1. INDUSTRY SEGMENTATION

2. TOPIC COVERS…. Definition The role of segmentation
Bases for segmenting industries
Steps in segmentation analysis

3. Definition
“Industry segmentation is the division of an industry into sub-units for purposes of developing competitive strategies” (Porter, 1985, M E p.231).
Industry segmentation is broader than market segmentation as the latter is encompassed in the former.

4. The Role of segmentation
Enables structural analysis (e.g.5 forces analysis) segment by segment.
Enables the firm to choose in which segment to compete.
Facilitates implication of focus strategies.
Exposes segments in which the firm is weak.
Facilitates the identification of KSFs for each segment.

5. Bases for Segmenting Industries
These are of four main types (Porter M E 1985)
Product Variety
Buyer Type
Channel (Immediate Buyer)segments
Geographical Buyer Location

6. Product Segments These take the following forms Physical Size
Price Level
Product Features
Technology or Design
Inputs Employed
Packaging
Performance

7. Buyer Segments Industrial Commercial Buyers buyer industry
technological sophistication
purchasing process
buyer size, etc
Consumer Goods Buyers
demographics
life style
language
purchase association

8. Channel Segments Direct Vs Distributors
Direct Mail Vs Retail/wholesale
Distributors Vs Brokers
Types of Retailers
Exclusive Vs Non-exclusive Outlets

9. Geographic Segments Localities, regions or countries Weather zones
Country stage of development

10. Steps In Segmentation Analysis
Identifying key segmentation variables.
Constructing a segmentation matrix.
Analysing segment attractiveness.
Identifying the segment’s KSFs.
Choose between narrow versus broad segment scope.

11. IDENTIFYING KEY SUCCESS FACTORS
PRE-REQUISITES FOR SUCCESS
WHAT DO CUSTOMERS WANT ? HOW DOES THE FIRM
SURVIVE COMPETITION ?
ANALYSIS OF DEMAND ANALYSIS OF COMPETITION
WHO ARE OUR CUSTOMERS ?
WHAT DO THEY WANT ?
WHAT DRIVES COMPETITION ?
WHAT ARE THE MAIN
DIMENSIONS OF COMPETITION ?
HOW INTENSE IS COMPETITION ?
HOW CAN WE OBTAIN A SUPERIOR
COMPETITIVE POSITION ?
KEY SUCCESS FACTORS