Market Segmentation: Defined

1. Market Segmentation: Defined • Market segmentation – the process of dividing the total market into smaller groups of people who share specific needs and characteristics • Markets can be segmented based on: Demographics Psychographics Geographics Product Benefits Behavioral Segmentation

2. Product Benefits • Product Benefits – studying consumers’ needs and wants to identify desired benefits…then, market the benefits rather than the products.

3. Product Benefits It is very important when choosing Product Benefits as a marketing tool to be as specific as possible on who you are going to market to… Mini Case Study: Shampoo

4. Product Benefits • This year, it might have been easier to ask what isn't new. Straightening is in, but so is leaving curly hair natural; short and sassy is no hotter than long and lustrous. Some all-grays are staying gray, but many women with 30% or fewer grays are reaching for the dye.If there's any one trend in hair care for 2009, it is the trend of polar opposites. Sorting through the amazing array of choices, it is easy to see that individuality and personal distinction rule today's hair care scene. For boys, it is long but managed hair and curls rule. For professional men, the buzz-cut is no longer the office mainstay as office policy has changed to accommodate for personality.

5. Product Benefits • In class activity • Shampoo Benefits: How many ways can you think of to promote shampoo benefits? • What different shampoos offer specific benefits? • Men’s shampoo? • Children’s shampoo?

6. Behavioral Segmentation • Behavioral segmentation is based on actual customer behavior toward products. Some behavioralistic variables include • Benefits sought • Usage rate • Brand Loyalty • User Status: Potential, first-time, regular, etc. • Readiness to buy • Occasions: Holiday and events that stimulate purchases

7. Behavioral Segmentation • Benefits Sought: • What benefits are customers seeking… • Quality? • Low price? • Convenience? • Identify the benefits customers want and create the product or service to meet the need. Direct marketing efforts toward increasing customer awareness of those benefits. Some customers are interested in two or three benefits, not just a single one.

8. Behavioral Segmentation • Usage Rate: • Usage rate can be irregular (light), medium, or heavy, while user status for a product can range from regular user, first-time user, potential user, former-user, or non-user.  Under the 80/20 principle, marketers prefer to focus more of their attention on heavy and regular users, however they are also interested in attracting non-users.  Consider the marketing of soda.  The focus of advertising for soda is on heavy drinkers.  However newer products are targeted at non-traditional markets, such as younger people and females. 

9. Behavioral Segmentation • Brand Loyalty • Brand loyalty can be defined as regular (repeat) purchase of the brand based on a favorable price-and-promotion-resistant attitude toward it.

10. Behavioral Segmentation • User Status • User status markets can be segmented into non-users, ex-users, potential users, first-time users and regular users. For example, an impending birth will turn a non-user of childcare into a potential user. Recruiting first-time users will require a different marketing strategy than retaining existing users or attracting current users away from other types of childcare

11. Behavioral Segmentation • Occasions • Purchases that are made specifically due to an occasion. Holidays, birthdays, special events, weddings, New Years, etc. Think about when decorations for these events go up in stores? Why does Christmas start in September now??