Assignment chapter 3: Market Segmentation

1. Define the Market segmentation.

MARKET SEGMENTATION is the process of dividing the total market into several groups
seeking similar benefits from aa product or service and requiring separate marketing mixes.

2. Enumerate and identify the types of market segmentation as to demographic, geographic,

social, thoughts and feelings, behavior and combined approaches.

Market segmentation is a crucial strategy for businesses to target specific customer groups
effectively. Here are the common types of market segmentation:

• Demographic Segmentation: This divides the market based on demographic factors like age,
gender, income, education, occupation, marital status, and family size.

• Geographic Segmentation: This segments the market based on geographic criteria such as
location, region, climate, urban or rural areas, and population density.

• Psychographic Segmentation: This considers the psychological and lifestyle characteristics

of customers. It includes factors like values, interests, attitudes, opinions, hobbies, and
personality traits.

• Behavioral Segmentation: This focuses on consumer behavior and usage patterns. It

includes factors such as brand loyalty, purchasing frequency, product usage, and the benefits
sought.

• Social Segmentation: This involves grouping customers based on social factors like cultural
background, social class, reference groups, and social influence.

• Thoughts and Feelings Segmentation: This is a more specialized form of psychographic

segmentation, which delves deeper into customers' thoughts, emotions, and motivations.

• Combined Approaches: Businesses often use a combination of the above segmentation

methods to create more precise customer profiles. For example, a company might target
"young, urban professionals (demographic and geographic)" who "value sustainability and eco-
friendly products (psychographic)" and "frequently purchase organic food (behavioral)."

Each of these segmentation types can help a business tailor its marketing efforts to specific
customer segments, increasing the chances of success in the marketplace.

3. Discuss the benefits, limitations, purposes and procedures in segmenting the market.

Benefits of segmenting the market

Better understand your customers: Market segmentation helps you to better understand the
needs, wants, and behaviors of your different customer segments. This information can be used
to develop more targeted marketing campaigns, products, and services.

Increase sales and profits: By tailoring your offerings to the specific needs of each segment, you
can increase sales and profits. For example, you may be able to charge higher prices for
premium products or services that are targeted to high-income segments.

Improve customer satisfaction: When customers feel like they are being understood and that
their needs are being met, they are more likely to be satisfied. This can lead to repeat business
and increased customer loyalty.
Reduce marketing costs: By targeting your marketing efforts to specific segments, you can
reduce waste and save money. For example, you may not need to advertise your luxury
products in a mass-market magazine.

Gain a competitive advantage: Market segmentation can help you to develop a competitive
advantage by allowing you to focus on the segments that are most profitable or where you have
the strongest competitive position.

Limitations of market segmentation

Cost: Market segmentation can be expensive and time-consuming, especially if you are using
sophisticated techniques such as psychographic segmentation.

Complexity: Market segmentation can be complex, especially if you have a large and diverse
customer base. It can be difficult to identify the right variables to use for segmentation and to
develop accurate segments.

Over-segmentation: It is possible to over-segment your market, which can lead to your

resources being spread too thin. It is important to choose a segmentation approach that is
appropriate for your business and to avoid creating too many segments.

Changing customer needs: Customer needs and wants can change over time, so it is important
to regularly review your market segmentation and make adjustments as needed.

Purposes of market segmentation

Develop targeted marketing campaigns: Market segmentation allows you to develop targeted
marketing campaigns that are more likely to resonate with your target audience. For example,
you may create different marketing campaigns for different age groups or for customers with
different interests.
Develop new products and services: Market segmentation can help you to identify new product
and service opportunities. For example, if you see that there is a large and underserved
segment of the market, you may be able to develop a new product or service that meets their
needs.

Improve customer service: Market segmentation can help you to improve your customer service
by allowing you to tailor your service offerings to the specific needs of each segment. For
example, you may offer different levels of customer support to different segments, or you may
provide training to your customer service representatives on the specific needs of each
segment.
Make better business decisions: Market segmentation can help you to make better business
decisions by giving you a deeper understanding of your market and your customers. For
example, you may use market segmentation to decide which markets to enter, which products
to launch, and how to price your products and services.

Procedures in segmenting the market

1. Identify your segmentation variables: The first step is to identify the variables that you will use
to segment your market. Common segmentation variables include demographics,
psychographics, behavior, and geographics.

2. Collect data on your customers: Once you have identified your segmentation variables, you
need to collect data on your customers for each of those variables. You can collect data through
surveys, customer interviews, focus groups, and website analytics.

3. Analyze your data: Once you have collected data on your customers, you need to analyze it
to identify natural segments. There are a number of different statistical techniques that you can
use to segment your data.

4. Develop segment profiles: Once you have identified your segments, you need to develop
profiles of each segment. This will help you to better understand the needs, wants, and
behaviors of each segment.

5. Evaluate your segments: Once you have developed segment profiles, you need to evaluate
each segment to determine which segments are most attractive to your business. You should
also consider your resources and capabilities when evaluating your segments.

6. Select your target segments: Once you have evaluated your segments, you need to select
the target segments that you will focus on. You may want to focus on all of your segments, or
you may want to focus on a specific subset of segments.

7. Develop marketing strategies for each target segment: Once you have selected your target
segments, you need to develop marketing strategies for each segment. These strategies should
be tailored to the specific needs, wants, and behaviors of each segment.

4. Explain the basis for segmenting the different markets

There are many different ways to segment a market, but the four main bases are:

Demographics: This includes factors such as age, gender, income, education level, occupation,
and household size. Demographic segmentation is one of the most common types of
segmentation, as it is relatively easy to collect and analyze demographic data.

Psychographics: This includes factors such as values, beliefs, attitudes, interests, and lifestyles.
Psychographic segmentation is more complex than demographic segmentation, but it can be
more effective for developing targeted marketing campaigns.

Behavior: This includes factors such as purchasing habits, product usage, and brand loyalty.
Behavioral segmentation is a very effective way to identify and target potential customers.
Geographics: This includes factors such as country, region, city, and neighborhood. Geographic
segmentation is useful for targeting customers in specific geographic locations.

In addition to these four main bases, there are a number of other factors that can be used to
segment markets, such as:

Firmographics: This includes factors such as company size, industry, and revenue.
Firmographics segmentation is useful for targeting businesses and other organizations.

Technographic: This includes factors such as device ownership, internet usage, and social
media engagement. Technographic segmentation is useful for targeting customers based on
their technology usage.

Needs: This includes factors such as what problems customers are trying to solve and what
benefits they are looking for. Needs-based segmentation is a very effective way to identify and
target potential customers.

The best basis for segmenting a market will vary depending on the specific business and the
products or services that it is offering. For example, a business that sells clothing may want to
segment its market based on demographics (such as age and gender) and psychographics
(such as interests and lifestyles). A business that sells software to businesses may want to
segment its market based on firmographics (such as company size and industry).

It is important to note that market segmentation is not a one-size-fits-all solution. Businesses

should carefully consider their specific needs and goals when choosing a segmentation
approach.

5. Discuss the procedures in market segmentation for consumer and industrial market.

The procedures in market segmentation for consumer and industrial markets are similar, but
there are some key differences.

Consumer market segmentation

1. Identify your segmentation variables: The most common segmentation variables for
consumer markets are demographics, psychographics, and behavior.

2. Collect data on your customers: You can collect data on your customers through surveys,
customer interviews, focus groups, and website analytics.

3. Analyze your data: There are a number of different statistical techniques that you can use to
segment your data.

4. Develop segment profiles: Once you have identified your segments, you need to develop
profiles of each segment. This will help you to better understand the needs, wants, and
behaviors of each segment.
5. Evaluate your segments: Once you have developed segment profiles, you need to evaluate
each segment to determine which segments are most attractive to your business. You should
also consider your resources and capabilities when evaluating your segments.

6. Select your target segments: Once you have evaluated your segments, you need to select
the target segments that you will focus on. You may want to focus on all of your segments, or
you may want to focus on a specific subset of segments.

7. Develop marketing strategies for each target segment: Once you have selected your target
segments, you need to develop marketing strategies for each segment. These strategies should
be tailored to the specific needs, wants, and behaviors of each segment.

Industrial market segmentation

The procedures for industrial market segmentation are similar to those for consumer market
segmentation, but there are some key differences. First, industrial markets are typically smaller
and less homogeneous than consumer markets. Second, industrial buyers are often more
rational and deliberate in their purchase decisions. Third, industrial markets often have longer
sales cycles and more complex purchase processes.

As a result of these differences, it is important to use segmentation variables that are relevant to
industrial markets. Some common segmentation variables for industrial markets include:

Firmographics: This includes factors such as company size, industry, and revenue.
Needs: This includes factors such as what problems customers are trying to solve and what
benefits they are looking for.
Buying behavior: This includes factors such as purchase frequency, order size, and brand
loyalty.

Once you have identified your segmentation variables, you can follow the same steps outlined
above to segment your industrial market. It is important to note that industrial market
segmentation is often more complex and time-consuming than consumer market segmentation.
However, it is a valuable tool that can help businesses to better understand their customers and
develop more effective marketing strategies.

Here are some additional tips for market segmentation in industrial markets:

Segment by industry: Industrial markets are often divided into different industries, such as
manufacturing, healthcare, and transportation. Segmenting your market by industry can help
you to better understand the specific needs and challenges of each industry.
Segment by company size: Company size can also be a useful segmentation variable in
industrial markets. Small businesses may have different needs and budgets than large
businesses.
Segment by geography: Geographic segmentation can also be useful in industrial markets,
especially if you are selling products or services that are specific to a particular region.
By following these tips, you can develop a market segmentation strategy that will help you to
better understand your customers and develop more effective marketing strategies.