, purchasing power, profiles of segments can be measured.

• Segments can be effectively reached and served.

• Segments are large or profitable enough to serve.

Measurable Measurable

AccessibleAccessible

SubstantialSubstantial

DifferentialDifferential

ActionableActionable

• Segments must respond differently to different marketing mix elements & programs.• Effective programs can be designed to attract and serve the segments.

Requirements for Effective Segmentation

market segments must be:

Market Segmentation

SegmentationDivide the total market into smaller segments

PositioningPosition the market offering in the minds of target customers

TargetingSelect the segment or

segments to enter

Create Value for targeted Customers divide the

total market into smaller segments

DifferentiationDifferentiate the market

offering to create superior customer value

Market Targeting

Selecting Target Market Segments

Target market consists of a set of buyers who share common needs or characteristics that the company decides serve

Market Targeting

Target Marketing Strategies

Mass MarketingSame product to all consumers (no segmentation, i.e Coca-Cola)

Undifferentiated marketing targets the whole market with one offer

Mass marketing•Focuses on common needs rather than what’s different

Segment MarketingDifferent products to one or more segments

(some segmentation, i.e. Marriott)

Differentiated marketing targets several different market segments and designs separate offers for each

•Goal is to achieve higher sales and stronger position•More expensive than undifferentiated marketing

Target Marketing Strategies

Market Targeting

Concentrated marketing targets a small share of a large market

•Limited company resources•Knowledge of the market•More effective and efficient

Niche MarketingDifferent products to subgroups within segments

(more segmentation, i.e. Standard or Luxury SUV’s)

Target Marketing Strategies

Market Targeting

Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations

MicromarketingProducts to suit the tastes of individuals and locations

(complete segmentation)

Local Marketing

Tailoring brands/ promotions to local customer groups.

Individual Marketing

Tailoring products and programs to the needs of

individual customers, i.e. Dell

Target Marketing Strategies

Market Targeting

Market Targeting

Choosing a Target Market

Company ResourcesCompany Resources

Product VariabilityProduct Variability

Product’s Stage in the Life CycleProduct’s Stage in the Life Cycle

Market VariabilityMarket Variability

Competitor’s Marketing StrategiesCompetitor’s Marketing Strategies

Market Segmentation

SegmentationDivide the total market into smaller segments

PositioningPosition the market offering in the minds of target customers

TargetingSelect the segment or

segments to enter

Create Value for targeted Customers divide the

total market into smaller segments

DifferentiationDifferentiate the market

offering to create superior customer value

Differentiation and Positioning

Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive advantages to build a position

Choosing the right competitive advantages Selecting an overall positioning strategy

Differentiation and Positioning

Product’s Position - the way the product is defined by consumers on important attributes - The place the product occupies in consumers’ minds relative to competing products.

Perceptions

Impressions

Feelings

Differentiation and Positioning

Identifying Possible Value Differences and Competitive Advantages

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

Differentiation and Positioning

Choosing a Differentiation and Positioning Strategy

Identifying a set of possible competitive advantages to build a position by providing superior value from:

Product differentiation Service differentiation Channel differentiation People differentiation Image differentiation

ServicesDifferentiationi.e. Delivery, Installation,

Repair Services, Customer

Training Services

Product Differentiationi.e. Features,

Performance, Style & Design, or Attributes

ImageDifferentiationi.e. Symbols, Atmospheres,

Events

Personnel Differentiation

i.e. Hiring, Training Better People Than

Competitors Do

Identifying Possible Competitive Advantages

Differentiation and Positioning

Selecting an Overall Positioning Strategy Value proposition

is the full mix of benefits

upon which a brand

is positioned

Marketing Strategy and the Marketing Mix

Developing an Integrated Marketing Mix

Marketing mix is the set of controllable tactical marketing tools — product, price, place, and promotion—that the firm blends to produce the response it wants in the target market

Marketing Strategy and the Marketing MixDeveloping an Integrated Marketing Mix

Marketing Strategy and the Marketing Mix

Marketing Mix

4P’s& 4C’s Product (Customer Solutions) Price (Cost) Place (Convenience) Promotion IMC (Communication)

Promotion IMC (Communication)7 P’s Extended in case of Services)

People Process Physical Facilities

Thank You