Market Segmentation

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Description of Market Segmentation. Explanation.

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Market SegmentsDefinition Market Segmentation. Description.

Market Segmentation is the marketing process of identifying and breaking up the total market into groups of potential customers with similar motivations, needs, characteristics or behavior, who are likely to exhibit homogeneous purchase behavior.


Undertaking this process allows marketing efforts to be targeted at select groups. In determining their segmentation strategy, organizations can choose to pursue the whole market with a single offer (Undifferentiated Marketing), pursue only certain segments with specific offers (Niche Marketing) or pursue individual customers with specific offers designed just for them (Customization).


The process enables a company to develop a suitable Marketing Mix for each of the chosen market segments.

A Market Segment is a (relatively) homogeneous group of customers with similar characteristics, wants, needs or behaviors which is likely to respond similarly to a given marketing mix.
 

5 Ways or bases of market segmentation

  1. Geographic Segmentation.

  2. Demographic Segmentation (age, gender, income occupation etc). Compare: JICNARS Scale

  3. Psychographics Segmentation (values, attitudes, social class, lifestyle and aspirations). Compare: Values and Lifestyles

  4. Behavioral Segmentation (occasion, benefits sought, loyalty status, user status, buyer readiness).

  5. Product differences.

Steps in segmentation. Process

  1. Identify the total market.

  2. Determine the segmenting dimensions.

  3. Profile each segment.

  4. Assess segment attractiveness.

  5. Select target market.

  6. Determine positioning (marketing mix) for each segment.

Strengths of Segmentation. Benefits

  • Organization get to know its customers better.

  • Provides guidelines for resource allocation.

  • It helps focus the strategy of the organization.

Limitations of Segmentation. Disadvantages

  • Targeting multiple segments increases marketing costs.

  • Segmentation can lead to proliferation of products.

  • Narrowly segmenting a market can hamper the development of broad-brand equity.

Book: Dowling, G. - The art and science of marketing; Marketing for marketing managers -

Book: Kotler, P., Brown, L., Adams, S. & Armstrong, G. - Marketing, 6th edition -

Book: Simpson, P.M. - Marketing segmentation and target markets; Marketing best practices; 2nd edition -




Market Segmentation Forum (12 topics) Help
  Ideas for Demand Segmentation based on the Total Need for a Product  - Traditionally, marketers have been interested in cracking demand by making more sales using tools like increased sales force, increased visibility and by direct marketing tools. These have been instrumental in increasing the bottom lines of most of t...      
  Forward and Backward Segmentation  - When you have selected the data, segments should be deduced. Two types or approaches of segmentation exist:
1. Forward Segmentation (also called A Priori Segmentation): customers are first classified on personal characteristics. Th...
     
  Conditions for a Segment  - A group of potential buyers or customers can be called a "segment" if the following four conditions are met:
1. Homogeneity; in a segment the response to an activity should be as homogeneous as possible, and between segments it sho...
     
  Market Segmentation and Target Marketing  - The concepts of market segmentation and target marketing, are they the same?...      
  Segmentation Examples  - I need 2 examples of segmentation process for psychographic and behavioral in retail consumer products goods
Thanks....
     
  Is Segmentation of Taxpayers Possible?  - How successfully could segmentation be applied to servicing taxpayers treated as customers of the government. What could be the negatives and futility of such an approach and what could be the possible upsides?...      
  Disadvantages of Demographic Segmentation  - I need to know the drawbacks of demographic segmentation. Thanks...      
  Segmentation Requirements  - Market segmentation requires accurate and reliable info, and a triangulation of the major environmental factors....      
  Market Segmenting Process  - This article discusses and explains the various steps in the market segmentation process and criteria used in determining and selecting competitive segments....      
  Segmentation and Marketing Mix  - Segmentation and the Marketing Mix are interrelated because one can know by segmenting targeted customers into individual groups how to come up with a product that best suits the needs of each group, can determine the best pricing strategy based on t...      
  Disadvantages of Segmentation  - I kindly request you to please provide with some more limitations or disadvantages of segmantation.Thank you...      
  Segmentation and Marketing Mix  - How are Segmentation and the Marketing Mix interrelated?...      



Market Segmentation Special Interest Group


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Compare with: 3 C's (Ohmae)  |  Multi Channel Marketing  |  Target Marketing  |  Positioning  |  Marketing Mix  |  Extended Marketing Mix (7-Ps)  |  4S Web Marketing Mix  |  Competitive Environment  |  Competitive Intelligence  |  Competitive Position  |  Values and Lifestyles  |  Profit Pools  |  SOSTAC

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