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Market Segmentation

Process of dividing the market into sub groups

The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants, or demand characteristics.

Its objective is to design a marketing mix that precisely matches the expectations of customers in the targeted segment.

Few companies are not big enough to supply the needs of an entire market; most must breakdown the total demand into segments and choose those that the company is best equipped to handle.

ExampleBanks have different kinds of accounts for different users.

Factors affecting Market Segmentation

(1) Clear identification of the segment

2) measurability of its effective size

(3) its accessibility through promotional efforts.

(4)its appropriateness to the policies and resources of the company..

(a) behavioral Segmentation

Based on actual customer behavior towards the product.

Some variables are :a) Benefits Soughtb) Usage Rate c) Brand Loyaltyd) Readiness e) Occasion

Segmentation Strategies(b) demographic

Some Demographic Variables:

AgeGenderFamily SizeFamily LifecycleGenerationIncomeEducationOccupationReligion

Segmentation Strategies(c) psychographic

Some psychographic variables are :

ActivitiesInterestsOpinionsAttitudesValues

Segmentation Strategies(d) geographical differences

Some of the geographic Variables are:

Region : By continent , country, state .

Size Of Metropolitan Area :Segmented according to size of population

Population Density; Urban , Rural ,semi urban

Climate

Why use Market SegmentationThe information will allow more sales to be made

Why use Market SegmentationTo gain greater knowledge about customers so that it can vary the products

Prevent promoting product to wrong people

To target particular groups

Benefits of Segmentation Sales should increaseSatisfy customer needs more successfully customer feedback more easily obtained reduced costs as money is not wasted on ineffective advertising and promotion. Better utilization of scarce resources.

Undifferentiated Marketing ( Mass Marketing )Advantages:

Mass Marketing ensures lower cost due to economies of scale.

Disadvantage:

Less than optimal need satisfactionLower Adaption

Mass Marketing vs. Segmentation

Difference between Mass Marketing and SegmentationMass Marketing is a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer..

Market Segmentation is the identifications of portions of the market that are different from another.

Difference between Mass Marketing and SegmentationIn mass marketing it is more difficult to satisfy the needs of the customers in total market.

In market segmentation it is easy to tailor to the needs and wants of the customers.

An example would be let's say for toothpaste, toothpaste for sensitive teeth would be segmentation whereas toothpaste for the entire market would be using mass marketing.

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