This document discusses market segmentation. It defines market segmentation as dividing a total market into smaller, internally similar groups based on factors that influence demand. The key bases for segmentation include geographic, demographic, psychographic, and behavioral factors. The segmentation process involves identifying customer needs and wants, distinguishing characteristics between segments, and estimating market potential. For effective segmentation, the distinguishing characteristics must be measurable, segments must be accessible at low cost, and segments must be large enough to be profitable. Benefits of segmentation include satisfying specific customer groups and selecting target markets.
2. Market Segmentation
Objectives of the Study
Definition of the Segmentation
Basis of Segmentation
Market Segmentation Process
Conditions for Effective Segmentation
Bases for Segmentation
Benefits of Segmentation
Limitations of Segmentation
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3. Objectives of the Study
Be able to define the three steps of target marketing: market
segmentation, target marketing, and market positioning.
Understand the major bases for segmenting consumer and
business markets.
Know how companies identify attractive market segments
and how they choose a target marketing strategy.
Comprehend how companies position their products for
maximum competitive advantage.
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4. Market Segmentation
Definition:
This is the process of dividing the total market for a
good or service into several smaller, internally similar
(or homogeneous) groups.
All members in a group have similar factors that
influence their demand for the particular product.
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5. Bases for Segmentation
Geographic — The city size, urban/ suburban/ rural population distribution and
climate.
Demographic — The distribution of a population’s age, sex, income, stage in
family cycle and ethnic background.
Psychographic — Personalities, lifestyles, social class including activities,
interests and opinions (AIO).
Behaviour towards products.
◦ Benefits desired or sought.
◦ Product usage rate.
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7. Market Segmentation Process
The process involves:
Identifying the needs and wants of customers.
Identifying the different characteristics between market
segments.
Estimating the market potential
◦ Market demand.
◦ Market potential.
◦ Sales potential.
◦ Market share.
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8. Conditions for Effective Segmentation
A segmentation process must meet 3 conditions:
1.The characteristics used to categorise customers must be
measurable and the data obtainable.
2.The segment itself must be accessible through existing
marketing institutions with a minimum
of cost and waste.
3.A segment must be large enough to be profitable.
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9. Bases for Segmenting Business Markets
Segmentation is based on consumer categories plus:
Customer Location.
Geographic Concentration.
Type of Customer.
Size, industry.
Organisational structure.
Purchasing style and criteria.
Type of Buying Situation.
New buy.
Rebuy.
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10. Benefits of Segmentation
Segmentation enables marketers to:
Identify and satisfy specific benefits sought by particular groups.
Divide the market into segments by separating marketing programs.
Select target market.
Action the market segmentation plan.
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11. Limitations of Segmentation
1. Segments are too small.
2. Consumers are misinterpreted.
3. There are too many brands.
4. Consumer are confused.
5. Costing is not taken into consideration.
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12. Conclusion
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Segmentation is the tool that enables the Organization
to identify different groups of customers, and provide
the best possible products to meet individual
requirements.
The market consists of different consumers with
differing needs.
Understanding segmentation enables the Organization
to maintain a Number 1 value position in the market.