Segmentation and Targeting (How to Segement (Major Segmentation…
The final step is
, or formulating the firm's value proposition for the target segments, and developing an action plan for them. ln our example, the company may position its high-priced tea as a premium/luxury product designed for the consumer with good taste, while its low-priced tea could be positioned as a good value for the smart consumer. This positioning is communicated to consumers through the ways in which the product is designed, packaged, distributed, and advertised.
What Is Segmentation
At its most basic, segmentation is simply separation of a heterogeneous group of customers with different needs into homogenous subgroups or segments of customers with similar needs and preferences. This allows firms to tailor their products and services to better meet the needs of each segment.
Why Segment the Market?
Customers benefit from products and services tailored to their needs because they provide convenience, save time, and enrich the customer experience.
Digital technology and customer-level data have allowed firms to customize solutions for individual customers-such as when Amazon & Netflix.
There are often multiple ways to segment a market; however, for a segmentation to be useful, it must be identifiable, substantial, accessible, stable, differentiable, and actionable.
How to Segement
Major Segmentation Variables for Consumer Markets
the ultimate goal of segmentation is to group consumers with similar needs and preferences, often it is easy to form these groups on the basis of readily available and identifiable information about consumers,
Country, region, city, urban/rural, climate
Age, income, gender, generation, marital status, family size, occupation, education, ethnicity, religion
Lifestyle, personality, activities, interests, opinions
Usage rate, loyalty, product knowledge, Involvement, purchase occasion, buying stage
Convenience, value, safety, status
Major Segmentation Variables for Business Markets
Country, region, clty, urban
Industry, firm size, global/reglonal, owners
Centralized or decentralized purchase, purchase policies, Involvement of decision-maker
Volume, purchase frequency, attitude toward risk, loyalty, urgency
Price, product quality, service, relationship
Bases for Segmentation
Why do customers make the decisions they do? Needs, preferences, decision process
What have the customers done? Usage, loyalty, profltabilty
Who are the customers? Demographics, media habits, lifestyle