MARKET

SEGMENTATION
Monday, Sept 2 nd , 2019
What is market segmentation?
▪ MS can be defined as the process of dividing a market into distinct subsets of
consumers with common needs or characteristics and selecting one or more
segments to target with a distinct marketing mix.
▪ MS is just the first step in three – phase marketing strategy -> After segmenting
the market into homogeneous clusters, the marketer then must select one or
more segments to target.
▪ To accomplish this, the marketer must decide on a specific marketing mix –
that is, a specific product, price, channel and/or promotional appeal for each
distinct segment.
▪ The third step is positioning the product, so that is perceived by the consumers
in each target segment as satisfying their needs better than other competitive
offerings.
An example of market segmentation
➢Fossil a manufacturer of popular priced fashion-
conscious lifestyle need of consumers.
➢More specifically Fossil’s watches can be
segmented in terms of four segments:
1. Gender of wearer (e.g. adult male versus adult
female users)
2. Age of users (e.g. first or starter watches,
children’s watches or adult watches)
3. Function or lifestyle (e.g. business dress, runner’s
watches, swimmers or divers watches, cell phone
watches)
4. Price (e.g. watches costing less than $100, $100-
$200, more than $200)
 How market segmentation operates?
❖Segmentation studies are designed to discover the needs and wants of specific
groups of consumers, so that specialized good and services can be developed
and promoted to satisfy each group’s need.
❖Many new products have been developed to fill gaps in the marketplace
revealed by segmentation research. For example: Bayer Aspirin has developed
a variety of products that are designed to appeal directly to individuals with
specific health issues (e.g. Bayer Rapid Headache Relief Formula, Bayer Back
and Body Pain Formula, Bayer Night Time Relief Formula)
❖In addition to filling product gap, segmentation research is regularly used by
marketers to identify the most appropriate media in which to place
advertisements.
 Bases for segmentation
❖The first step in developing a segmentation strategy is to select the most
appropriate bases on which to segment the market.
❖There are nine major categories of consumer characteristics provide the most
popular bases for market segmentation
❖They include geographic factors, demographic factors, psychological factors,
psychographic (lifestyle) characteristics, sociocultural variables, use-related
characteristics, use-situation factors, benefits sought and form of hybrid
segmentation such as demographic- psychographic profiles, geodemographic
factors and values and lifestyles.
❖Hybrid segmentation formats each use a combination of several segmentation
bases to create rich and comprehensive profiles of particular consumer
segements (e.g. a combination of a specific age range, income range, lifestyle
and profession)
 Hybrid segmentation
❖Example: Bump Fighter Shaving System, manufactured by the American Safety
Razor Company (www.asrco.com), is a replaceable-blade razor designed
specifically for African American males.
❖The product line has been expanded to now include shaving gel, skin
conditioner, a disposable version of the razor and a treatment mask (to be
applied prior to sleeping)
Market segmentation categories &
selected variables
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

1. GEOGRAPHIC SEGMENTATION

Region Southwest, Mountain States, Alaska,

Hawai
City size Major metropolitan areas, small cities,
towns
Density of area Urban, suburban, exurban, rural

Climate Temperate, hot, humid, rainy

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

2. DEMOGRAPHIC SEGMENTATION

Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-

74, 75-79, 100+
Sex Male, female

Marital Status Single, married, divorced, living

together, widowed
Income Under $25.000, $25.000- $34,999

Up to $150.000 and over

Education Some high school, high school graduate,
some college, college graduate,
postgraduate

Ocupation Professional, blue-collar, white-collar,

agricultural, military
SEGMENTATION BASEE SELECTED SEGMENTATION VARIABLES
3. PSYCHOLOGICAL SEGMENTATION

Needs-motivation Shelter, safety, security, affection, sense of

self-worth

Personality Extroverts, novelty seekers, aggressives,

innovators

Perception Low-risk, moderate-risk, high-risk

Learning Involvement (keterlibatan) Low-involvement, HIgh-involvement,

4.PSYCHOGRAPHIC

Lifestyle (Segmentation) Economy-minded, couch potatoes (spent

time just sit and watch tv), outdoors
enthusiast, status seekers
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

5. SOCIOCULTURAL SEGMENTATION

Cultures American, Greek, Chinese, German,

Mexican, French, Pakistani

Religion Catholic, Protestant, Moslem, Jewish,

other

Subcultures (race/ethnic) African American, Caucasian, Asian,

Hispanic
Social class Lower, middle, upper

Family life cycle Bachelors, young marrieds, full nesters,

empty nesters
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

6. USE-RELATED SEGMENTATION
Usage rate Super heavy users, heavy users, medium
users, light users, non users
Awareness status Unware, aware, interested, enthusiactic

Brand loyality None, some, strong

7. USE-SITUATION SEGMENTATION
Time Leisure, work, rush, morning, night

Objective Personal, gift, snack, fun, achievement

Location Home, work, friend’s home, in-store
Person Self, family members, friends, boss, peer