Segmentation Flashcards
What is a Market?
A group of individuals/ organisations who have a need for certain products and the ability, willingness and authority to purchase such products.
Types of Markets
Heterogeneous Markets
Homogenous Markets
Heterogeneous Markets
Markets in which all customers have different requirements.
Homogeneous Markets
Markets in which all customers have similar product needs, wants and sought benefits.
Market Dynamics
Markets are now becoming more heterogeneous as consumers as seeking differentiation.
Marketers are driving towards segmenting more markets to provide a commercial advantage.
What is Segmentation?
The process of dividing a market into distinct groups with distinct needs, who might require separate products or marketing mixes.
Benefits to Segmentation
Customer analysis
Competitive analysis
Resource allocation
Strategic marketing planning
Customer Analysis
Provides for a better understanding of consumer needs and behaviour and makes for a better product fit.
Competitor Analysis
Provides for a better understanding of the competition by identifying and analysing the market segments that exist
Resource Allocation
Provides for effective use of financial and other resources/
Strategic Market Planning
provides for a better strategic vision and planning process to exploit opportunities in the marketplace.
Ways of Segmenting
Geographic
Demographic
Psychographic
Behavioural
Geographic
Country
Country Region
City
Population density - Urban, suburban, rural.
Demographic
Age Gender Family size & Life cycle Income Occupation Education Religion Race Generation
Demographic Disadvantages
People with the same demographic profile can have very different characteristics.
Psychographics
Social class - upper, working
Lifestyle - achievers, innovators
Personality - Compulsive, outgoing
Values - Compassionate, materialistic.
Behavioural
Occasions Benefits - quality, convenience User rates - non, light, medium Loyalty status - none, medium attitudes towards products, negative, enthusiastic
Geodemographics
Combines many approaches of segmentation.
Based on postcode analysis.
Where we live is correlated with many aspects of buying behaviour.
Criteria for Segmentation Effectiveness
Measurable - size, profiles Substantial - Is it big enough? Accessible- Can we get to them? Differentiable - Are segments different? Actionable - Can we implement?
Levels of Segmentation
Undifferentiated
Differentiated
Concerntrated
Undifferentiated
The least demanding approach.
Assumes the whole market is one homogenous unit with no significant differences between individuals.
Wide appeal, mass communication, mass distribution.
Low cost
Singles Marketing Mix
Economies of scales
Differentiated
Market divided into segments Each segment has a marketing mix tailor offer to each segment able to provide satisfaction spreads risk over more than one segment.
Concentrated
Concentration of resources in one segment makes for a strategically defendable position against generalists.
Focus on a single segment
Specialised approach
Niche marketing
One tailored marketing mix
Possibility of lower costs and some economy of scale.
MOSAIC
Optimises the value of your customer and locations now and in the future.
Overlays segmentation variables.
Updated every year.
The latest classifies the UK consumers into 15 groups.
Evaluation of Market Segments
Market segments need to be evaluated and ranked for possible targeting. Evaluation is based on... - Size of segment - Growth prospects - Profitability - Competitive pressure - Fit with company objectives.
