Market Segmentation Jeremy Kees, Ph.D. Selecting and Serving Consumers • Market Segmentation: the process of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs • NOT to be confused with targeting and positioning Our overall intent is to… 1. Identify groups of similar customers and potential customers 2. Prioritize the groups 3. Understand their behavior 4. Respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment To effectively segment a market, remember SADAM • • • • • S Substantial A Accessible D Differential A Actionable M Measurable We can segment a market by… Geography • Region of the world or country • City or country size • Climate We can segment a market by… Demographics • age • gender • sexual orientation • family size • family life cycle • household type • income/expenditure patterns • occupation • education • socioeconomic status • religion • nationality/race/ethnic group • Oxygen.com – clearly an ad directed at the female segment • Budweiser – most campaigns target young males We can segment a market by… Psychographics • personality • lifestyle • value • attitude • Tom’s of Maine – Targeting a Specific Marketing Segment – Which segment? • How about Kellogg's? We can segment a market by… Product Characteristics / Behavior • benefit sought • product usage rate • brand loyalty • product end use • readiness-to-buy stage • Which segment is Mabellene trying to appeal to? Segmenting based on one variable usually is not good enough….