Market Segmentation

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Market Segmentation

• Organization based on A Preface to Marketing
  Management, by
• Peter and Donnelly

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1. Delineate Firms Current Situation

• Internal assessment
• Products, mission, history culture, etc.
• External Assessment
• Competitive environment
• Cooperative environment
• Macro-environmental variables

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2. Determine Consumer Needs and Wants

• Do needs/wants, attribute values, or behaviors,
  vary in some systematic way?
• What benefits are customers seeking?

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3. Divide Markets on Relevant Dimensions

• This is market segmentation
• A Priori segmentation
• Based on logic, managerial experience, and data
  availability
• Chosen prior to any research
• Take market, divide it up

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• Post hoc segmentation
• Based on research
• Collect data regarding behavior, needs/wants,
  attribute values, etc.
• Build up market segments by determining what
  groups share behavior, needs/wants, etc.
• Key helpful quantitative method(s) Cluster
  analysis

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• Bases for segmentation
• Limited by imaginations
• Common ones
• Benefits (tough)
• Geography
• Demographics
• Psychographics
• Behavior
• See pages 76-77

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4. Develop Product Positioning

• Analyze competitor positions
• Similarity/dissimilarity ratings
• Attribute ratings
• Ideal/preference data
• Develop/evaluate potential product positions

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5. Decide on Strategy

• Enter/do not enter
• One set of 4Ps for all (mass marketing strategy)
• Target one segment (concentration strategy)
• Target 2 or more segments (differentiation
  strategy)

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6. Design Marketing Mix Strategy

• 4Ps are a function of position and target group
• Product
• Price
• Place Promotion