Market Segmentation

5474 Words Jul 1st, 2013 22 Pages
Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behavior. The world is made up from billions of buyers with their own sets of needs and behavior. Segmentation aims to match groups of purchasers with the same set of needs and buyer behavior. Such a group is known as a 'segment'. Think of you r market as an orange, with a series of connected but distinctive segments, each with their own profile. Of course you can segment by all sorts of variables. The diagram above depicts how segmentation information is often represented as a pie chart diagram - the segments are often named and/ or numbered in some way.
Segmentation is a form of
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Revenues are thus improved.
Improved segmentation can lead to significantly improved marketing effectiveness. Distinct segments can have different industry structures and thus have higher or lower attractiveness (Michael Porter). With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased leading to better reputation.
Successful Segmentation
Successful segmentation requires the following
• homogeneity within the segment
• heterogeneity between segments
• segments are measurable and substantial
• segments are differentiable
• segments are accessible and actionable
• target segment is large enough to be profitable Variables Used for Segmentation
• Geographic variables o region of the world or country, East, West, South, North, Central, coastal, hilly, etc. o country size/country size : Metropolitan Cities, small cities, towns. o Density of Area Urban, Semi-urban, Rural. o climate Hot, Cold, Humid, Rainy.
• Demographic variables o age o gender Male and Female o family size o family life cycle o education Primary, High School, Secondary, College, Universities. o income o occupation o socioeconomic status o religion

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