2What is Market Segmentation? A market is people or organizations with needs to be satisfied, money to spend and the willingness to spend it.But buyers of a single product or service differ. This is the logic behind market segmentation.
3Six End-User MarketsThe retail or consumer market (households, families)The institutional market (hospitals, schools, prisons, day-care centers)The commercial market (retailers, wholesalers, and business-to-business services) and industrial market (manufacturers, processors and natural resources)The government market (municipal, provincial and federal departments and agencies)The agribusiness market (farms)The export market (other countries)(These may be potential markets for your product)
4Market SegmentationFirst: Inquire about the existence and satisfaction of needs/ wants and benefits sought in each of the six potential end-user markets.Second: Look specifically in each market for detailed characteristics of buyers in that market.
5Ways the Consumer Market might be Segmented: Demographics (characteristics of buyers)Behavior
6Demographics Age group Gender Size of Household Marital Status Presence of ChildrenFamily Life CycleEducation LevelOccupationReligionLanguage(s) SpokenRaceNationalityGeography (region, urban, rural, climate)IncomeLifestyle
7BehaviorBenefits Sought (for example: for toothpaste-whiter teeth, no cavities, fresher breath)Usage Level (light, medium, heavy)User Status/ Patronage Level (non-user, ex-user, potential user, regular user)Readiness Level / Intention to Purchase (unaware, aware, informed, interested)Current Ownership (have none, one, two, types or brands owned)Loyalty Status (brand loyal, store loyal, “deal” loyal, switcher)
8Bases of Market Segmentation The basis of Market Segmentation is to select the market segment that is most meaningful, to better satisfy more people.Many market segments are unique to a particular product or market (example: Hair color matters to manufacturers of tinting products or the number of children in a household participating in minor hockey matters to summer hockey schools).
9Classifying Potential Customers The Key is to find one or more ways of classifying or grouping users or potential users that really matter in terms of reaching them and meeting (satisfying) their needs.
10Selecting Target Markets The key reason to do segmentation analysis is to identify potential Target Markets:Your unique package of benefits as compared to your direct or indirect competition.The size, location and needs of various buyer groups (segments)Your resources and ability to efficiently reach any particular buyer group (segment)
11Select a Market Segment (group) That is big enough to warrant attentionThat is not as satisfied as they want to beThat are relatively easy to reach via available channels of distribution and advertisingThese groups are your Target Markets (each target market is unique and defines who, when and where of a marketing strategy)
12PositioningPositioning offers some advantage over the competition in a way that matters to a particular target market.Entrepreneurs must design a package of benefits- product, price, place, promotion that offers an advantage over the competition.
13Positioning Questions: Does your toothpaste reduce cavities better than other brands?Is your accounting software package fully compatible with the leading data base software?Is your ice cream really richer or more flavorful?Can your product be on any customer’s doorstep in 24 hours?Do you offer unique sizes?Is the image or personality of your store or product appealing to a large group of buyers?
14How are You Better?The market positioning for any product , service or store is how you wish o be seen in the eyes of members of your target markets compared to other products, services or stores.Your market positioning statement should catch your buyer’s attention and indicate how you are different from and better than available alternatives!Advertising Slogans often reveal market positions.