Market segmentation

1. Avi Chemay presents Market segmentation

2. Ultimate aim of market segmentation • The aim of market segmentation is to increase sales, market share and profits • This is done by better understanding and responding to the desires of different target customers

3. Process of market segmentation • Market segmentation involves dividing the total market into segments • Once the market has been segmented. A segment of the market is chosen to be the target market. Segment 1 Segment 2 Target market Segment 3

4. Ways of segmenting consumer markets • Demographic segmentation • Geographic segmentation • Psychographic segmentation • Behavioral segmentation

5. Demographic segmentation • Dividing the total market according to particular features of a population such as age or gender • It is easy to measure demographics, therefore it is commonly used among marketers • Age and gender are the most common • For example coca cola targets 15-35 year old males while Fanta targets 13-16 year olds

6. Geographic segmentation • Geographic segmentation divides the total market according to geographic locations • A business may divide the market into regions • Different geographical locations have different needs and tastes • A city size will impact location, for example a fast food chain will not open in a city with a population of 25,000 • Climate will also impact segmenting markets for a business selling heating or cooling systems

7. Psychographic segmentation • Psychographic segmentation is the process of dividing the total according to personality • Characteristics such as motives, opinions, socioeconomic groups and lifestyle • To segment this market a business would research preferences such as TV shows, movies and music • Psychographic variables can be combined with other segmentation variables • This segmentation focuses on why people behave the way they do • This method of segmentation is difficult to measure

8. Behavioral segmentation • Behavioral segmentation is the process of dividing the total market according to customer relationships to the product • This includes the customers knowledge of, attitude and benefits of the product • This type of segmentation identifies what the customers want from the product • By understanding what customers want from the product, marketers can design their product to satisfy the needs of their target market

9. Common variables of market segmentation

10. Diagram of market segmentation Whole Market Segment 1 Segment 2 Segment 3

11. Market segmentation case study: Holden shifts gear and goes all girly (Page 205) • Holden is the second largest car manufacturer in Australia • They now want to sell cars to young female drivers • Using social media • Holden is best known for their top selling car the commodore • Holden has launched a social media campaign to launch the Briana Spark • This is due to changing consumer preferences • Holden wanted to deliver a selection of cars that met with the changing consumer preferences • Holden has began to lean towards digital advertising • The spark is priced at 12,490 • The digital strategy is a large part of their marketing strategy • The campaign allows users to design their car online and share it on twitter and Facebook

12. QUESTION TIME! • Distinguish the four main ways of segmenting consumer markets. • Describe the link between market segmentation and the target market