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Market Segmentation and Targeting, involves, for example, for example, for…
Market Segmentation and Targeting
Market Segmentation
consists of
5 types of Market Segmentation
Geographic Segmentation
focuses on
Different customer groups based on geographical boundaries
due to the
Difference in needs, preferences and interests at different geographies
which helps to identify
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for example
Selling snowboarding equipments in Japan and not in Singapore
Selling lawn mowers in rural rather than urban areas
can be categorized into
Zip Code
City
Country
Climate
Rural or urban
Demographic Segmentation
consists of
Demographic elements
such as
Age
Education
Income
Family size
Race
Gender
Nationality
determines
How customers use particular products
The willingness to spend on the product
Firmographics Segmentation
focuses on
Organisation as a whole
takes into consideration things like
Company size
Number of employees
shows how
Addressing a small business is different from addressing an enterprise corporation
Behavioural Segmentation
focuses on
Consumer behaviour and actions
Consumer decision making patterns
consider factors like
Purchasing habits
Spending habits
Consumption
Usage
for example
Younger generation prefers to buy G Shock watches;
Older generation prefers to buy Rolex watches
Psychographic Segmentation
categorize consumers based on
Subjective psychological aspects of consumer behaviour
such as
Lifestyle
Personality traits
Values
Opinions
Interest
Social Status
requires
Research to discover and understand
examples include
Fitness industry focuses on consumers who cares about healthy living and exercise
is the practice of
Dividing its customer base into smaller groups
Characteristics
such as
Age
Personality Traits
Income
Behaviour
5 Primary steps for segmentation
Conduct Preliminary Research
Determine how to segment the market
Design your study
Create customer segments
Test and iterate
Evaluate segments to see if they are effective
Analyse responses and group consumers accordingly
Ask a mix of demographic, firmographic, behavioural, psychographic and geographic questions
Decide which type of segmentation and the respective criteria you want to segment the market
Ask customer open ended questions
3 ways to ensure effective segmentation
Accessible
Understand how customers can be reached
Teenagers can be reached via technology; Senior citizen can be reached via newspaper advertisement
Substantial
Product must fulfil both customers interest and willingness to spend on it
Environmental enthusiasts who are willing to pay high quality eco friendly products
Actionable
Each segment must produce different responses from customers
People with same purchasing habits must be grouped in the same segment
Market Targeting
4 Market Targeting Strategies
Undifferentiated Marketing
is defined as
Ignorance of all differences between market segments
Treats entire market as one single target
Everyone is a potential and targeted customer
Product or service that has a high market appeal / a necessity in consumer's daily life
for instance
Toothpaste
Toilet roll
Pepper
Differentiated Marketing
'Segmented' Marketing
Brands identifying several market segments
Offer different products for different segments
Nike has products for weightlifting, basketball, athletics, tennis, golf etc
Concentrated Marketing
Focuses on one specific customer group
whereby
Brands focuses all their marketing efforts towards the defined segment
which aims to have
Advantage over their competitors
Potential business growth
Brand loyalty
Higher market position
Eco-friendly Lush cosmetics like their shampoo and bath balls, differentiate themselves from competitors by spreading awareness of climate change through their products
Micromarketing
All marketing efforts are focused on distinct characteristics of individuals
Satisfy individuals specific requirements
Groupon provides discounts based on each individual's geographic location
Evaluating and selecting market segments
Reach targeted audience better
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