Market Segmentation
- 1. Market Segmentation By: Kenneth Rakes
- 2. What is Marketing Segmentation Marketing segmentation or an STP Analysis is a marketing process involving segmenting the market, choosing which segment to target, and developing a positioning strategy.
- 3. Steps of the Marketing Segmentation process 1. Establishing overall strategy/objectives 2. Use the segmentation methods 3. Evaluate segment attractiveness 4. Select a target market 5. Develop a positioning strategy
- 4. 1. Establishing overall strategy/objectives To effectively go through the STP process you must first identify the objectives of your marketing strategy as a whole. Then you must make sure your segmentation strategy is consistent with the overall marketing strategy and your current situation.
- 5. 2. Use the segmentation methods Step two of the segmentation process is to choose which segmentation method or combination of methods to use. This allows marketers to differentiate between and create descriptions of customers in different segments. The different methods of segmentation are described in the following slide
- 6. The segmentation methods Method: Description: Example: Geographic Grouped based on where they live Countries and Continents Demographic Grouped based on easily measured, objective characteristics Age, gender, income, etc. Psychographic Grouped based on how customers describe themselves Lifestyle, Self-concept, Values Benefit Grouped based on the benefits they seek Convenience, Prestige, etc. Behavioral Grouped based on how they use the product or service Occasion and loyalty
- 7. 3. Evaluate segment attractiveness The next step evaluates the attractiveness of the potential target segments identified in the previous step. To evaluate the segments marketers ask 5 question: 1. Is it identifiable? 2. Is it sustainable? 3. Is it reachable? 4. Is it responsive? 5. Is it Profitable?
- 8. The 5 evaluation questions explained Is it …? Description: Identifiable marketers have to be able to identify who is in the segment and who is not. Sustainable The segment has to be large enough to generate significant profit. Reachable marketers must make sure they are able to reach consumers to persuade and tell them how to buy their product. Responsive Will the segment respond similarly and positively, and can the marketer provide the segment with what they are looking for? Profitable Marketers must make sure that the segment will be profitable now and in the future.
- 9. 4. Select a target market After evaluating different segments attractiveness marketers must decide which segments to target. To choose which segments to target marketers must choose a targeting strategy. The four basic targeting strategies are undifferentiated targeting, differentiated targeting, concentrated targeting, and micromarketing targeting. Based on the strategy of their choosing marketers will be able to identify how many and which segments to target.
- 10. Targeting Strategies Explained Strategy: Description: undifferentiated Used when everyone can be considered a potential customer, and the product or service provides similar benefits to everyone. Differentiated Targets several segments using a different marketing strategy for each. Concentrated Targets one primary segment focusing all its energy on fitting that markets needs. Micromarketing When Marketers tailor a product or service to fit an individual’s needs.
- 11. 5. Develop a positioning strategy After a marketers decided on its target segment/segments and a targeting strategy they begin working on market positioning. Marketing positioning is the process of defining the marketing mix variables to to make sure that the target market has a clear understanding of what the product/service does compared to competitors helping to communicate the marketers unique value proposition. The first step in the marketing positioning strategy is for marketers to identify their unique value proposition. Once they have this identified they then choose one of the four positioning methods (value, salient attributes, symbols, or competition) that will most effectively convey their unique value proposition to their target segment.
- 12. Positioning Methods Explained Positioning Method: Description: Value Proposition Involves positioning the product/service directly based on the value it provides to the target market. Salient Attributes Positioning based on the attributes most important to the target market. Symbols A symbol (or logo) is used to position and a brand and distinguish it from its competitors. Competition When marketers position their products against a certain competitor or the entire product/service classification.