1. Module 3
Market segmentation
Dr. Mohamed Zamil AL-Akhtaby

2. Market segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more effectively and efficiently with products and services that match their unique needs

3. Market Segmentation Differentiation Differentiate the market
offering to create
superior customer value
Segmentation
Divide the total market
into smaller segments
Create Value for targeted
Customers divide the
total market into
smaller segments
Positioning
Position the market
offering in the minds
of target customers
Targeting
Select the segment or
segments to enter

4. Market Segmentation Segmenting consumer markets
Segmenting business markets
Segmenting international markets
Requirements for effective segmentation

5. Segmenting Consumer Markets
Market Segmentation
Segmenting Consumer Markets
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation

6. Segmenting Consumer Markets
Market Segmentation
Segmenting Consumer Markets
Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities

7. Segmenting Consumer Markets
Market Segmentation
Segmenting Consumer Markets
Demographic segmentation: Dividing the market into groups based on variables such as:
Age
Gender
Income
Occupation
Education
Religion
Race
Generation
Nationality

8. 9.2 How Are Market Segments Best Defined?
Age
Demographic
Descriptors
Gender
Education

9. 9.2 How Are Market Segments Best Defined?
Demographic
Descriptors
Family
size
Occupation
Income

10. 9.2 How Are Market Segments Best Defined?
Few financial commitment. Recreation and fashion oriented.
Buys cars, entertainment items, and holidays.
Better off financially.
High purchase rate of consumer desirables.
Buy cars, white goods and furniture.
House buying is at peak. Liquid assets are low.
Dissatisfied with level of savings and financial position.
Buy medicine, toys, school tuition, and white goods.
Family lifecycle
Home ownership is at peak.
Financial situation, and savings have improved.
Interest in travel, recreation, and self-education.
Not interested in new products.
Buy holidays, luxuries, and home improvements

11. 9.2 How Are Market Segments Best Defined?
Demographic
Descriptors
Race
Religion
Nationality

12. Market Segmentation Segmenting Consumer Markets
Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits
Social Class
Lifestyle
Personality

13. Segmenting Consumer Markets
Market Segmentation
Segmenting Consumer Markets
Behavioral segmentation: Dividing the market into groups based on variables such as:
Occasions
Benefits
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product

14. Geographic Demographic Psychographic Behavioral Occasions Benefits
Country
Region
City
Metro size
Density
Climate
Social Class
Life style
Personality
Age
Gender
Family life cycle
Family size
Income
Occupation
Education
Religion
Race
Nationality
Occasions
Benefits
User status
User rates
Loyalty status
Readiness stage
Attitude toward
The product
Geographic
Demographic
Psychographic
Behavioral

15. Segmenting Business Markets
Market Segmentation
Segmenting Business Markets
Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries

16. Market Segmentation Geographic Location
Segmenting International markets
Factors Used to Segment International Markets
Geographic
Location
Economic
Factors
Cultural
Political and Legal Factors

17. Market Segmentation Measurable Accessible Substantial Differential
Requirements for Effective Segmentation
market segments must be:
Size, purchasing power, profiles
of segments can be measured.
Segments can be effectively
reached and served.
Segments are large or profitable enough to serve.
Measurable
Accessible
Substantial
Differential
Actionable
Segments must respond differently to different marketing mix elements & programs.
Effective programs can be designed to attract and serve the segments.

18. Market Segmentation Differentiation Differentiate the market
offering to create
superior customer value
Segmentation
Divide the total market
into smaller segments
Create Value for targeted
Customers divide the
total market into
smaller segments
Positioning
Position the market
offering in the minds
of target customers
Targeting
Select the segment or
segments to enter

19. Selecting Target Market Segments
Market Targeting
Selecting Target Market Segments
Target market consists of a set of buyers who share common needs or characteristics that the company decides serve

20. Market Targeting Mass Marketing Target Marketing Strategies
Same product to all consumers
(no segmentation, i.e Coca-Cola)
Market Targeting
Target Marketing Strategies
Undifferentiated marketing targets the whole market with one offer
Mass marketing
Focuses on common needs rather than what’s different

21. Market Targeting Target Marketing Strategies Segment Marketing
Different products to one or more segments
(some segmentation, i.e. Marriott)
Differentiated marketing targets several different market segments and designs separate offers for each
Goal is to achieve higher sales and stronger position
More expensive than undifferentiated marketing

22. Market Targeting Niche Marketing
Different products to subgroups within segments
(more segmentation, i.e. Standard or Luxury SUV’s)
Market Targeting
Target Marketing Strategies
Concentrated marketing targets a small share of a large market
Limited company resources
Knowledge of the market
More effective and efficient

23. Market Targeting Micromarketing
Products to suit the tastes of individuals and locations
(complete segmentation)
Market Targeting
Target Marketing Strategies
Local Marketing
Tailoring brands/ promotions to local customer groups.
Individual Marketing
Tailoring products and programs to the needs of individual customers, i.e. Dell
Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations

24. Market Targeting Choosing a Target Market Company Resources
Product Variability
Product’s Stage in the Life Cycle
Market Variability
Competitor’s Marketing Strategies

25. Market Segmentation Differentiation Differentiate the market
offering to create
superior customer value
Segmentation
Divide the total market
into smaller segments
Create Value for targeted
Customers divide the
total market into
smaller segments
Positioning
Position the market
offering in the minds
of target customers
Targeting
Select the segment or
segments to enter

26. Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position
Choosing the right competitive advantages
Selecting an overall positioning strategy

27. Differentiation and Positioning
Product’s Position - the way the product is defined by consumers on important attributes - The place the product occupies in consumers’ minds relative to competing products.
Impressions
Perceptions
Feelings

28. Differentiation and Positioning
Identifying Possible Value Differences and Competitive Advantages
Competitive advantage is an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices

29. Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy
Identifying a set of possible competitive advantages to build a position by providing superior value from:
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation

30. Identifying Possible Competitive Advantages
Product
Differentiation
i.e. Features, Performance, Style & Design, or Attributes
Services
Differentiation
i.e. Delivery, Installation,
Repair Services, Customer
Training Services
Image
Differentiation
i.e. Symbols, Atmospheres, Events
Personnel
Differentiation
i.e. Hiring, Training Better People Than Competitors Do

31. Differentiation and Positioning
Selecting an Overall Positioning Strategy
Value proposition
is the full mix of benefits
upon which a brand
is positioned

32. Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix
Marketing mix is the set of controllable tactical marketing tools — product, price, place, and promotion—that the firm blends to produce the response it wants in the target market

33. Marketing Strategy and the Marketing Mix
Developing an Integrated Marketing Mix

34. Marketing Strategy and the Marketing Mix

35. Marketing Mix 4P’s& 4C’s Product (Customer Solutions) Price (Cost)
Place (Convenience)
Promotion IMC (Communication)
Promotion IMC (Communication)7 P’s Extended in case of Services)
People
Process
Physical Facilities

36. Thank You