Segmentation

Kerem Gurses

What do you see in this

photo?

7.2

Briefly,

You see
a MARKET
7.2

So, a market is

People or organizations
With needs and wants and
With the ABILITY and
WILLINGNESS to buy.

All should exist to call it a market!

Do you think these two people are

same in their life style?

WHAT SHOULD A MARKETING

PRACTIONER DO?

TREAT THEM SAME

or
TAILOR THE PRODUCT ACCORDING TO THEIR
NEEDS, WANTS, LIFE STYLES. etc.

Segmentation and Targeting

Bases for segmentation

Requirements for
effective segmentation
Segmentation and
targeting strategies
Positioning for a
competitive advantage
7.1

Segmentation

Segmentation
is in
BETWEEN

Everybody

OR

One person

Segmentation is called a process of dividing market into

Meaningful, relatively similar, and identifiable segments

Market Segmentation

SEGMENTATION is the marketing

methodology subdividing the market into
small parts
Segmentation is a key factor in Marketing
and the basic assumption is

Similar Consumers may have Similar

purchasing behaviour

Through Segmentation, the Company has

better chances to match its product supply
with a differentiated market demand

Successful Companies differentiate

their supply by segmenting it:

BMW and Mercedes segmented their

products range by consumers age and income
Valtour and Club Med, subdivided their
resort villages into different consumers:
luxurious, family, singles.

7.2

Why Segmentation?

Consumers are:
Too many;
.
Geographically widespread;
Different..
A Company willing to operate effectively in the market must identify the
segments to better serve them

Opportunities for building and strengthening long-term relationships with key

customers

Improved marketing efficiency and effectiveness (resource allocation/

performance)

Better understanding of the competitive marketing environment.

Faster response to the changing needs of customers (remember market

orientation).

7.3

Criteria for Successful Segmentation

Segments must be:

Substantial (large enough to make commercial sense)
Identifiable and Measurable (segment characteristics,
number of people)
Accessible (ability to reach those people)
Responsiveness (are customers responding to tailored
marketing mix in different fashion?)
7.4

Segmenting the Consumer Market

(Segmentation Bases/ single vs multiple
variable segmentation)
Geographic (region, market size, market
density, climate)
Demographic (age, gender, income,
ethnic background, family life cycle, job)

7.5

Segmenting the Consumer Market

(Segmentation Bases)

Psychographics (personality, motives, life styles,

geodemographics)
Life-style: conservative, radical, liberal.
Personality: autorithoritative, passive, ambitious
Benefits sought (segmentation base is needs and wants!
same product but different use, different benefit seekingPower Bar)
Behavioral

Purhasing Behaviour: regular, irregular..;

Important advantages: service quality, economic. .

Users-Current, ex, potential
Intensity of Consumption-scarce, medium, high
Brand Loyalty: High, low, occasional
Level of Brand awareness: unknown, known, informed,
interested
7.6

Steps in Segmenting Markets

Select market/product

Select basis or bases for segmenting

Select segment descriptors

Profile and analyze segments (segment size, expected growth,

current brand usage, brand loyalty potential, long-term sales and
potential)

Select target market

Design & implement appropriate strategies

7.8

Market Coverage Strategies (for

selecting target market)
Undifferentiated marketing (mass market, one marketing
mix)
Concentrated marketing (market niche, put all the eggs in
the same basket)

Multi-segment targeting (multiple baskets, halo effect,

cannibalization)
7.10

Mass Marketing
By Mass Marketing, we mean to apply
production, distribution and promotion on a
large scale with the objective of reducing
costs and prices in order to attract a very
wide market
Mass Marketing, assumes an
indifferentiated target; the Company handles
the market differences with a global
approach

Niche Marketing
By Niche Marketing, we mean to subdivide a segment
into smaller subgroups.
Family Cars can be subdivided into: Monovolume/S.W
By Niche Marketing we mean Concentrated Marketing:
the Company is able to serve only a single sub-segment
This Strategy requires close company control and
monitoring because the companies future will be tied
to a specialization

7.11

SEGMENTATION

Lets look at the

CHAIR MARKET

SEGMENTATION

Chairs are segmentable according to the

production material:
leather
wood
metal

plastic

SEGMENTATION
Chairs are segmented by their
destination:

Living

HOME
Dining
Desk

Kitchen

OFFICE

RECEPTION

Meeting

SEGMENTATION

but Chairs are segmentable by properties:

AESTHETIC
ERGONOMIC

Product Positioning
Positioning assumes that consumers compare products on
the basis of important features
A process designed to fit the product/service to a
target market in such a way as to set it apart from
competition.
keeps employees focused on the total value
package
customers use this position as a kind of shorthand
to perceptually map products
7.11

Positioning Bases

Attribute (product feature, customer benefit)

Price / Quality

Use or application

User (personality, life style)

Competition

Emotion
7.12

Line Extension
The Company Brand Strategy, managing the
differentiated supply is Line Extension
Line- extension, is when the Company
introduces an additional line to the product
category under the same umbrella Brand name
A strategy used when a Company introduces
new forms, sizes, flavours. to an existing
product category
A typical Strategy used to attract new
consumers because the market is so
segmented that mass marketing cant be
successful

Cornetto Algida

15

New Flavors

Cornetto Algida

17

New Colors

Take
Kartell Lamp

18

New Ingredients

Palmolive

20

DESIGN SCHOOL

LINE-EXTENSION
Can partially cannibalize the original
product, but it must bring additional
business to the Company
can also be considered a DEFENSIVE
MOVE against competition
Also optimizes an excess of production

SEGMENTATION

In conclusion, the Segmentation Process

has 3 key steps:
SEGMENTATION
1.Identify the
Segmentation criteria

2.Define the Segment

Profiles

MARKET OBJ.

POSITIONING

3. Evaluate the segments 5. Position the

attractiveness
product within
segment.
4. Select the Segments