Marketing Chp. 8: Segmentation

Benefits of Regional Segmentation

1. Generate NEW sales in sluggish and competitive markets! 2. Quicker reaction to competition 3. Scanner data allows assessment of best selling brands in a region 4. Regional brands appeal to local preferences e.g Macy's NYC vs. Macy's San Francisco

Why is market segmentation important?

1. Marketers have a variety of product needs and preferences 2. Marketers can better define customer needs 3. Decision makers can define objectives and allocate resources more accurately

Steps in Segmenting Markets

1. Select a market 2. Choose bases for segmentation 3. Select descriptors 4. Profile and Analyze segments 5. Select target markets........

CRITERIA for Segmentation

1. Sustainability 2. Identifiably and Measurable 3. Accessibility 4. Responsiveness (SIAR)

80/20 Principle Note: That 20%

A principle holding 20% of all customers generate 80 percent of demand Note: Take good care of that 20% because these are your customers! e.g Beer

Market Segment

A subgroup of people sharing one or more characteristics that cause them to have similar product needs

Demographic Segmentation (by...)

Age Gender Income e.g recession, "basic products" Ethic Family life cycle

Geodemographics

Clusters customers into neighborhood lifestyle categories e.g neighborhood

Usage-Rate Segmentation

Divides a market by the amount of product bought or consumed e.g Combination of never used, potential users, first-timers, heaver users

BASES (variable) for segmentation

Geography Demographics Psychographics Benefits Sought Usage Rate

Responsiveness

Markets can be segmented using any criteria that seem logical.

Market

People or organization with needs or wants and the ability and willingness to buy

Benefit Segmentation

Process of grouping customers into market segments according to the benefits they seek from the product e.g Luna bar! Tropicana

Types of Geographic Segmentation

Region of the country Market Size Market Density Climate e.g Subaru for Upstate New York

Sustainability

Segment must be LARGE ENOUGH to warrant developing and maintaining a marketing mix

Psycho graphic Segmentation

Segmentation on the basis of personality e.g safety=Volvo, status=BMW motives (safety=volvo) lifestyle geogemgraphics

Identifiable and Measurable

Segments must be identifiable and measurable. e.g demographic data

Family Life Cycle

Series of stages determined by a combination of age, marital status, and presence of absence of children e.g buy basic kitchen equipment, car

Accessibility

The firm must be able to reach members of the segment with customized market mix.

Segmentation

The process of dividing a market into meaningful, relatively similar, identifiable segments or groups