Segmentation

Mass-marketing
• A strategy that presumes there is one
undifferentiated market and that one
product will appeal to all consumers in that
market.
 Advantages of Mass Marketing

• Lower cost
• One advertising campaign is needed
• One marketing strategy is developed
• Usually only one standardized product is
developed
 Disadvantage of Mass Marketing

• It only works if all consumers have the same

needs, wants, desires, and the same
background, education and experience.
 Market matching strategy

• Today, mass marketing has largely been

replaced by a three-step market matching
strategy
 Market Matching Strategy

Market Matching

Segmentation Targeting Positioning

 Market Matching Strategy
• Segmentation
• Act of dissecting the marketplace into submarkets that
require different marketing mixes
• Targeting
• Process of reviewing market segments and deciding
which one(s) to pursue
• Positioning
• Establishing a differentiating image for a product or
service in relation to its competition
 Market segmentation

• The process of dividing a market into distinct

subsets (segments) of consumers with
common needs or characteristics and selecting
one or more to target with a distinct
marketing mix
 Market Segmentation

Definition:-
• “Grouping people according to their
similarity related to a particular
product category”
 example : metro versus retro-sexuals
 The “Man Study” by the Leo Burnett advertising
agency, which created the Marlboro Man, found that
half of all men report that they don’t know what is
expected of them in society.
 three-quarters of men think that images of men in
advertising are out of touch with reality.
 Most ads have lumped men into one of two groups:
“metrosexuals”: soft, caring males who are in touch
with their feelings. They use product in their hair,
get facial peels, wear designer clothes
“retrosexuals”: manly, macho types. They drink beer,
worship sports, work on cars.
 Segmenting male consumers
• Metrosexuals: straight urban
men who are into style,
fashion
• - Raymond man
– wear designer clothes
– like fine cuisine
– get expensive haircuts
– get waxed
– enjoy shopping at Wills
Lifestyle
 Retrosexuals (“real men”): straight
males who are more macho, prefer
masculine role differentiation
 Reid&Taylor
 Play Xbox 360 and Sony PS2
 like Carl’s Jr.
 use power tools
 enjoy shopping at Reeboks
 live in a “man cave”
 Advantages and disadvantages
• identify a new audience, market • micro-marketing can be costly
• tailor message to a specific – More time, effort, expense to
audience develop individual messages
• focus on most relevant media and strategies
• if a brand is associated with one
subgroup it may be shunned by
other subgroups
 Market Segmentation
4 commonly used bases for Segmentation

Descriptive
geographic location
demographic

Behavioural
psychographic
benefits
 Geographic Segmentation
• Division of the market based on the location of the target
market
• People living in the same area have similar needs and
wants that differ from those living in other areas
• Climate
• Population density
• Taste
• Micromarketing
 Geographic Segmentation
The reason why we study geographic segmentation is because WHERE
people live has a big effect on their consumption patterns.

Additionally, WHERE people live in a city is also a reflection of their

income level and we can make certain assumptions about their ABILITY
TO SPEND based upon their address.

This helps people plan store locations and the location of other services.
 Geographic Segmentation
Climate:

winter equipment and recreation are effected by geographic

location

An International food chain may have to change their cooking

medium to coconut oil for selling in Kerala.
To sell car in India and south Asian countries, international car
manufacturers modify their car suspensions and remove the fuel
heating system in the cars because of climate & terrain.

Clothing purchases are also effected by climate/geography.

Ladies garments are of long length in Middle east.
 Demographic Segmentation
• Partitioning of the market based on factors
such as
– age
– gender
– marital status(Singles, Divorced, Dual-income)
– income
– occupation
– education
– ethnicity
 Demographic Segmentation
Demographic Segmentation is the most common approach to Market
Segmentation
- gender is an obvious way to divide the market into segments since so
many products are gender-specific
• clothing
• medical products
• sports products/services
• entertainment
- age is another obvious way to divide the market into segments since
so many products are based upon “time of life”
• diapers for babies
• toys for children
• entertainment for “over 19”
 Demographic Segmentation
age
• also, people have different consumption patterns at different ages
•eg. Milk products
• children and teens drink a lot of milk
• adults don’t
• older adults need calcium, but don’t drink milk
(they take pills)
 Demographic Segmentation
•household (family - style) size
BUYING PATTERNS
• 0-5 young children
• 6-19 school children
• 20-34 young adults
• 35-49 younger middle-aged
• 50-64 older middle-aged
• 65+ seniors
• 80+ SUPER seniors
 Demographic Segmentation
•household (family - style) size
THE CHANGING HOUSEHOLD
• half of the households in Canada are only one, or two people
• many unmarried people, and old widowed people, live by themselves
around the globe.
 Demographic Segmentation

FAMILY LIFE CYCLE STAGES

1. Young Single
2. Young Married with no Children
3. Young - married with children
- divorced without children
- divorced with children
 Demographic Segmentation

FAMILY LIFE CYCLE STAGES

4. Middle Aged
a. married without children
b. divorced without children
c. married with children
d. divorced with children
e. married without dependent children
f. divorced without dependent children
 Demographic Segmentation

FAMILY LIFE CYCLE STAGES

5. Older
a. older married
b. older unmarried (divorced, widowed)

6. other
 Demographic Segmentation
household (family - style) size

SSWDs

single separated widowed divorced

in Canada, 1.6 million people live alone

- they buy different sizes of products
eg. Single serving soup, etc.
 Demographic Segmentation

income
Segmenting markets on the basis of income
and expenditure patterns
 Psychographic Segmentation
• Partitioning of the market based on lifestyle
and personality characteristics
• Marketers use it to further refine a target
market
• Its appeal lies in the vivid and practical profiles
of consumer segments that it can produce
• Accomplished by using AIO inventories
 AIO Inventories
• AIO research seeks consumers’ responses to a
large number of statements that measure
• Activities
• Interests
• Opinions
 How do you like your Coke?
• From a Can
• From a Pet
 Examples of the use of psychographic
segmentation reflected in marketing messages

• Kellogg’s targets health-conscious consumers

with brands such as Special K and Product 19
• Old Spice is targeting the active sports lifestyle
with High Endurance deodorant
 Behavioral Segmentation
• Partitioning of the market based on attitudes
toward or reactions to a product and to its
promotional appeals.
• Behavioral segmentation can be done on the
basis of:

1. Usage rate
2. Benefits sought from a product
3. Loyalty to a brand or a store
 1. Usage Rate
• Differentiates between
– heavy users
– medium users
– light users
– nonusers
• In general, a relatively small number of heavy
users account for a disproportionately large
percentage of product usage
• Targeting those heavy users is a common
marketing strategy
 2. Benefit Segmentation
• Marketers constantly attempt to identify the
single most important benefit of their product
that will be the most meaningful to consumers
• Changing lifestyles play a major role in
determining the product benefits that are
important to consumers and also provide
marketers with opportunities for new
products and services
 Benefit Segmentation of the Toothpaste Market
Benefit Segmentation
Segment Name
The
The Sensory The Independent
Segment Sociables The Workers Segment

Principal benefit sought Flavour, product Brightness Decay Price

appearance of teeth prevention
Demographic strengths Children Teens, young Large families Men
people
Special behavioural Users of Smokers Heavy users Heavy users
characteristics spearmint-
flavoured
toothpaste
Brands disproportionately Close-Up, Clogate ActiveSalt Pepsodent Brands
flavoured Stripe Plus White, on sale
Ultra Brite
Personality characteristics High self- High High High
involvement sociability hypochondriasis # autonomy
Lifestyle characteristics Hedonistic Active Conservative Value-
oriented
# anxiety about imaginary symptoms
 3. Brand and Store Loyalty
• The tendency of some consumers to
repeatedly select the same brand within a
given product category

• A parallel tendency of some consumers to

repeatedly patronize a particular retail
establishment
Bases for Segmenting B2B Markets

Demographic Industry, company size, location

Operating Variables Technology, user status, customer capabilities

Purchasing Approach Power structure, nature of existing relationship

Situational Factors Urgency, specific application, size of order

Personal Characteristics Buyer-seller similarity, loyalty, risk attitude

 Choosing Market Segments to Target
• Once an organization has identified its most promising
market segments, it must decide whether to target one
segment or several segments

• Each targeted segment will then receive a specially

designed marketing mix — i.e., a specially tailored
product, price, distribution network and/or promotional
campaign
 Market Targeting Strategies
There are three basic types of strategies:
1. Undifferentiated
2. Multisegment (Differentiated)
3. Concentration (Niche)
 1. Undifferentiated Strategy
• A strategy that ignores differences between
groups within a market and offers a single
marketing mix to the entire market
• It works when a product is new to the market
and there is minimal or no competition
 Advantages and Disadvantages
• Economies in production and marketing

• Vulnerability to competitors offering more

differentiated products and services to market
subsegments
2. Multisegment/Differentiated Strategy
• Targeting two or more segments with different
marketing mixes for each
 Advantages and disadvantages
• Minimizes risks, as losses in one segment can
be made up for in others
• Unique product features allow for higher
prices

• Increased costs for differentiated products

and marketing
 3. Concentration/Niche Marketing Strategy

• Focus on one sub-market

• Greater knowledge of customers’ needs
• Economies of scale

• Entry of a strong competitor

• Change in size or tastes of the segment
 Positioning
• Deciding how the firm wants the company and its
brands to be perceived and evaluated by target
markets
• Differentiating the product from other products of
the firm or its competition
• Positioning complements and is an integral
part of the company’s segmentation strategy
and selection of target markets
• The same product can be positioned
differently to different market segments
• The result of successful positioning is a
distinctive brand image on which consumers
rely in making product choices
 Perceptual Mapping
• A graphical picture of how consumers view
products or brands within a market
• Allows marketers to determine how their
product appears in relation to competitive
brands
• Enables them to see gaps in in positioning of
all brands in the product class to identify areas
in which consumer needs are not being met
 Repositioning
• Marketers may be forced to reposition
products due to competition or a changing
environment.
• Done because-
• Modifying an existing brand
• Targeting it to a new market segment
• Emphasizing new product uses and benefits
• Stressing different features with the intention
of boosting sales
• Modifying an existing brand
• Targeting it to a new market segment
• Emphasizing new product uses and benefits
• Stressing different features with the intention
of boosting sales