Transcript Market Segmentation

Market Segmentation
Today you will know what market
segmentation is.
You will understand how and why businesses
segment their markets.
You will be able to apply this to the Levi’s
case study.
Market Segmentation (1)
Market Segmentation is the division of larger markets into smaller
clearly identifiable sections. Producers will use segmentation to
identify people with similar needs and characteristics.
The purpose of market segmentation :
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Few goods are truly mass-market products. A business that attempts
to produce a good that is all things to all people will probably fail.
Segmenting helps businesses to differentiate (To make noticeable or
different) their products and to market them effectively.
May also help firms to identify niche markets (often very profitable.)
Through market research firms aim to find info out about customers
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E.g. What TV they watch, magazines they read, how much they
earn, where do they shop, who does the shopping, what products
they use and why.
This info can be used to develop products and marketing strategies
that appeal directly to specific consumer groups.
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E.g. actors chosen for adverts to appeal
Market Segmentation (2)
Businesses can segment their markets in the following ways:
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Age e.g. Saga holidays for over 50s, club 18-30 holidays for
younger segment
Gender – Clothes, alcoholic drinks e.g., Baileys aimed at females
Income – Certain goods aimed at individuals with certain income.
e.g. Rolex, Porsche, Aldi, Lidl
Disposable income – cash available to spend after all bills paid
Socio-economic group – Households are characterised by the major
earners job linked to income
Geographical region – ACORN – segments markets according to
types of households and the characteristics of the families that
live in them
Usage rate – Firms such as Bt and Cigarette companies distinguish
between heavy users and light users, may affect promotion used
Purchase occasions – when do people buy e.g. card companies
increasingly increasing occasions where cards should be sent.
Socio-economic groups
Institute of Practitioners in Advertising (IPA) Grouping
A:
Higher managerial, professional and administrative
B:
Middle management, professional and administrative
C1:
Supervisory, clerical and junior management
C2:
Skilled Manual Workers
D:
Semi and unskilled manual workers
E:
Pensioners, casual workers, unemployed
Reasons for segmenting a market
Businesses segment their markets for the following
reasons:
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To increase market share - you can adapt products and
marketing to reach new market segments e.g. Mothercare
increasing its age range
To assist new product development - can provide
incentives your particular market segment would want to
encourage purchase
To extend products into new markets - mobile phones
originally aimed at business people, then teenagers now
whole family
To identify ways of marketing a product -If you know
the characteristics of your market segment you can use
media and types of marketing that will appeal to them e.g.
Advertise in The Times for Socio-economic group A
Problems with Market Segmentation
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Difficulty in identifying the most important
segments for a product
Knowing how to reach your chosen segment
with your marketing
Recognising changes in the segments
interested in your product - recquire constant
research to stay in touch with market segments as markets are
dynamic
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Failure to meet the needs of customers not
included in your chosen segment
Task:
Levi’s Case
Study
Read the case
study and
complete all
questions.