3. 1. Market Segmentation
Dividing a market into smaller groups with distinct needs, characteristics, or
behaviors that might require separate products or marketing mixes.
N.B Through market segmentation; companies divide large, heterogeneous
markets into smaller segments that can be reached more efficiently and effectively
with products and services that match their unique needs.
5. A .1. Geographic Segmentation
Calls for dividing the market into geographical units such as
nations, states, regions, countries, cities or neighborhoods.
EXAMPLES
• A company shipped low calorie snack foods to stores in neighborhoods near
weight watchers clinics.
• P&G introduced curry Pringles in England and Funky Soy Pringles in Asia
6. A .2. Demographic Segmentation
Divides a market into groups based on variables as age, gender, family
size, income, education, occupation, generation and nationality.
Age: consumer needs and wants change with age.
Gender: has been used in clothing, cosmetics and magazines.
Income: used by marketers of products & services as automobiles, clothing and
travel.
7. A .3. Psychographic Segmentation
Divides buyers into different groups based on social class, lifestyle, or
personality characteristics.
8. A .4. Behavioral Segmentation
Divides buyers into groups based on their knowledge, attitudes, uses or
responses to a product.
Occasions: Buyers can be grouped according to occasions when they get the idea
to buy, actually make their purchase or use the purchased item.
Coca-Cola’s “Good Morning” campaign attempts to increase
Diet Coke consumption by promoting the soft drink as an early
morning pick-me-up.
Usage Rate: Markets can be segmented into light, medium and heavy product
users.
Loyalty Status: markets can be segmented by consumer loyalty.
9. B. Segmenting International Markets
• Companies can segment international markets using one or a combination of
several variables, ex. Geographic location, grouping countries by region as Asia,
Middle East or Western Europe.
• Geographic segmentation assumes that nations close to one another have
common traits and behaviors, example: United States and Canada.
• World markets can be segmented on the basis of economic factors . Ex. Countries
might be grouped by population, income levels or overall level of economic
development
11. C. Requirements for Effective Segmentation
To be useful, market segments must be :
Measurable :The size, purchasing power, and profiles of the segments
can be measured
•Ex: There are approximately 30.5 million lefthanded people in the United
States, Yet few products are targeted toward this segment.
Accessible The market segments can be effectively reached and served.
•Suppose a fragrance company finds that heavy users of its brand are single
men and women who stay out late and socialize a lot. Unless this group lives or
shops at certain places and is exposed to certain media, its members will be
difficult to reach
Substantial The market segments are large or profitable enough to serve
•Ex: It is not practical for an automobile manufacturer to develop cars especially
for people whose height is greater than seven feet.
12. To be useful, market segments must be :
Differentiable The segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs
• If men and women respond similarly to marketing efforts for soft drinks,
they do not constitute separate segments.
Actionable: Effective programs can be designed for attracting and serving
the segments.
• For example, although one small airline identified seven market
segments, its staff was too small to develop separate marketing
programs for each segment.
13. 2. Market Targeting
A. Evaluating Market Segments
B. Selecting Target Market Segments
C. Choosing a Target Strategy
14. A. Evaluating Market Segments
To evaluate we must look at 3 factors:
Segment Size and Growth: Company must collect & analyze current segment
sales, growth rates and expected profitability for various segments
Segment Structural Attractiveness: Ex. A segment is less attractive if it already
contains many strong competitors. The existence of many actual or potential
substitutes will limit profits.
Company Objectives and Resources
N.B The company should enter only segments in which it can offer
superior value and gain advantages over competitors
15. B. Selecting Target Market Segments
Target Market Definition: consists of a set of buyers who share common needs
or characteristics that the company decides to serve.
Undifferentiated
Marketing
(Mass)
Targeting Broadly
Differentiated
Marketing
(Segmented)
Concentrated
Marketing
(Niche)
Micromarketing
(Local)
Targeting Narrowly
N.B The differentiated & concentrated tailor the offers & marketing programs while the Micro
marketing tailors the products and the marketing programs
16. 3. Differentiation and Positioning
Differentiation: to be branded, products must be differentiated from competitors’
ones.
Dimensions of product differentiation :
• Form: size, shape or physical structure ex: asprin
• Features ex: telephone (waiting, caller id…etc)
• Performance quality: is the level at which the product is operating
• Durability: a measure of product’s expected operating life under natural or
stressful conditions ex kitchen appliances, vehicles
• Reliability: measuring product’s malfunction or failure ex home appliance
• Style : Product’s look and feel to the buyer
17. Dimensions of service differentiation:
• Ordering ease: how easy for the customer to place an order ex. Delivery
• Delivery: how well the product is delivered to the customer. Includes
speed, accuracy and care
• Installation : refers to the work done to make a product operational in location
• Customer Training:
•Maintenance and repair
18. Product Position : is the way the product is defined by consumers on important
attributes– the place the product occupies in consumer's minds relative to
competing products. A product must have a unique identity.
EXAMPLES
In the automobile market;
•Toyota Yaris & Honda positioned as Economy
•Mercedes and Cadillac positioned as Luxuory
•BMW & Porsche positioned as Performance
19. Decide on a value proposition
Select Customers to serve
Differentiation
Segmentation
Differentiate the market
offering to create superior
customer value
Divide the total market
into smaller segments
Targeting
Select the segment or
segments to enter
Create value for
Targeted customers
Positioning
Position the market offering
in the minds of target
customers
Editor's Notes
Curry :كاريSoy: فول صوياa company may decide to operate in one or a few geographical areas or to operate in all areas.
Demographic factors are one of the most popular ones due to :1- easier in measurement 2- consumer needs, wants and usage rates often vary closely with demographic factors. Age: ex : P&G - KIDS- sells crest toothbrush with special children’s characters - ADULTS –sells more serious models.N.B: marketers must avoid stereotyping as the 70 years old need wheelchair, others play tennis Gender : example- NIKE has changed its approach to women, from 2000 NIKE made women’s shoes using molds made from women’s feet.
- This technique is to create a profile of how a particular group lives, what are their interests and what are their likes.
Occasions: example – eggs are most often used at breakfast, Mother’s day event ; flowers , candies and cards increase their sales.Loyalty status : consumers can be loyal to companies (Toyota), stores , brands (Tide). some consumers are totally loyal, others are some what loyal (they are loyal 2 or 3 brands of a given product), others show no loyalty to any brand
Measurable: Thesize (growth rate), purchasing power and profiles of the segments can be measured. N.B Purchasing power The value of a currency expressed in terms of the amount of goods or services that one unit of money can buyAccessible: The market segments can be effectively reached and served.Substantial : The market segments are large or profitable enough to serve.Differentiable: The segments are conceptually distinguishable and respond Differently to different marketing mix elements and programs. Actionable : Effective programs can be designed for attracting and serving the Segments.
Segment structural attractiveness : can be affected also by;1- The power of buyers affects segment attractiveness .Buyers with strong bargaining power relative to sellers will try to force down the prices, require more services2- powerful suppliers who can control prices or reduce the quality or quantity of goods and services.
Undifferentiated marketing: a firm might decide to ignore market segment differences and target the whole market with one offer . It focuses on what is common in the needs of consumers rather than the difference. Differentiated marketing: a firm decides to target several market segments and designs separate offers for each. But this increases the costs of doing a business. It is expensive to develop 10 units of 10 different products rather than 100 unit of 1 product. Concentrated marketing : is appealing when company resources are limited. Instead of going for a small share of large market, it goes after a large share of small segment or niches. Ex : Pepsi developed several niche products as Sierra Mist, Pepsi Twist and Mountain dew. These brands combined accounted for barely 5% of Pepsi overall drinks however Sierra Mist became now (2008) number 2 lemon- lime soft drink after sprite. This segment can be highly profitable but higher risk. Companies rely on few segments will suffer when these segments turn dry out. Or large competitors decide to enter these segments with greater resources.4. Micromarketing: Is the practice of tailoring products and marketing programs to the needs and wants of specific individuals and locations. ex : LEGO company launched LEGO website “design your own LEGO model”
-Features : TOOTHBRUSH “SOFT – MEDIUM- HARD” -Performance quality : the company doesn’t necessarily apply high quality to the product, it can design level of performance appropriate for the target market.
