Definition of Marketing

Series

Segmentation/ Target Market

What is Market Segmentation ?

Aggregating prospective buyers into groups that:

Share a problem

Are similar – in terms of demographics, geography, or psychographics (attitudes and beliefs)

Respond similarly to market forces

What is a “Target Market” ?

One or more groups toward which a firm focuses its marketing efforts?

McDonalds

Everyone – price conscious, convenience

Happy Meals for kids

Salads for moms

Angus burgers for men

Why Segment the Market?

One size fits all (mass) markets are ineffective

They may please no one

They’re expensive to serve

Fail to match customer desires with firm competencies

How to Segment the Market.

Identify market needs

Features/ benefits

Price

Options

Form

Tylenol chooses to some segments to target and develops a product aimed at each target market

Pain Reliever Example

Relief from headache, arthritis, cold, etc

Branded, generic

Large bottle, small bottle

Capsules, pills, liquid, powder

How to Segment Market

Form Segments

Substantial – the size and purchasing power of the segment must have potential for profit

Accessible – the segment can be effectively reached and served (ie. They read the same magazine or frequent the same stores, etc.)

Actionable – programs can effectively be developed to reach the segment

Segmentation Variables

Demographics

Age – cruises focus on seniors

Gender – women watching sports

Income – bottom of the pyramid

Ethnicity - grocery stores carry more Hispanic foods

Education, life cycle, religion, family size …

Segmentation Variables

Geographic

Country

Region – NE, SW, …

Population density

Climate

Rural versus Urban

MSA

Segmentation Variables

Psychographic

Social class – middle class striving

Lifestyle – achievers

Personality - introverted

Segmentation Variables

Behavioral

Loyalty

Attitude toward Brand

Usage occasion

Usage rate – 80/20

Readiness stage

Targeting Options

Mass market – 1 product to all segments

1 product to multiple segments (book translations, split runs)

Multiple products to multiple segments (Coke, P& G)

Mass customization – individualized products (Mac computers, Sabre)

How Can This Help You Succeed?

Products targeted at a specific segment are likely more valuable to that segment

Promotions aimed at a segment convert at higher rates

Results in better allocation of firm resources

More questions?

Check out other videos in this series

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