Download Revision Notes

Revision Notes
MARKET SEGMENTATION
Assembled by Arsene Kodjo
MARKET SEGMENTATION
DEFINITION
It consists of dividing a whole market
(heterogenious) into smaller and similar
groups of needs or characteristics so that the
best and profitable one can be selected and
subsequent marketing programs applied to it.
Market segmentation
Stages (STP)
1. Segmenting- dividing the market into groups of
similar needs using unique characteristics ( ex.
grouping Toyota car users by age)
2. Tageting – selecting the appropriate market
segment from various groupings ( ex. women
professional between the age 28-35 and
working in Accra)
3. Positioning- deciding how to register the
company’s services or product into the mind of
the selected target group
Market segmentation
variables for segmenting consumer market
1-Demographics Variables– general characteristics
of a population including age, gender, income,
ocupation, education, religion and family life cyle.
A familiy life cycle describes the stages in which a
person goes through from birth to adult.
Variables used in familly life cycle segmentation
include youth and single status, maried and
single,married with kids, maried but single....etc
Ex. An insurance company wishing to provide insurance package to female car users
for example will try to know the number of female who purchased brand new cars
over the past 3 to 5 years by dividing the entire market using gender variable.
Market segmentation
variables for segmenting consumer market
2- Geographic Variables- grouping a market or
customers based on where they live such as:
• Countries
• States
• Regions
• Cities
• Towns
• Regional economic or monetary blocs(ECOWAS,
EU, NAFTA)
Market Segmentation
variables for segmenting consumer market
3- Geo-demographics variables- trying to group
consumers or markets based on their behaviours
and their geographical locations
ACCORN(A Classification Of Residential Neighborhood)
is a system used in UK for geo-demographic
segmentation whereas LSM (Living Standards
Measurement ) is used in Ghana
Ex. identify the number of female car users between
the ages of 27-35 years old(demographic) and who
live in Accra (geographic)
Market segmentation
variables for segmenting consumer market
4- Psychographic segmentation- focusing on social
class of consumers.
• It involves grouping consumers on the basis of how
they live their life
• It uses AIO (Activities , Interest and Opinion) of
consumers to group them
 Activities- hobby or work
 Interest-family, job or food
 Opinion- politics, education , development
• “VALS” is also used to segment consumers based on
what influences their purchasing behaviors.
Market segmentation
variables for segmenting consumer market
• Behaviour segmentation- Grouping consumers
on how they behave or act towards particular
products . variable under this methodology are:
• Purchase behaviour (ex. Straight re-buy)
• Benefits sought
• User status and usage rate.
Others are
• CRF (Currency, Frequency , Recency )
• Prospect , Customers , Clients , Advocates and
Partners
Market segmentation
variables for segmenting industrial market
• Industrial markets means Business to business markets.
i.e. dividing organizational buyers into similar groups of
interests or characteristics.
Variables used in B2B markets segmentation include:
• Demographics – company size , history , industry type,
legal status(public or private)
• Geographical coverage (international or regional)
• Purchasing approaches (Centralised vs. Decentralised
• Situational factors
• Type of culture
Market segmentation
criteria for successful market segmentation
• Measurability – ability to measure the
variables selected
• Accessibility – ability to define and reach the
selected segment with specific marketing
programs
• Sustainability –ability to use the selected
segment to achieve the company’s objectives
Targeting
• It involves decisions about the segments on-which
the organisation will focus its resources.
There are 3 strategies to approach segments:
1. Undifferentiated marketing –approaching the
segments without taking considerations of the
varying needs
2. Differentiated marketing –approaching different
segments with different marketing mix
3. Concentrated marketing –select one or two
segments and focus all marketing efforts on them
Targeting
how to select a market after segmentation
• Remember the reasons for undertaking the project
• Define criteria for attractive market (ex. market size)
• Define your company’s strengths and capabilities (ex. strong
brand name)
• Match segments characteristics with defined criteria and
company’ capabilities
• Select
In selecting a target market, the GE matrix is a helpful tool to use
because it helps managers identify both the attractiveness of
a selected market as well as the strengths of the business or
the company trying to take advantage of such market.
Positioning
It is all about how you want your market to perceive
your offering.
Variables used in Positioning are:
• Internal variables (the company),ex. Product quality ,
service quality , personnel readiness to serve,
resource capability , experience…etc
• External variables(the market), ex. social class ,
competition , market position, relationship with
suppliers, ethical behaviours….etc
International marketing
difference between domestic and international market
Factors
Comments
Culture
Often diverse an multi-cultural
markets
Markets
Widespread and sometimes
fragmented
Data
Difficult to obtain and often
expensive
Politics
Regimes vary in stability
Governments
Sometimes strong influence
on regulating importers and
foreign business ventures
Economics
Varying level of development