TM 361 : Fundamentals of Marketing
Lecture 7
Market Segmentation
Md. Shayekh Munir
Figure shows the four major steps in designing a
customer-driven marketing strategy.
Market Segmentation:
• Buyers in any market differ in their wants, resources,
locations, buying attitudes, and buying practices.
• Through market segmentation, companies divide large,
heterogeneous markets into smaller segments that can
be reached more efficiently and effectively with
products and services that match their unique needs.
• Four important segmentation issues are:
I. Segmenting consumer markets,
II. Segmenting business markets,
III. Segmenting international markets,
IV. The requirements for effective segmentation.
Segmenting Consumer Markets:
Major variables for segmenting consumer
markets:
1. Geographic,
2. Demographic,
3. Psychographic,
4. Behavioral variables.
Geographic Segmentation:
• Geographic segmentation calls for dividing the market
into different geographical units, such as nations,
regions, states, countries, cities, or even
neighborhoods.
• A company may decide to operate in one or a few
geographical areas or operate in all areas but pay
attention to geographical differences in needs and
wants.
• Many companies today are localizing their products,
advertising, promotion, and sales efforts to fit the
needs of individual regions, cities, and even
neighborhoods.
• For example, Walmart operates virtually everywhere
but has developed special formats tailored to specific
types of geographic locations.
Demographic Segmentation:
• Demographic segmentation divides the market into
segments based on variables such as age, gender,
family size, family life cycle, income, occupation,
education, religion, race, generation, and
nationality.
• Demographic factors are the most popular bases for
segmenting customer groups.
• One reason is that consumer needs, wants, and
usage rates often vary closely with demographic
variables.
Psychographic Segmentation:
• Psychographic segmentation divides buyers into
different segments based on social class,
lifestyle, or personality characteristics.
• People in the same demographic group can
have very different psychographic
characteristics.
Behavioral Segmentation:
• Behavioral segmentation divides buyers into
segments based on their knowledge, attitudes,
uses, or responses to a product.
• Many marketers believe that behavior variables
are the best starting point for building market
segments.
Types
1. Special occasion segmentation
2. Benefits sought
3. User status
4. Usage rate
5. Loyalty status
6. Buyer readiness stage
Segmenting Business Markets:
Consumer and business marketers use many of
the same variables to segment their markets.
Business buyers can be segmented
geographically, demographically (industry,
company size), or by benefits sought, user
status, usage rate, and loyalty status.
Yet, business marketers also use some additional
variables, such as customer operating
characteristics, purchasing approaches,
situational factors, and personal
characteristics.
Segmenting International Markets:
• Companies can segment international markets using
one or a combination of several variables.
• They can segment by geographic location, grouping
countries by regions such as Western Europe, the
Pacific Rim, the Middle East, or Africa.
• Geographic segmentation assumes that nations close
to one another will have many common traits and
behaviors.
• World markets can also be segmented on the basis of
economic factors.
• Countries might be grouped by population income
levels or by their overall level of economic
development.
Requirements for Effective
Segmentation
• Measurability
• Accessibility
• Substantiality
• Action ability
Requirements for Effective
Segmentation
• Size, purchasing power, profiles
Measurable of segments can be measured.
• Segments can be effectively
Accessible reached and served.
• Segments are large or profitable
Substantial enough to serve.
• Effective programs can be designed to
attract and serve the segments.
Actionable
Thanks For your attention
