The consumer market segmentation process

Segmentation: The identification of individuals or organizations with similar characteristics

that might require separate products/services and marketing mixes.

Market segmentation:
- Dividing a diverse market into a number of smaller, more similar sub-markets =
segments.
- The objective is to identify groups with similar characteristics/ needs
- Segmentation  Targeting  Positioning (STP process)

Advantages of market segmentation

The STP process

The process of market segmentation and target marketing

- The diverse, potential market:

The characteristics of individual customers are
understood

- The segmented market:

Customers are grouped in segments based on
having similar characteristics

- The target market(s)

Segment 3 is judged to be the most attractive
and a marketing mix strategy is designed for
that target market

Step 2: Identify segmentation criteria

Using market segmentation makes us realize there is differences between the need for the
product/service in the various segments of the potential market
Segmenting consumer markets
Market segmentation criteria’s

Step 4: Choice of target groups.

- An evaluation of the segments before choosing which segments to approach
- Evaluating each segment in regard of the company’s internal situation – the
company’s internal strengths and weaknesses

Evaluating market attractiveness:

Step 4: The choice of target group(s)
THE SOCC model
 

Targeting:

Step 5: Choice of target group

Step 6: Marketing strategies / target group strategies

- Undifferentiated marketing (mass marketing)
o The same marketing mix towards the whole market

- Differentiated marketing
o The marketing mix is different for different segments
 - Focused marketing
o The company is focusing on a narrow target group and have developed
specific product and marketing mix for this target group

- One-to-one marketing or customized marketing

o The marketing mix is targeted towards each individual customer.

Three main strategies for targeting a market:

- Mass marketing (undifferentiated)
- Segmented (differentiated)
- Concentrated (niche)
 Advantages of market segmentation

Factors used to assess market attractiveness

 
Differentiating and positioning
- Do something others don’t do!
- Assumptions for differentiation
o It should be relevant for the customer
o It should be capable of being realized
o It should be difficult to imitate
o It should be economical feasible
o