Segmentation PDF

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Segmentation...

Description

Segmentation This is the process of dividing the total market for a good or service into several smaller, internally similar groups. All members in a group have similar needs and product/service requirements. A great example of segmentation would be ‘AmazonMom’. Which is a branch of Amazon with the target market being mothers with newborns/young children. The need of this segmentation is to provide products for the mothers efficiently so they can spend more time looking after their children. Benefits of segmentation to the organisation: sustainable profit growth - Identification of unfulfilled needs - Better product design - More targeted promotions - Increased customer satisfaction Benefits to the customer: compelling customer experiences - Convenience and time savings - Tailored products and services - Relevant offers - Personalised experience Criteria of a useful segmentation: Identifiable, substantial, accessible, differentiable and actionable. BASIS OF SEGMENTATION Demographic

Psychographic

Behaviour towards products

Geographic

Age

Personalities

Benefits desired or sought

City size

Sex

Lifestyles

Product usage rate

Urban/sub Urban/rural

Brand loyalty

Population distribution

Income Stage in family cycle

Climate

Religion Education Occupation

Targeting Targeting involves evaluating the attractiveness of each market segment, selecting one or more segments to pursue, and then designing marketing programs to serve them. The goal is to select segments that improve the organisation’s chances of maximising its long-term profitability. Target market selection:

• Competition - strength, intensity and resources • Segment characteristics - size, growth rate and profitability • Company fit - objective, competencies and resources Targeting strategy: undifferentiated strategy, differentiated strategy, concentrated strategy and customised marketing Undifferentiated strategy - aimed at the entire market Differentiated strategy - aimed at a few different segments • Pros: can achieve better market coverage comparing with focus strategy, price differentials among different brands can be maintained, and less risk not relying on one market • Cons: demands a greater number of production processes, increased marketing costs due to selling through different channels and promoting more brands (i.e. using different packaging), and must be careful to maintain the product distinctiveness in each consumer group and guard its overall image. Concentrated strategy - aimed at one segment • Pros: it allows a firm to specialise, can focus all energies on satisfying one group’s needs, and a firm with limited resources can compete with larger organisations • Cons: small shift in the population or consumer tastes can greatly affect the firm, and may have trouble expanding into new markets due to lack or skills and positioning. Customised marketing - aimed at a single customer...