1. Part 3 Marketplace Dynamics
Chapter 16
Segmenting a Market

2. Chapter Objectives
Explain how segmentation helps a marketer determine a market to target.
List the four categories of segmentation variables for the consumer market.
Explain each segmentation category and give one example.
Describe how marketers use more than one segmentation variable.

3. Market Segmentation Segmentation variable
customer characteristic used to segment a market
Age
Income

4. Market Segmentation
Segmentation variables are organized into four categories
geographic
demographic
psychographic
behavioral
What customer characteristics come to mind when you consider these categories?

5. Geographic Variables Geographic segmentation
dividing a market based on where customers live

6. Location Location Example: car manufacturer not climate
geography of place
customs of place
Example: car manufacturer
For the United Kingdom market, steering wheel on the right
For the United States market, steering wheel on the left

7. Climate
Climate
different climates require different types of products, such as
clothing
automobile tires
housing
heating and air conditioning

8. City Size Market size often varies with city size
Ch. 16, Segmenting a Market
City Size
Market size often varies with city size
for some products, a small city might not have a large enough market to generate enough profit
Small
Medium
Large

9. City Size
Example: some restaurant chains will open only in cities of 200,000 or more people
Conversely, some products are very successful in small markets

10. Demographic Variables
Census
count of the people in a country made by the government on a regular basis
the U.S. government takes a census every ten years
Demographic information
statistics (numbers) that describe the characteristics of a population
collected in a census

11. Demographic Variables
Demographic variables are used to segment large markets into smaller markets that might be good target markets
Demographic segmentation
the process of segmenting a market based on demographic variables
Choose a demographic variable. How would you use it to segment a market?

12. Age
Generation
group of people who were born or grew up during a particular period of history
People in the same generation generally have similar attitudes, wants, and needs
The U.S. consumer market is often segmented by generations

13. In which generation do you belong? your parents?
Age
In which generation do you belong? your parents?

14. Gender Markets are often segmented into products for men or women
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Name some products that were developed to meet the specific needs of men or women.

15. Ethnicity
Needs for many products vary with ethnic or cultural heritage
examples
ingredients for making ethnic foods
items for religious practices

16. Income Marketers are interested in two categories of income
disposable income
money left after taxes are taken out
discretionary income
money left after taxes are taken out and after necessities are paid for
A market is often segmented based on income levels

17. Family Size Families of different sizes have different needs
Describe the differences in purchases between a single person and a large family.

18. Psychographic Variables
Psychographic segmentation
based on psychological characteristics of customers

19. Hobbies and Activities
People who participate in the same hobbies and activities often buy similar things
examples of hobbies and activities
photography
quilting
stamp collecting
sports
cultural events

20. Behavioral Variables Behavioral segmentation
dividing a market based on the way customers use a product
Behavioral variables include
features desired
usage rate
brand loyalty

21. Features Desired Customers vary in the features they want
some just want the basics
others want advanced or extra features
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22. How could you use the difference in usage rate to segment a market?
80/20 rule
most of the profits (80%) come from a few customers (20%) who show the greatest brand loyalty
Marketers often segment the market based on customer usage rates
heavy, moderate, light, nonuse
How could you use the difference in usage rate to segment a market?

23. Market Segment Profile
a detailed description of the typical customer in a market segment
Includes information on
geographic variables
demographics
psychographics
behavior relevant to the product