1. Market Segmentation

2. Lesson Objectives Understand market segmentation
Know benefits and disadvantages of market segmentation
Have relevant examples for each method
Able to analyse a market using the most appropriate tools

3. Who are these products targeted at?

4. Market Segmentation

5. Definition Is the process of breaking down a market into sub groups
Uses market research to find information on people who would fit into the product or services’ target market
E.g. Threshers used such information to make sure each store was stocked with goods suitable to the population of the area it serves

6. Benefits
Should allow a business to sell more products and increase profits
Understand customers better and vary products to suite their needs
Helps target products at specific customer groups
Prevent wrong product promotion, leading to a waste of resources
Allow marketing a wider range of differentiated products
Develop business loyalty when needs are met

7. Types of market segmentation
There are four main types:
Geographical – where they live?
Demographic – by gender, class, age, ethnicity or religion
Psychographical – by lifestyle and personality
Behaviour – by how they act (repeat purchases)
E.g. Tesco use storecard to gain customer information

8. Geographic segmentation
Including where the consumers live and the nature of the region
Type of house or area of the city they live in
Global businesses will sell different products in various parts of the world (Nestle sells profiteroles in France)
Goods can also be priced differently across the globe - car manufacturers (economy, production)
However, consumers tastes are becoming more uniform across geographic boundaries (football club supporters)

9. Demographic Segmentation
Age – music gets targeted at different categories of age
Gender – targeting males and females because they have different spending patterns (Ford Ka targeted women)
Social Class – Look at table 1 in text books, based on employment status and conditions (used by banks and insurance companies)
Income – A self employed electrician and a middle manager could have the same income (watch companies in magazines)
Religion – Food producers may specialise in Kosher food for Jewish people, also sky Christian channels
Ethnic grouping – Radio stations gear towards certain groups, Radio 1 extra for black music

10. Market segmentation
A Higher managerial, administrative or professional
B Intermediate managerial, administrative and professional
C1 Supervisory, clerical, junior administrative or professional
C2 Skilled manual workers
D Semi and unskilled manual workers
E State pensioners, widows, lowest grade workers.

11. Psychographic Segmentation
Groups customers according to attitudes, opinions and lifestyles
Sports products aimed at different groups, football boots in a football magazine
Attitudes used to segment the market
Mobile phones offer internet access for business travellers
Newspapers geared towards how people vote
However, it can be difficult for businesses to collect this data and may require hiring in a specialist

12. Behavioural Segmentation
Segments on how consumers relate to a product
Usage rate – consumers are categorised according to quantity and frequency of purchase (BA has executive club)
Loyalty – The Tesco Clubcard offers discounts for loyalty to store
Time and date of consumption – Bars encourage different groups on certain nights of the week
On its own may fail to capture the target market so needs to be used in accordance with other methods

13. TASK
Choose one of the products listed below and state how it has been segmented for the market.

14. Market Segmentation and strategy

15. Market Segmentation and strategy
Recap on segmentation
Understand different marketing strategies
Know targeting and positioning strategies

16. Market Segmentation and strategy
How do they segment the market?
Think of different Ford Products
Who are their target market?
Why do they have so many products?

17. Segmentation, targeting and positioning
Planning a marketing strategy
Identify the market
Market segmentation
Developing customer profiles
Evaluating market segments
Market targeting
Selecting market segments to target
Positioning for each market segment
Market positioning
Developing a marketing mix for each target segment

18. Targeting Undifferentiated strategy :
Try to promote the business to the whole market,
some newspapers for example
Businesses producing commodities like oil do not need to produce products for specific market segments, PG Tips
A detergent manufacturer might sell cleaning products to consumers and cleaning companies, but it could use different packaging for both products
Concentrated strategy :
Targeting just one market segment, Gucci

19. Targeting Differentiated strategy :
Different products are marketed to different groups of people, banks services for teenagers and retired people
Some businesses are trying to move away from undifferentiated marketing strategies to better target consumer needs. Milk for example was marketed in this way, now it is differentiated by fat levels, skimmed etc.
Consumer profiles – information that tells businesses about consumers of a particular product and their characteristics. Cinemas have 50% of customers between the age of

20. Positioning
Takes into account the views and perceptions that consumers have about products
Consumers catagorise products according to quality, status or value for money
These catagories define the products’ position
How to gain a strong position?
Use a unique selling point to establish a position within the market, like Purdey’s drinks with herbs and minerals
Attributes like Flora pro-active having cholestrol reducing qualities
Origins, Fosters emphasises it is an Australian beer
Luxury, such as Thorntons chocolates

21. Positioning
As markets and consumers’ tastes change a business may try to reposition its product. This can involve changing the image of the product , its features or its target market. E.g.. Lucozade was changed from a drink which people took when they were ill to one used for sport.

22. Questions How can a market be segmented geographically? (3)
How might a business, plan concentrated marketing strategy? (6)

23. Marketing strategy
Segmenting the market – Identify how to segment the market
Develop customer profiles – Who are your customers? Done through market research and once identified draw up a consumer profile
Evaluating market segments – Which segments are worth targeting?
Selecting market segments – Which will be the target market?
Position the product for the target segment – How to position the product within the market? Look at competition and how will it differentiate itself

24. Marketing strategy
Developing a marketing mix for each target segment - Finally the business must develop a marketing mix. Take into account the 4 p’s suited to the market segment. Always responding to market and customer needs.
Problems
Sometimes the buyer is not the main influence on the product, especially the increasing effect of pester power. Some researchers say this results in a purchase 2/3 of the time.

25. CASE STUDY The power of the Muslim pound Page 71 in text books
Answer questions b,c and d.

26. Plenary Everyone should understand : Market segmentation
Market targeting
Market positioning
Marketing strategies

27. Questions What is meant by a market segment? (3)
How can market segmentation benefit a business? (3)
List three ways, with examples, of how a business can differentiate the product. (3)