Segmentation: A market segment consists of a group of customers who share a similar set of wants. Market segmenting is dividing the market into groups of individual markets with similar wants or needs. Generally three criteria can be used to identify different market segments: 1) Homogeneity (common needs within segment)
2) Distinction (unique from other groups)
3) Reaction (similar response to market)
Basis for segmenting consumer markets
Geographic segmentation: The market is
segmented according to geographic criteria —
neighbourhoods, or zip codes.
segmentation consists of dividing the market into
groups based on variables such as age, gender,
family size, income, occupation, education,
religion, race and nationality.
Psychographics is the science of using psychology
consumers. Psychographic segmentation: consumers are divided according to their lifestyle, personality, values and social class. Aliens within the same demographic group can exhibit very different psychographi c profiles. Behavioral Segmentation: In behavioral segmentation, consumers are divided into groups according to their knowledge of, attitude towards, use of or response to a product. It is actually based on the behavior of the consumer.
Occasions: Segmentation according to occasions. We segment the market according to the occasions of use. For example, whether the product will be used alone or in a group, or whether it is being purchased as a present or for personal use.
Benefits: Segmentations according to benefits sought by the consumer. Market segmentation allows three alternative marketing
A) Undifferentiated marketing or mass marketing (one product for all); B) Differentiated marketing (e.g. premium, standard and budget options);
C) Concentrated marketing (focusing on just one segment).
10 Steps in Market Segmentation
T arget ing
Target Market is a specific group of consumers at which a company aims its marketing efforts, products and services
The psychology of target marketing
A principal concept in target marketing is that those who are targeted show a strong affinity or brand loyalty to that particular brand. Target Marketing allows the marketer to customize their message to the targeted group of consumers in a more focused manner.
Market Targeting Options
After segmentation firms can adopt one of three strategies to target customers.
Option 1: Undifferentiated Marketing
Undifferentiated marketing is marketing that does not target a particular segment of the market. Instead the firm adopts one marketing strategy and hopes that it will appeal to as many
people as possible. Sometimes referred to as mass marketing, undifferentiated marketing usually involves targeting the whole market with one product. Coca Cola's origin al marketing
strategy was based on this format when they offered one
product, which they believed had universal appeal. However
now that Coca Cola has introduced other products, it has
changed its marketing strategy to differentiated marketing. An undifferentiated marketing strategy can be cheaper than the
other strategies because there is only one product to produce, distribute and market. It can also be cheaper because the firm is not targeting multiple market segments. The disadvantage is the challenge involved in producing a product and marketing
campaign which is universally appealing enough to make it
Option 2: Differentiated Marketing Strategy
If a firm decides to target several segments of the market, it is engaging in a differentiated marketing strategy. Under a differentiated marketing strategy, a firm will develop products and services with separate marketing mix strategies for each of the segments chosen by the firm. An airline company...