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MarketSegmentationandTargetingMarketSegmentationMarketscanbehugeanddiverseentitiesmadeupofindividuals.Sinceindividualwantsandneedstendt

odiffer,tryingtomassmarkettoawholemarketoftenisinefficient.Costingtoomuchtimeandmoney,andhurtingprofitpotential.Therefore,acompanyshoul

dfocusortargetspecificgroupsorsegmentsofindividualstoenhanceprofitopportunities.MarketSegmentationSomewillarguethatmassmarketingisbe

tter,becauseloweroverallproductioncostsareachieved.Lowerexpensesthenleadstohigherprofits.However,unlessalmosteveryoneisbuyingyourproduct

/service,thelowerexpenseswillnotnecessarymeanhigherprofits.MarketSegmentationAsamarketer,definingandidentifyinggroupsofindiv

idualswhowillpayforyourproductorserviceisanimportanttask.Thinkofthistaskastryingtotakeadvantageofthec

ostsavingsofmassmarketing,butonasmallerscale.Or,conductingmassmarketingtogroupsinsteadofthemarketasawhole.MarketSegmentationDefi

nition:Amarketsegmentsaregroupsofhigh-potentialprospectivecustomerswithcommoncharacteristicsandneedsthatdistinguish

themfromotherhigh-potentialmarketsegments.MarketSegmentationTypesofSegmentation:•Segment(general):focusesonc

ustomerswhoshareasimilarsetofwants.•Niche:focusesoncustomerswhoseekadistinctsetofbenefits(oftencalledsub-segmentation).•Local:focusesonthewantsofcust

omersinaspecificlocation.•Customerization:focusesoncustomizingtheproductorservicetofitthecustomer’sspecificwants(theulti

mateinsegmentation).MarketSegmentationBasesforSegmentingCustomerMarkets:•Geographic•Demographic•Psychographic•Be

havioralMarketSegmentationGeographicSegmentation:Thisbasisforsegmentationcallsfordividingthemarketinto

differentgeographicunits(i.e.provinces,counties,cities,towns,neighborhoods,etc.).MarketSegmentationDemographicSegmentation:Thisbasisofsegmentationca

llsfordividingthemarketsintogroupsbasedonageand/orothervariables.Demographicsegmentationispopular,becausethevaria

blesareeasiertomeasre.MarketSegmentationSomeofthevariablesconsideredinDemographicSegmentation:•Ageandlife-cycl

estage•Lifestage•Gender•Income•Socialclass•Generation•EthnicityMarketSegmentationPsychographicSegmen

tation:Thisbasisofsegmentationgroupspotentialcustomersaccordingtopsychological/personalitytraits,lifestyles,orvalues.MarketSegmentationBe

havioralSegmentation:Thisbasisofsegmentationdividescustomersintogroupsaccordingtotheirknowledgeof,attitud

etoward,useof,orresponsetoaproductorservice.MarketSegmentationVariablesconsideredinBehavioralSegmentation:•Occasions(need/use)•Benefits•UserS

tatus•UsageRate•Buyer-readinessstage•Loyaltystatus•AttitudeMarketSegmentationIntheend,therearemanydifferentwaystosegmentamarket.Howyousegment

themarketisyourdecision!Alwayskeepyourproductorserviceinmindwhenyousegment,orelseyoursegmentationactivitieswillbeawasteoftimeandmoney.MarketTargeting

Afteryouhaveidentifiedthepossiblemarketsegmentsandopportunities,whichsegmentsandhowmanysegmentstotargetorfocusonisyou

rnextstep.MarketTargetingEffectiveSegmentationCriteria:Tobeusefulinyourmarketingefforts,marketsegmentsmustratefavorablyonfi

vekeycriteria.Thesegmentsmustbe:•Measurable•Substantial•Accessible•Differentiable•ActionableMarketTargetin

gWhenevaluatingdifferentmarketsegments,twofactorsmustbeconsidered:•Thesegment’soverallattractiveness•Thecompany’sobjectiv

esandresourcesMarketTargetingTypesofTargetingDecisions:•Single-segmentconcentration•Selectivespecialization•Productspecialization•Marketspe

cialization•FullmarketcoverageMarketTargetingSingle-segmentconcentrationtargeting:Thischoiceinvolvesconcentratedm

arketing.Thecompanygainsathoroughunderstandingofthechosensegment’sneedsandachievesastrongmarketpresence(i

.e.mostluxurygoods).MarketTargetingSelectivespecializationtargeting:Anumberofsegmentsareselected,eachobjectivelyattractiveandappr

opriate.Littleornosynergymayexistamongthesegments,buteachsegmentpromisestomakemoneyforthecompany(i.e.

carmanufacturers).MarketTargetingProductspecializationtargeting:Underthisarrangement,thecompanyspecializesinmaking

acertainproductforseveralsegments.Theproductmightbefurtherspecializedforeachsegment(i.e.TexasInstrumentcalculat

ors).Theriskistechnologicalchangemightendtheneedfortheproduct.MarketTargetingMarketspecializationtargeting:Focusisonservingthen

eedsofaparticularcustomergroup(i.e.defensecontractors).Therisksarebudgetcutsandgroupshrinkage.MarketTar

getingFullmarketcoveragetargeting:Aattemptismadetoserveallcustomergroupswithalltheproductstheymightneed.Onlyafewlargecompaniescanemploy

thistargetingmethodeffectively,butsometimeeventheyfail.MarketTargetingFullmarketcoveragetargeting:UndifferentiatedversusdifferentiatedmarketingUndif

ferentiated:ignoressegmentdifferencesandoffersonlyoneproductDifferentiated:operatesinseveralsegmentandoffersdifferentproductsforeachSalestendtobehi

gherfordifferentiatedmarketing,butsoarecosts.MarketTargetingAdditionalconsiderations:Segment-by-segmentinvasions

:enteringonesegmentatatimeandavoidinglettingrivalsknowwhichsegmentisnext,goodplanningrequired.Updatingsegmentationarrangements:

segmentationanalysisneedstobeonaregularbasis.Ethicalchoiceoftargetmarkets:sometimesachoicecancausecontroversy,consumerscanbeconcernedifvul

nerablegroupsaretakenadvantageoforpotentiallyharmfulproductsarepromoted.