Market Segmentation
MAP
Characteristics required for a segment to be attractive. --M-easurable--A-ccessible (do you have access to distribution channels to get there?--P-rofitable
Concentration, Niche, Focus, Specialization Strategy
A subset of a larger segment. An approach to enter an industry that you may otherwise find barriers to enter.
Demographics
of the company (not the individual): Measurable characteristics about the customers—Company size, employees, number of locations, how much they buy.
Positioning
The act of designing the company's offerings and image to occupy a distinctive place in the minds of the target market. Ex: Volvo = safety , IBM = customer service and support. It is what the customer thinks about your product.
Micro Marketing
The customer in the segment is solo; only one. ex: Custom order. A company needs something unique that only they need. ex:Nike custom sneakers
Market Segmentation
The process of dividing the market into segments with similar buying behavior or characteristics.
Note on the market
The term market is not interchangeable with the term consumers.
Undifferentiated approach (mass market)
Treating all segments the same. Coco Cola tries to use this strategy. not a recommended approach— early classical approach
Differentiated segmented approach (market segmentation)
Treating each segment with a unique approach. Most companies today use this approach.
Segmentation Strategies 4 kinds
Undifferentiated approach, Differentiated Approach, Niche, Micro marketing
Positioning map
visual tool used in marketing to plot a company's product against competitors based on key attributes important to consumers, like price or quality. This strategic diagram helps businesses understand their competitive landscape, identify market gaps, and determine how to differentiate their brand. **Look for competitive clusters
Segmentation Variables for Industrial Customers
Geographic, Demographic, Industry, Applications, Purchasing Situations
Segmentation Variables for Consumer Customers
Geographic, Demographic, Psychographic, Product relatedness. Note: Demographic and Geographic are most objective and clear cut.
Psychographic
How one sees themself. Personality, lifestyle, social class, interests, opinions. More difficult to observe.
All segments are customers
Each segment is either one of three: consumer, industrial/business, Government (non-profit)
Geographic
Identify where the customers are located. (very important)
Geographics
Need to know where the customers are located.
Market
People (consumer market) or institutions (business or industrial market) that have needs/ wants with the authority, resources and willingness to buy.
Note on choosing segmentation approach
need to analyze who the customer is and what segmentation will suit the segment best. You may use more than one strategy.
Applications
What are the applications that the customer will use the product for? The product may need tweaking depending on how the product will be used.
Purchasing Situations
What are the circumstances in which the customer buys the product? Are they buying on a centralized basis or decentralized basis Centralized (high risk)-only need one marketing plan. Don't need to spend a lot on advertising. Decentralized- reward is higher, but costs are higher too for advertising. Bidding process
Industry
What are the customers needing per the specific industry. The specific needs of the industry the customer is in.
Demographic
What are the measurable characteristics (observable traits) that describe the customers of the segment. E.g. ethnicity, age, gender, family life stage, income. (DINK- double income no kids—type of customer).
Product relatedness
Why is the customer buying the product? What is the benefit they are seeking from the product? Usage level. Loyalty to the product. Note: Demographic and Geographic are most objective and clear cut.
Target Market
a market segment that a company addresses with its own set of 4 Ps.
