Market Segmentation

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Market Segmentation

• Selecting Target Markets
• Positioning

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What is Market Segmentation?

• A market is people or organizations with needs to
  be satisfied, money to spend and the willingness
  to spend it.
• But buyers of a single product or service differ.
  This is the logic behind market segmentation.

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Six End-User Markets

• The retail or consumer market (households,
  families)
• The institutional market (hospitals, schools,
  prisons, day-care centers)
• The commercial market (retailers, wholesalers,
  and business-to-business services) and industrial
  market (manufacturers, processors and natural
  resources)
• The government market (municipal, provincial and
  federal departments and agencies)
• The agribusiness market (farms)
• The export market (other countries)
• (These may be potential markets for your product)

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Market Segmentation

• First Inquire about the existence and
  satisfaction of needs/ wants and benefits sought
  in each of the six potential end-user markets.
• Second Look specifically in each market for
  detailed characteristics of buyers in that market.

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Ways the Consumer Marketmight be Segmented

• Demographics (characteristics of buyers)
• Behavior

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Demographics

• Age group
• Gender
• Size of Household
• Marital Status
• Presence of Children
• Family Life Cycle
• Education Level

• Occupation
• Religion
• Language(s) Spoken
• Race
• Nationality
• Geography (region, urban, rural, climate)
• Income
• Lifestyle

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Behavior

• Benefits Sought (for example for
  toothpaste-whiter teeth, no cavities, fresher
  breath)
• Usage Level (light, medium, heavy)
• User Status/ Patronage Level (non-user, ex-user,
  potential user, regular user)
• Readiness Level / Intention to Purchase (unaware,
  aware, informed, interested)
• Current Ownership (have none, one, two, types or
  brands owned)
• Loyalty Status (brand loyal, store loyal, deal
  loyal, switcher)

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Bases of Market Segmentation

• The basis of Market Segmentation is to select the
  market segment that is most meaningful, to
  better satisfy more people.
• Many market segments are unique to a particular
  product or market (example Hair color matters to
  manufacturers of tinting products or the number
  of children in a household participating in minor
  hockey matters to summer hockey schools).

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Classifying Potential Customers

• The Key is to find one or more ways of
  classifying or grouping users or potential users
  that really matter in terms of reaching them and
  meeting (satisfying) their needs.

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Selecting Target Markets

• The key reason to do segmentation analysis is to
  identify potential Target Markets
• Your unique package of benefits as compared to
  your direct or indirect competition.
• The size, location and needs of various buyer
  groups (segments)
• Your resources and ability to efficiently reach
  any particular buyer group (segment)

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Select a Market Segment (group)

• That is big enough to warrant attention
• That is not as satisfied as they want to be
• That are relatively easy to reach via available
  channels of distribution and advertising
• These groups are your Target Markets (each target
  market is unique and defines who, when and where
  of a marketing strategy)

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Positioning

• Positioning offers some advantage over the
  competition in a way that matters to a particular
  target market.
• Entrepreneurs must design a package of benefits-
  product, price, place, promotion that offers an
  advantage over the competition.

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Positioning Questions

• Does your toothpaste reduce cavities better than
  other brands?
• Is your accounting software package fully
  compatible with the leading data base software?
• Is your ice cream really richer or more
  flavorful?
• Can your product be on any customers doorstep in
  24 hours?
• Do you offer unique sizes?
• Is the image or personality of your store or
  product appealing to a large group of buyers?

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How are You Better?

• The market positioning for any product , service
  or store is how you wish o be seen in the eyes of
  members of your target markets compared to other
  products, services or stores.
• Your market positioning statement should catch
  your buyers attention and indicate how you are
  different from and better than available
  alternatives!
• Advertising Slogans often reveal market positions.