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