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Summary Segmenting and targeting markets
a summary on segmenting and targeting markets
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STUDY NOTESWeek 4 – Study Unit 4 – Segmenting and targeting market
1. Introduction: this unit will focus on market segmentation and targeting markets, it will also
look at the importance of segmentation and the process of segmentation
2. Outcomes:
Define market segmentation and targeting
Describe the characteristics of markets and market segments
Explain the importance of market segmentation
Discuss criteria for successful market segmentation
Outline and discuss the segmentation process
Identify and discuss comparative strategies for selecting target markets
3. Notes:
- In order to build the right relationships with the right consumers three major steps are
necessary:
Market segmentation – dividing the market into smaller groups of buyers that have
similar needs, wants and characteristics.
Target marketing – evaluating the attractiveness of each segment and choosing one or
more market segments to serve
Market positioning – deciding on a competitive position for these products
THE NATURE OF MARKET SEGMENTATION
The term ‘market’ means different things to different people, but they share several different
characteristics. They compose of people (consumer markets) or forms (business markets). They have
needs and wants that can be satisfied by a product. They have the ability to buy the products that
they desire. Lastly, they are willing to exchange their resources for the desired products.
SEGMENTATION is dividing the/ separating the market into meaningful, relatively similar and
recognisable groups or segments. In other words, segmentation is dividing your market into smaller
groups based on similar needs, wants and characteristics.
CRITERIA FOR SUCCESSFUL SEGMENTATION
- It helps marketers to identify groups of people with similar needs or characteristics. It
provides them with the information to design marketing mixes. Segmentation works with
, the marketing concept, satisfying consumer needs and wants while meeting the firms
objectives.
- 4 basic criteria for segmentation:
Substantiality - there would be no point in wasting marketing budget on a market
segment that is insufficiently large or has no spending power. The segments need to
be large enough to develop a marketing mix and needs to have spending power.
Identifiability and measurability - Market segments are usually measured in terms of
sales value or volume (i.e. the number of customers within the segment). Market
research should be able to identify the size of the market to determine whether it is a
feasible segment.
Accessibility - When dividing a market segment, it is important to consider how the
group might be accessed and whether this falls within the strengths and abilities of
the company’s marketing department. Different segments might respond better to
outdoor advertising, social media campaigns, television infomercials, or any number
of other approaches.
Responsiveness – this would look at the response rate of the market segment and
whether they have the ability to respond to the marketing efforts of the company.
BASES FOR SEGMENTING CONSUMER MARKETS
GEOGRAPHIC SEGMENTATION – Dividing the market according to geographical location,
such as regions of the country, cities, climate etc.
DEMOGRAPHIC SEGMENTATION – dividing the market based on vital statistics like age,
gender, income, race etc
Age and life cycle – the needs and wants of customers change with age. Companies
offer different products or use different approaches for different age and life cycle
groups
Gender – item like clothing, jewellery, perfume etc usually segment markets according
to gender.
Income – the level of consumer income impacts on the level of consumer spending
and their needs and wants.
PSYCHOGRAPGHIC SEGMENTATION – dividing the market into different groups
according to social class, lifestyle or personality. The most commonly used indicators of
social class include, level of education, occupation type and the type of neighbourhood.
Social class can be upper class or lower class.
Personality – people with different personalities buy differently. A compulsive buyer
will buy differently from a cautious buyer.
BEHAVIOURAL SEGMENTATION – divides buyers into groups according to their
knowledge, attitudes, use of or responses to a product.
Purchase occasion – buyers are classified according to the occasion when they
purchase. E.G turkey for Christmas, Easter eggs for Easter
Benefits sought – involves identifying the main benefits that people look for in the
product class. E.G in the toothpaste market, consumers may look for benefits like
flavour, whiteness of teeth, price etc.
User status – segmented into groups based on how often they use the product,
whether they can possibly use it or they have used it.
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