1. chapter 5
segmenting
markets

2. learning objectives_1
Explain how both B2B and consumer markets can be broken down into smaller, more manageable groups of similar customers
Understand the effects on the marketing mix of pursuing specific segments
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3. learning objectives_2
Understand the potential benefits and risks of segmentation
Appreciate the role of segmentation in strategic marketing thinking
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4. Segmentation Defined
Segmentation is the art of discerning and defining meaningful differences between groups of customers to form the foundations of a more focused marketing effort.
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5. eg business and consumer travel markets
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6. Stages of Segmentation for B2B Markets
Identify subgroups within the whole market that share common general characteristics (macro segments)
Select target segments from macro segments based on differences in specific buying characteristics (micro segments)
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7. B2B Segmentation Bases Macro Size Location Usage rate Micro Product
Applications
Technology
Purchasing and decision-making processes
Buyer-seller relationships
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8. Consumer Segmentation
Similar to B2B segmentation, except
Consumer segments tend to be larger
More difficult to get close to buyer
More emphasis on lifestyle and context
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9. Consumer Segmentation Bases
Geographic
Multi-variable
Geodemographic
Behaviour
Psychographic
Demographic
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10. eg Geographic Segmentation and Instant Hot Chocolate
Ideal for UK market (homes equipped with kettles, nice bedtime drink, or substitute for tea
Less so for French market (kettles uncommon, norm of making hot chocolate with milk rather than water)
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11. Demographic Segmentation
Age
Gender
Race
Income
Occupation
Social status
Family structure
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12. eg Geodemographic Segmentation and Mosaic
The analysis of people by where they live
Micro-targeting system
Targets by neighourhood
Source: Experian Ltd, © 2005 Experian Ltd. All rights reserved. The word ‘Experian’ is a registered trademark in the EU and other countries and is owned by Experian Ltd and/or its associated companies
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13. Psychographic Segmentation
Lifestyle segmentation
Categories
Activities
Interests
Opinions
Demographics
Quorn targets vegetarians with meat substitutes
Source: © Quorn
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14. eg Lifestyle Orientations in China
Fashion-orientated
Tradition-orientated
Achievement-orientated
Moderate-orientated
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15. Lifestyle Orientations in the USA
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16. Why Use Psychographic Segmentation?
To define a target market
To create a new view of the market
To position the product
To better communicate product attributes
To develop overall strategy
To market social and political issues
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17. Behaviour Segmentation
End use
Benefits sought
Usage rate
Loyalty
Attitude
Buyer readiness
eg usage segmentation in the soup market
Dinner party starter
Warming snack
Meal replacement
Recipe ingredient
Easy office lunch
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18. Loyalty Segments Current loyal user, continuing purchase
Current customer, switching possible
Occasional user, could become loyal
Occasional user, switching possible
Non-user, could become user
Non-user, unlikely to become user
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19. Figure 5.2 The AIDA Response Hierarchy Model
Awareness
Interest
Desire
Action
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20. Segmentation Targeting Strategies
Concentrated
Undifferentiated
Differentiated
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21. Undifferentiated Strategy
Marketing mix
The market
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22. Differentiated Strategy
Marketing mix 1
Segment 1
Marketing mix 2
Segment 2
Marketing mix 3
Segment 3
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23. eg Cadbury’s Market Segments
Immediate eat
Home stock
Kids
Seasonal
Gift
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24. Concentrated Strategy
Marketing mix 2
Segment 2
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25. Criteria for Successful Segmentation
Distinctiveness
Tangibility
Accessibility
Defendability
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26. Key Terms_1
Which bases of segmentation groups consumers in terms of their usage rate, the purpose of use, or their willingness and readiness to buy?
Behavioural segmentation
_____ occurs when a consumer consistently buys the same brand over a long period.
Brand loyalty
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27. Key Terms_2
_____ stages categorise consumers in terms of how close they are to making a purchase or a decision.
Buyer readiness
Which segmentation base considers the measurable aspects of population structure, such as birth rates, age profiles, family structures, education levels, occupation, income and expenditure patterns?
Demographic segmentation
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28. Key Terms_3
_____ is a combination of geographic and demographic segmentation that can either give the demographic characteristics of particular regions, neighbourhoods and even streets, or show the geographic spread of any demographic characteristics.
Geodemographics
Which segmentation base groups customers in terms of their geographic location?
Differential advantage
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29. Key Terms_4
_____ means to group consumers on the basis of psychographic characteristics.
Lifestyle segmentation
_____ segments in B2B markets are defined in terms of broad organisational characteristics such as size, location and usage rates, or in terms of product applications.
Macro
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30. Key Terms_5
_____ segments in B2B markets are defined in terms of detailed organisational characteristics such as management philosophy, decision-making structures, purchasing policies.
Micro
What term refers to using a number of different variables to develop a rich profile of a target group of customers?
Multivariate segmentation
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31. Key Terms_6
Which bases of segmentation defines consumers in terms of their attitudes, interests and opinions?
Psychographics
_____ are consumers who are not loyal to any one brand of a particular product and buy two or more brands within the category.
Switchers
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32. Key Terms_7
_____ is the process of deciding how many market segments to aim for and how to do it.
Targeting
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