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Segmentation Strategies

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Presentation on theme: "Segmentation Strategies"— Presentation transcript:

1 Segmentation Strategies
Using our limited resources wisely Mass market approach Large segment approach Adjacent segment approach Multisegment approach Small segment approach Niche approach Mass customization approach

2 Segmentation Strategies
Mass Market Approach: a generic value proposition built around the core customer need and the business’s generic positioning strategy Use when: differences in customer needs are small

3 Segmentation Strategies
“Large Segment” Approach: address one set of core customer needs Use when: resources are limited advantage: benefits of segmentation while providing a relatively large market demand

4 Segmentation Strategies
“Adjacent Segment” Approach: move into the next most attractive segment Use when: growth is desired but resources are limited advantage: use profits from primary segment to move into closely related segment

5 Segmentation Strategies
“Multisegment” Approach: multiple market- based strategy where several segments are targeted, each with its own marketing mix Use when: growth is desired but resources are limited advantage: tailor our efforts toward most attractive segments improve efficiencies portfolio effect

6 Segmentation Strategies
“Small Segment” Approach: focus on the smallest segment Use when: resources are limited, specialized capabilities small segments are ignored by competitors pursuing mass market or large segment strategies

7 Segmentation Strategies
“Niche” Approach: focus on a portion of the smallest segment Use when: some needs cannot be fully addressed within a single segment

8 Segmentation Strategies
“Mass Customization” Approach: complete opposite of mass market strategy; each unique group of customer needs is a niche Use when: database marketing allows customization within each segment combines the advantages of niche segment strategy with the breadth of opportunity available in a multisegment strategy customers create their own segments Disadvantages: increased price of customized products delay in receipt of custom-made products need for customers to invest time in specifying their preferences before the product can be produced

9 So… Each segmentation strategy has its own merits and limitations Segmentation is the first step in Customer Relationship Management Demographics alone seldom provide much guidance for product development or message strategies – we need to group people on the basis of similar needs

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