What is Segmentation?

Segmentation is the process of dividing a company’s target market into groups of

potential customers with similar needs and behaviors.

5 C's STP 4 P's

Customer Segmentation Product
Company Targeting Price
Context Positioning Place
Collaborations Promotion
Competitors
What are Market Segments?
A market segment is a group of customers who share similar inclinations toward a brand.
On a continuum from mass marketing to one-to-one marketing, market segmentation is in the
middle.

Market Segmentation
Markets consist of buyers, and buyers differ in many ways. Market can be segmented in a
number of ways. Here we will examine levels of segmentation, patterns of segmentation, market-
segmentation procedure, bases for segmenting consumer and business markets, and requirements
for effective segmentation.
 Market Positioning
5. Identify possible
positioning concepts for
Market Targeting each target segment.

3. Evaluate the 6. Select, develop, and

Market Segmentation attractiveness of each communicate the chosen
1. Identify segmentation segment. positioning concept.
variables and segment
the market. 4. Select the target
2. Develop profiles of segment(s).
resulting segments.

 Market segmentation - is the process of dividing a market of potential customers into

groups, or segments, based on different characteristics. The segments created are
composed of consumers who will respond similarly to marketing strategies and who
share traits such as similar interests, needs, or locations.

What Information Serves as Bases for Segmentation?

 1.) Demographic - Demographics is the study of a population based on factors such as
age, race, and sex. Demographic data refers to socio-economic information expressed
statistically, also including employment, education, income, marriage rates, birth and
death rates and more factors. Governments, corporations, and nongovernment
organizations use demographics to learn more about a population's characteristics for
many purposes, including policy development and economic market research.

Understanding Demographics

 Demographics is the collection and study of data regarding the general characteristics of
specific populations. It is frequently used as a business marketing tool to determine the
best way to reach customers and assess their behavior.
 Segmenting a population by using demographics allows companies to determine the size
of a potential market.
 The use of demographics helps to determine whether its products and services are being
targeted to that company's most important consumers. 

Types of Demographic Information

 
The common variables that are gathered in demographic research include:
Age
 Sex
Income level
Race
Employment
Homeownership
Level of education
 Two demographic characteristics frequently used in segmentation studies are education
and income.
 Ethnicity is also important. Any one of the groups is sizeable enough to influence a
market.
 Any variable has potential depending on its relevance.
 They have the advantage of being clear and easy to recognize.

 2.) Geographic - Geographic segmentation is when a business divides its market on the
basis of geography. There are several ways that a market can be geographically
segmented.
 You can divide your market by geographical areas, such as by city, country, region, or
international region, (like Asia).
 You can also divide the market into rural, suburban, and urban market segments. And,
you can segment a market by climate or total population in each area.

 Advantages of Geographic Segmentation

 It's an effective approach for companies with large national or international markets
because different consumers in different regions have different needs, wants, and cultural
characteristics that can be specifically targeted.
 It can also be an effective approach for small businesses with limited budgets.
 It works well in different areas of population density. Consumers in an urban
environment often have different needs and wants than people in suburban and rural
environments. There are even cultural differences between these three areas.

 3.) Psychological - Psychographic segmentation is dividing your market based upon

consumer personality traits, values, attitudes, interests, and lifestyles.
 Segmentation will allow you to better develop and market your products because there
will be a more precise match between the product and each segment's needs and wants.

Segmentation in Action
 Segments are groups of customers. The confusion is understandable because companies
doing good marketing try to offer different products to serve different segments. Each
segment has different needs rather than trying to force-fit one product on the whole
market, and rather than forgoing the business of many customers in the market, the
company offers different products or brands or brand extensions so as to optimize the
satisfaction of its customer segments.
  Categories of segmentation data that are particularly useful for consumers, marketers
segmenting their business clients most frequently use size. Size can be defined in a
number of ways, company sales, market share, number of employees, client’s share of
provider’s business etc.
Concept in Action: Segmentation Variables
 No variability says that customers are homogenous in their perceptions, which and give
advice, they will perceived by others opinion leaders or innovation, and they would be
ideal persons for the marketer to identify as people likely to generate word of mouth.
Some customers are early adopters, caring about new developments in their category,
seeking out new products.
Behavioral
 Beyond attitudes, psychographics and lifestyle, marketers would like to know what
customers purchase not just what they report they intend to purchase.
Personality - Marketers have used personality variables to segment markets. They endow their
products with brand personalities that correspond to consumer personalities.
Behavioral Segmentation
 A buyers are divided into groups with the basis of their knowledge of attitude toward use
of or response to a product.

 Occasions. Buyers can be distinguished according to the occasions they develop a need,
purchase a product or use a product.
 Benefits. A powerful form of segmentation involves classifying buyers according to the
benefits they seek from the product.
 User Status. Markets can be segmented into groups of nonusers , ex-users, potential users,
first time users, and regular users of a product.
 Usage Rate. Markets can be segmented into light, medium, and heavy product users.

LEVELS OF MARKET SEGMENTATION

1. Mass Marketing
2. Segment Marketing
3. Niche Marketing
4. Local Marketing
5. Individual Marketing
6. Self Marketing

MASS MARKETING
- Market strategy in which a firm decides to ignore market segment differences and
appeal the whole market with one offer or one strategy.
SEGMENT MARKETING
- it is the activity of dividing a broad consumer or business market, normally consisting
of existing and potential customers into sub groups of consumer.
NICHE MARKETING
- it is the subset of market on which a specific product is focused.
LOCAL MARKETING
- it is a market strategy that targets customers by a finely grained location such as a city
or neighborhood. Involves identifying and implementing opportunities in local communities.

INDIVIDUAL MARKETING
- Also known as one-to-one marketing, a marketing strategy by which companies leverage data
analysis and digital technology to deliver individualized messages and product offerings.
SELF MARKETING
-it is the process of promoting a person rather than a product.

MARKET TARGETING - is the process of selecting the target market from the entire market.
It consists of group/groups of buyers to whom the company wants to satisfy.

EVALUATING THE MARKET SEGMENTS - First, the firm must ask whether a potential
segment has the characteristic that make it generally attractive such as size, growth, profitability,
scale economies and so on.
Second, the firm must consider whether investing in the segment makes sense given the firms
objectives and resources.
FIVE PATTERNS OF TARGET MARKET
1. Single segment concentration
- Company is selling one product in the single market.