Market Segmentation

Effective segmentation: (1) Measurable: size, purchasing power, & profiles of segments can be measured (2) Accessible: segments can be reached & served (3) substantial: large/profitable enough to serve (4) Differentiable: conceptually distinguishable & respond differently to mixes

STP Process: segmentation, targeting, positioning

To identify groups or segments of potential customers (individuals, organizations, buying centers, etc.) whose desired values from products and services within groups are similar and whose values between groups are different.

To select one or more groups as a target segment who respond favorably to a current or prospective marketing offering.

To achieve a desired positioning in the minds of potential segment customers (defined broadly, as above) with a profitable marketing program.

To constantly revisit and refresh these three steps as part of an on-going business process

Demographic: divides on variables such as age, gender, fam size, life cycle, income, occupation, edu, religion, race, generation, nationality. MOST POPULAR** (needs, wants & usage rates often vary closelyw/ demographic variables AND they are easier to measure than other types

Behavioral: based on knowledge, attitudes, uses, or responses to products. Often believed to be best starting point for building market segments* (ex: occasion segmentation)

Geographic: dividing into geographical units i.e. nations, regions, states, cities, etc. Many efforts today to localize

Psychographic: based on social class, lifestyle, or personality i.e. car company "not about cars" but "about the urban life"

Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product

Occasions Benefits sought User status Usage rate Loyalty status

Multiple segmentation

Used to identify smaller, better-defined target groups

PRIZM NE classifies every American household into 66 unique segments...