Identification of individuals or organizations with similar characteristics THAT HAVE SIGNIFICANT IMPLICATIONS FOR THE DETERMINATION OF MARKET STRATEGY. Why do businesses need to segment their markets? Because customers differ in the ... · Benefits they want · Amount they are able to or willing to pay · Media (e.g. television, newspapers, and magazines) they see · Quantities they buy · Time and place that they buy · Dividing a diverse market into groups of customers with similar requirements ... . ... so that the particular product-related needs of these groups can be met effectively ... . ... while the size of such groups is large enough to allow the firm to serve them profitably From segmentation to targeting The disaggregated market - the characteristics of individual customers are understood The segmented market - customers are grouped into segments on the basis of having similar characteristics The target market - segment 3 (marketing mix targeted at segment 3) is judged to be most attractive and a marketing mix strategy is designed for the target market The process of market segmentation The disaggregated market - the characteristics of individual customers are understood The segmented market - Customers are grouped into segments on the basis of having similar characteristics Psychographic segmentation A brand becomes a statement of one's personality Market segmentation offers the following potential benefits to a business: Better matching of customer needs Customer needs differ. Creating separate products for each segment makes sense Enhanced profits for business
Customers have different disposable incomes and vary in how sensitive they are to price. By segmenting markets, businesses can raise average prices and subsequently enhance profits Better opportunities for growth Market segmentation can build sales. For example, customers can be encouraged to "trade-up" after being sold an introductory, lower-priced product Retain more customers By marketing products that appeal to customers at different stages of their life ("life-cycle"), a business can retain customers who might otherwise switch to competing products and brands. Target marketing communications Businesses need to deliver their marketing message to a relevant customer audience. By segmenting markets, the target customer can be reached more often and at lower cost Gain share of the market segment Through careful segmentation and targeting, businesses can often achieve competitive production and marketing costs and become the preferred choice of customers and distributors To position yourself successfully there are 4 Cs 1. Clarity - clear message to customers 2. Consistency - well blended marketing mix 3. Credibility - position credible in the mind of the consumer (be able to deliver what you promise) 4. Competitiveness - offering something which competitors do not offer