Market Segmentation

Chapter 5 – Market Segmentation

Do Not Read

Page 74 Marketing Insight 5-1

Page 75 – under the headings Bases for Segmentation - Benefit Segmentation, paragraph 2 and 3

Page 76, figure 5.2 (note that you do not have to study this for the quiz but you should know/understand some of the ways to segment the market listed here)

Page 78 – figure 5.4

Page 79 – Marketing Insight 5-2

Page 80 – figure 5.5

Page 81 – Marketing Insight 5-3

Page 82 – Marketing Insight 5-4

Understanding Market Segmentation

← Market segmentation can be defined as: the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve.

← It is based on the idea that a single product item can rarely meet the needs and wants of all consumers.

← Target market – Group or market segment that a company selects to focus on.

← Viable market – One that can be profitably served by a firm.

Figure 5.1 A Model of the Market Segmentation Process

1. Delineate the firm’s current situation

Step 1 is a reminder of the tasks to be performed prior to marketing planning (See Chapter 1) as well as an internal company analysis (Strength Weaknesses Opportunities Threats SWOT)

2. Determine consumer needs and wants

← Successful marketing strategies depend on meeting consumer needs and wants.

← Industry within which firm operates specifies boundaries of firm’s need satisfaction activities.

← At a strategic level, need and wants usually are translated into more operational concepts.

3. Dimensions for Market Division

Three important questions to be considered are:

a. Should segmentation be a priori or post hoc?

b. How does one determine the relevant dimensions or bases to use for segmentation?

c. What are some bases for segmenting consumer and organizational/business markets?

a. A Priori versus...