Segmentation
Ontela-A
, Definition
• Segmentation is the process of dividing the market into groups bas
upon important consumer characteristics.
, Why Segment?
• Better focus on customer needs
• Promotes new product ideas
• Helps develop effective marketing mix strategy
• Allocation of marketing resources to different products depending upon segm
attractiveness.
,Technical reason for segmentation…
• Markets are composed of customers who view a product differentl
from each other.
• For example a mobile phone for me is “functional” while for my daughter,
psychosocial.
• This difference is captured in the Willingness to Pay (WTP) of each custom
• Now, if we do not segment the market, our demand curve would look like
this……
• However, if you are able to segment and charge different prices to differen
segments, you will be able to “extract” more consumer surplus, and
therefore, make more money!
• No point in segmentation unless you are able to
• Charge different prices for same products—More Money
• Charge same prices for different products—More Customers
, Using Market Segmentation
• Useful market segments share certain characteristics:
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable
, Segmenting Consumer Markets
• Nation or country
Bases for • State or region
Segmentation • City or metro size
• Density
• Geographic
• Climate
• Demographic
• Psychographic
• Behavioral
Ontela-A
, Definition
• Segmentation is the process of dividing the market into groups bas
upon important consumer characteristics.
, Why Segment?
• Better focus on customer needs
• Promotes new product ideas
• Helps develop effective marketing mix strategy
• Allocation of marketing resources to different products depending upon segm
attractiveness.
,Technical reason for segmentation…
• Markets are composed of customers who view a product differentl
from each other.
• For example a mobile phone for me is “functional” while for my daughter,
psychosocial.
• This difference is captured in the Willingness to Pay (WTP) of each custom
• Now, if we do not segment the market, our demand curve would look like
this……
• However, if you are able to segment and charge different prices to differen
segments, you will be able to “extract” more consumer surplus, and
therefore, make more money!
• No point in segmentation unless you are able to
• Charge different prices for same products—More Money
• Charge same prices for different products—More Customers
, Using Market Segmentation
• Useful market segments share certain characteristics:
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable
, Segmenting Consumer Markets
• Nation or country
Bases for • State or region
Segmentation • City or metro size
• Density
• Geographic
• Climate
• Demographic
• Psychographic
• Behavioral
