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How to Design Marketing Campaigns: The Importance of Market Segmentation

Analytical Marketing

❶Segmentation and Positioning for Strategic Marketing Decisions. Tabs are shown as a set of headings under the header, which shows the name of the segment.

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The following sections provide a detailed description of the most common forms of consumer market segmentation. Geographic segmentation divides markets according to geographic criteria. In practice, markets can be segmented as broadly as continents and as narrowly as neighborhoods or postal codes. The geo-cluster approach also called geodemographic segmentation combines demographic data with geographic data to create richer, more detailed profiles.

They classify residential regions or postcodes on the basis of census and lifestyle characteristics obtained from a wide range of sources.

This allows the segmentation of a population into smaller groups defined by individual characteristics such as demographic, socio-economic or other shared socio-demographic characteristics. Geographic segmentation may be considered the first step in international marketing, where marketers must decide whether to adapt their existing products and marketing programs for the unique needs of distinct geographic markets.

Tourism Marketing Boards often segment international visitors based on their country of origin. A number of proprietary geo-demographic packages are available for commercial use. Geographic segmentation is widely used in direct marketing campaigns to identify areas which are potential candidates for personal selling, letter-box distribution or direct mail.

Geo-cluster segmentation is widely used by Governments and public sector departments such as urban planning, health authorities, police, criminal justice departments, telecommunications and public utility organisations such as water boards. Segmentation according to demography is based on consumer- demographic variables such as age, income, family size, socio-economic status, etc. Typical demographic variables and their descriptors are as follows:. The use of multiple segmentation variables normally requires analysis of databases using sophisticated statistical techniques such as cluster analysis or principal components analysis.

It should be noted that these types of analysis require very large sample sizes. However, data-collection is expensive for individual firms. For this reason, many companies purchase data from commercial market research firms, many of whom develop proprietary software to interrogate the data.

The labels applied to some of the more popular demographic segments began to enter the popular lexicon in the s. Psychographic segmentation, which is sometimes called psychometric or lifestyle segmentation, is measured by studying the activities, interests, and opinions AIOs of customers. It considers how people spend their leisure, [55] and which external influences they are most responsive to and influenced by.

Psychographics is a very widely used basis for segmentation, because it enables marketers to identify tightly defined market segments and better understand consumer motivations for product or brand choice.

While many of these proprietary psychographic segmentation analyses are well-known, the majority of studies based on psychographics are custom designed. That is, the segments are developed for individual products at a specific time.

One common thread among psychographic segmentation studies is that they use quirky names to describe the segments. Behavioural segmentation divides consumers into groups according to their observed behaviours.

Many marketers believe that behavioural variables are superior to demographics and geographics for building market segments [57] and some analysts have suggested that behavioural segmentation is killing off demographics. Note that these descriptors are merely commonly used examples.

Marketers customise the variable and descriptors for both local conditions and for specific applications. For example, in the health industry, planners often segment broad markets according to 'health consciousness' and identify low, moderate and highly health conscious segments. This is an applied example of behavioural segmentation, using attitude to product or service as a key descriptor or variable which has been customised for the specific application.

Purchase or usage occasion segmentation focuses on analyzing occasions when consumers might purchase or consume a product. Unlike traditional segmentation models, this approach assigns more than one segment to each unique customer, depending on the current circumstances they are under. The benefits sought by purchasers sometimes called needs-based segmentation divides markets into distinct needs, perceived value, benefits sought or advantage that accrues from the purchase of a product or service.

Marketers using benefit-sought segmentation might develop products with different quality levels, performance, customer service, special features or any other meaningful benefit and pitch different products at each of the segments identified.

Benefit segmentation is one of the more commonly used approaches to segmentation and is widely used in many consumer markets including motor vehicles, fashion and clothing, furniture, consumer electronics, and holiday-makers. Loker and Purdue, for example, used benefit segmentation to segment the pleasure holiday travel market. The segments identified in this study were the naturalists, pure excitement seekers, escapists. Attitudinal segmentation provides insight into the mindset of customers, especially the attitudes and beliefs that drive consumer decision-making and behaviour.

An example of attitudinal segmentation comes from the UK's Department of Environment which segmented the British population into six segments, based on attitudes that drive behaviour relating to environmental protection: In addition to geographics, demographics, psychographics and behavioural bases, marketers occasionally turn to other means of segmenting the market, or to develop segment profiles. A generation is defined as "a cohort of people born within a similar span of time 15 years at the upper end who share a comparable age and life stage and who were shaped by a particular span of time events, trends, and developments.

Generational segmentation assumes that people's values and attitudes are shaped by the key events that occurred during their lives and that these attitudes translate into product and brand preferences. Demographers, studying population change, disagree about precise dates for each generation. For example, in Australia the post-war population boom peaked in , [65] while the peak occurred somewhat later in the USA and Europe, [66] with most estimates converging on Accordingly, Australian Boomers are normally defined as those born between —; while American and European Boomers are normally defined as those born between — Thus, the generational segments and their dates discussed here must be taken as approximations only.

The primary generational segments identified by marketers are: Cultural segmentation is used to classify markets according to cultural origin. Culture is a major dimension of consumer behaviour and can be used to enhance customer insight and as a component of predictive models.

Cultural segmentation enables appropriate communications to be crafted to particular cultural communities. Cultural segmentation can be applied to existing customer data to measure market penetration in key cultural segments by product, brand, channel as well as traditional measures of recency, frequency, and monetary value.

These benchmarks form an important evidence-base to guide strategic direction and tactical campaign activity, allowing engagement trends to be monitored over time.

Cultural segmentation can also be mapped according to state, region, suburb, and neighborhood. This provides a geographical market view of population proportions and may be of benefit in selecting appropriately located premises, determining territory boundaries and local marketing activities.

Census data is a valuable source of cultural data but cannot meaningfully be applied to individuals. Name analysis onomastics is the most reliable and efficient means of describing the cultural origin of individuals. The extent of name data coverage means a user will code a minimum of 99 percent of individuals with their most likely ancestral origin.

Online market segmentation is similar to the traditional approaches in that the segments should be identifiable, substantial, accessible, stable, differentiable and actionable. The segments differ regarding four customers' behaviours, namely: For example, Simplifiers make over 50 percent of all online transactions. Their main characteristic is that they need easy one-click access to information and products as well as easy and quickly available service regarding products.

They also 'dislike unsolicited e-mail, uninviting chat rooms, pop-up windows intended to encourage impulse buys, and other features that complicate their on- and off-line experience'. Surfers like to spend a lot of time online, thus companies must have a variety of products to offer and constant update, Bargainers are looking for the best price, Connectors like to relate to others, Routiners want content and Sportsters like sport and entertainment sites.

Another major decision in developing the segmentation strategy is the selection of market segments that will become the focus of special attention known as target markets. The marketer faces a number of important decisions:. When a marketer enters more than one market, the segments are often labeled the primary target market , secondary target market.

The primary market is the target market selected as the main focus of marketing activities. The secondary target market is likely to be a segment that is not as large as the primary market, but has growth potential.

Alternatively, the secondary target group might consist of a small number of purchasers that account for a relatively high proportion of sales volume perhaps due to purchase value or purchase frequency. In terms of evaluating markets, three core considerations are essential: There are no formulas for evaluating the attractiveness of market segments and a good deal of judgment must be exercised.

The following lists a series of questions that can be asked. When the segments have been determined and separate offers developed for each of the core segments, the marketer's next task is to design a marketing program also known as the marketing mix that will resonate with the target market or markets. Developing the marketing program requires a deep knowledge of key market segment's purchasing habits, their preferred retail outlet, their media habits and their price sensitivity.

The marketing program for each brand or product should be based on the understanding of the target market or target markets revealed in the market profile. Customer type - based on factors such as the size of the organization, its industry, position in the value chain, etc. Buyer behavior - based on factors such as loyalty to suppliers, usage patterns, and order size.

The identified market segments are summarized by profiles, often given a descriptive name. From these profiles, the attractiveness of each segment can be evaluated and a target market segment selected.

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The articles on this website are copyrighted material and may not be reproduced, stored on a computer disk, republished on another website, or distributed in any form without the prior express written permission of QuickMBA. A market segment should be: Consumer Market Segmentation A basis for segmentation is a factor that varies among groups within a market, but that is consistent within groups. Reach even more specific niche markets by combining different segmentation styles.

Customer segmentation is universally applicable. The tactic can benefit marketers in both small business start-ups and global companies across all industries.

Thus, with billions of people in the world, efficiently utilizing customer segmentation will help businesses narrow the pool and reach the people that they want to be talking to, ultimately driving conversions and revenue.

Begin by characterizing your target audience. Recognize singular character profiles by age, sexual orientation, interests, calling, and so […]. By breaking down your best customers into market segments and learning more about them, you can specifically target your best […]. There are several different ways to distinguish customers from one another.

Elizabeth Bell at Bridge examines 5 of the most common customer segmentation factors. The issue with this method is that there can be movements among segments over time, […]. Five Types of Customer Segmentation and Examples of Implementation Customer segmentation is imperative when trying to send messages to a target market. Demographic B2C Demographic segmentation is segmenting the market based on certain characteristics of the audience.

Behavioral Behavioral segmentation is similar to psychographic segmentation on the basis that it is less concrete than demographic or geographic segmentation. Segment Smarter Each style of customer segmentation carries its own unique set of benefits, but using them in conjunction with one another will create maximum impact.

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What is market segmentation?

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Market Segmentation. The division of a market into different homogeneous groups of consumers is known as market segmentation.. Rather than offer the same marketing mix to vastly different customers, market segmentation makes it possible for firms to tailor the marketing mix for specific target markets, thus better satisfying customer needs. Not all elements of the marketing .

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Marketing > Segmentation. Market Segmentation. Market segmentation is the identification of portions of the market that are different from one another. Segmentation allows the firm to better satisfy the needs of its potential customers.

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Market segmentation assumes that different market segments require different marketing programs – that is, different offers, prices, promotion, distribution or some combination of marketing variables. Customer Segmentation is the subdivision of a market into discrete customer groups that share similar characteristics. Customer Segmentation can be a powerful means to identify unmet customer needs. Companies that identify underserved segments can then outperform the competition by developing.

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Customer segmentation is the practice of dividing a customer base into groups of individuals that are similar in specific ways relevant to marketing, such as age, gender, interests and spending habits. Customer segmentation, also called consumer segmentation or client segmentation, procedures. Customer segmentation enables businesses to create messages that will resonate deeply with particular audiences by dividing consumers into niche groups.