Market Segmentation

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Market Segmentation:

Market Segmentation

Market Aggregation:

Market Aggregation 2 The market No segmentation heterogenous customers homogenous product no differentiation


Segmentation 3 S-1 S-2 S-3 It is dividing the market into distinct group of customers with similar requirements Segments must be Identifiable Measurable Accessible, reachable Substantial enough Unique enough Durable/stable Good market segmentation has internally homogenous members and is externally heterogeneous

Why Segment Business Market:

Why Segment Business Market It is complex and heterogeneous Distinct differences exits among buying policies, procedures and practices It allows to develop more specialized products for the clients it is more attuned to customer needs It is more effective way to use resources It gives better direction for creating marketing mix elements

Business Marketing Segmentation:

Business Marketing Segmentation Geographic Customer Type Customer Size Product Use Business Markets Purchasing Criteria Purchasing Strategy Importance Personal Characteristics Micro- segmentation Macro- segmentation

Approaches to Market Segmentation:

Approaches to Market Segmentation Macro Segmentation Geographic characteristics Demographic characteristics Observable buying characteristics Micro Segmentation Attitudes of buying influences Similarity in buying motives Similarity in decision making style Life-style of buying influences Self-image of buying influences

A Two-Stage Approach in Business Markets:

A Two-Stage Approach in Business Markets Macro-Segments: First stage/rough cut Industry/application Firm size Micro-Segments: Second-stage/fine cut Different customer needs, wants, values within macro-segment

Marketing Defined:

Marketing Defined Micro-marketing The performance of activities that seek to accomplish an organization’s objectives by anticipating customer needs and directing the flow of need-satisfying goods and services. Macro-marketing A social process that directs an economy’s flow of goods and services to effectively match supply and demand and to meet society’s objectives. 1-3

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Variables to Segment and Describe Markets Consumer Industrial Segmentation Needs, wants benefits, Needs, wants benefits, solutions to Bases solutions to problems, problems, usage situation, usage rate, usage situation, usage rate. size*, industrial*. Descriptors Age, income, marital status, Industry, size, location, current Demographics family type & size, supplier(s), technology utilization, gender, social class, etc. etc. Psychographics Lifestyle, values, & Personality characteristics of personality characteristics. decision makers. Behavior Use occasions, usage level, Use occasions, usage level, complementary & complementary & substitute substitute products used, products used, brand loyalty, order brand loyalty, etc. size, applications, etc. Decision Making Individual or group Formalization of purchasing (family) choice, low or high procedures, size & characteristics involvement purchase, of decision making group, use of attitudes and knowledge outside consultants, purchasing about product class, price criteria, (de) centralizing buying, sensitivity, etc. price sensitivity, switching costs, etc. Media Patterns Level of use, types of Level of use, types of media used, media used, times of use, time of use, patronage at trade shows, etc. receptivity of sales people, etc.

Macro-Marketing System:

Many Individual Consumers To create utility and direct flow of need-satisfying goods and services To overcome crepancies andseparations Perform universal marketing functions Middlemen intermediaries Many Individual Producers Facilitators Macro-Marketing System Exhibit 1-4 1-12 Monitoring by government(s) and public interest groups

Micro Segments:

Micro Segments Importance of Purchase -- appropriate when product is applied in various ways by various customers Attitudes toward Vendors – analysis of how various clusters of buyers view alternative sources of supply often uncovers opportunities Organizational Innovativeness – some organizations innovate more and are willing to purchase new industrial products than others Personal Characteristics – although some interesting studies have shown viability of segmentation based on individual characteristics, further research needed to explore potential as valid base for micro segmentation .


Findings Macro Segmentation It is less important, but very easy to find data. Micro Segmentation It is very important, but very difficult to find information. Conclusion Try to use micro segmentation factors as much as possible, otherwise segmentation will not be a perfect one.