Marketing/Targeting & Segmentation

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Marketing Book Sections


 Marketing  
 CH.1-Introduction  CH.2-Marketing Strategy  CH.3-Marketing Plan  CH.4-Targeting & Segmentation  
 CH.5-Consumer Behavior  CH.6-Product Development  CH.7-Market Research  CH.8-Marketing Ethics



Did you ever see the customers in health-food stores? They are pale, skinny people who look half dead. In a steak house, you see robust, ruddy people. They're dying, of course, but they look terrific.


-Bill Cosby


Segmentation[edit]

The primary objective of segmentation is to identify customers with similar attributes, and to find which segments of customers that are attractive from a profit perspective. Understanding the market segmentation allows marketers to create a more effective and efficient marketing mix.

Generic Markets (Large Segments)[edit]

A generic market is comprised of groups of customers who have a general need, but have many offerings to choose from to meet that need. For example: transportation is a generic market that can be met by many offerings: car, bus, train, subway, taxi, etc.

Product Markets (Small Segments)[edit]

A product market is comprised of groups of customers who have a very specific need, with fewer offerings to choose from. For example: The Luxury Car market fulfils a specific need and has only a few options to choose from: Bentley, Aston Martin, Ferrari, etc. Product market segments are similar within the specific segment (ex. Luxury Cars), and are different across segments (ex. Luxury, Mid-size, Economy); and each segment has very specific characteristics, which, when reflected in the product, can return higher profits to the organization.

Markets can be segmented by defining the goals of the customers in that market subset. For example, in the transportation market(The Generic Market), a group of customers who's goals of transportation are to be able to travel in their own vehicle, feel comfortable/safe/fast relative to other transport options, and be able to show other people how "nice" their own vehicle is: this subset can be said to have goals which define them as a Luxury Car segment.

Segmentation Variables[edit]

The factors which are be used to segment a market are the segmentation variables. Common variables include demographic, geographic, psychographics and behavioural considerations.

Demographic Quantifiable population characteristics, such as age, gender, income, education, family situation. e.g University Educated, 20-25 year old, Males
Geographic The physical location or region. e.g Living in New York City
Psychographics Lifestyle, social or personality characteristics. e.g Self assured, confident
Behavioural The needs and wants of the customer in relation to the product, including expectations and attitudes. e.g Social Activity

Targeting[edit]

identification of market segments and tailoring the marketing mix to meet segment needs

Target marketing is the identification of attractive market segments and tailoring the marketing mix to match the needs of target customers. This contrasts with mass marketing, whereby the marketing mix is vaguely aimed at all customers. A specific target market is a homogeneous group of customers to whom an organization wishes to appeal; it must be large enough to be profitable, and its members must have sufficient disposable income to spend on the goods, services, or ideas.

Segment Dimensions[edit]

The dimensions of a segment also indicate the potential profitability and attractiveness of the segment.

The Segment Dimensions impact on marketing mix decisions, a knowledge of the the needs and wants, and how potential customers within a segment define value, allows for considered development of the product, its distribution, advertising and pricing.

  • Demographics = Affects consumer needs
  • Geographic Location = Affects size of market
  • Behavior and Consumption Patterns = Affects product and promotion variables
  • Urgency of Satisfaction = Affects Place and Price variables

Positioning[edit]

what position does your product hold in the minds of your current and potential customers?


Positioning is the concept of defining what role the brand will play in enhancing customers' lives and then highlighting specific brand attributes to best match consumer needs.

  • Ways to position:
    • Understand how customers perceive key dimensions of your brand, both tangible and intangible, relative to competitors' brands.
      • Price, Taste, Design and look of product are tangible benefits. Whereas feelings such as trust and confidence are intangible benefits products can have.
    • Understand which needs your target audience wishes to satisfy with your brand.
    • Position or reposition your brand to meet various target markets' needs, and manipulate the Four P's accordingly.

Segmentation in the Digital Economy[edit]

Positioning is not what you do to a product , It's what you do to the mind of the consumer.

Information used to define segments of homogeneous consumers


Information is collected, aggregated, and used to define segments of homogeneous consumers. In providing targeted offerings to these consumers, several segmentation techniques are valuable:

  • Database Management:Use third party database information to segment target markets according to a variety of meaningful variables.
  • Anonymous Personalization:Segmenting a market based on anonymous consumer information .
  • Permission Based marketing:Consumers provide meaningful information that is then used by the firm to supply targeted offerings to the consumer.