11.5 Market Segmentation
1 min read•may 7, 2024
- Market segmentation: The process of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs.
- Purpose: To identify target markets and tailor marketing mixes (5Ps) to these segments for more effective marketing strategies.
Forms of Consumer Market Segmentation
Demographic Segmentation
- Involves categories like age, education, gender, income, and household size.
- Most common form due to ease of obtaining data, especially from sources like the U.S. Census Bureau.
- Limitation: May not fully reveal consumer preferences or behaviors.
Geographic Segmentation
- Divides markets by regional location, population density (urban, suburban, rural), city or county size, and climate.
- Tailors products to regional preferences and buying habits.
Psychographic Segmentation
- Focuses on consumer's lifestyle, personality, interests, values, and attitudes.
- Groups consumers with common activities and opinions under "lifestyle names."
Benefit Segmentation
- Based on the benefits consumers seek from products or services.
- Targets consumers by specific product attributes that meet their needs.
Volume Segmentation
- Categorizes consumers based on the quantity of product use: heavy, moderate, light users, or nonusers.
- Often targets heavy users as they may account for a larger portion of product sales.
Business Market Segmentation
Unlike consumer markets:
- May include segments based on product usage specifics (e.g., polyethylene for different applications).
- Considers characteristics of the purchasing function (committees vs. managers).
- Size of client organization can dictate segmentation.
Marketing Research Utilization
To serve current customers better and find new ones:
- Marketing research: Planning, collecting, analyzing data relevant to marketing decisions.
- Uses include adjusting products or discovering new concepts based on customer feedback.
Types of Marketing Research Methods:
- Survey Research: Gathers factual data through questionnaires via various communication methods.
- Observation Research: Monitors respondent behavior without direct interaction using advanced technology like portable people meters (PPMs).
- Experimental Research: Changes variables such as price or package design to observe effects on sales (causality).
Marketing research helps companies allocate their marketing budgets more efficiently by understanding customer preferences and perceived product benefits.
Key Terms to Review (16)
Arbitron
: Arbitron, now known as Nielsen Audio, is a consumer research company specifically focusing on analyzing radio audiences and their behaviors. It provides detailed data on listenership which helps businesses target their advertisements and content to appropriate market segments.Benefit segmentation
: Benefit segmentation is a marketing strategy where the market is divided into distinct groups based on the specific benefits that consumers seek from a product or service. It focuses on understanding and catering to the different needs or desires that motivate consumer purchases within various segments.California Pizza Kitchen
: California Pizza Kitchen is a restaurant chain known for its innovative and non-traditional pizzas, such as the BBQ Chicken Pizza, that combines global flavors with California-style cooking. It exemplifies how businesses can successfully target specific market segments by offering unique products that meet the diverse taste preferences of customers.Crest
: In market segmentation, a "crest" refers to the peak or highest point of market interest or demand for a particular product or service within a specific segment. It represents the optimal timing and condition under which the targeted segment's engagement and responsiveness to marketing efforts are at their highest.Demographic segmentation
: Demographic segmentation is the process of dividing a market into smaller groups based on demographic factors such as age, gender, income, education level, or family size. This strategy helps businesses tailor their products and marketing efforts to more effectively meet the needs and preferences of specific customer segments.experiment
: An experiment in the context of market segmentation is a methodical process businesses use to test different marketing strategies or product features among specific segments of their market to determine what best meets the customers' needs. It involves creating a controlled environment to observe, measure, and analyze the effects of variations on consumer behavior or preferences.Geographic segmentation
: Geographic segmentation is a marketing strategy that divides a target market into segments based on geographic locations such as countries, cities, or regions. This approach allows businesses to tailor their products and marketing efforts to meet the specific needs and preferences of customers in different areas.Hallmark
: In the context of market segmentation, a hallmark is a distinctive characteristic or attribute that makes a product or service stand out in a specific segment of the market. It serves as a key identifier for why a target demographic would prefer it over competitors.market segmentation
: Market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics. It aims to identify high-yield segments to target marketing efforts and resources efficiently.Marketing research
: Marketing research involves the process of gathering, analyzing, and interpreting information about a market, including the identification of a target market's needs and preferences. It is used to determine the viability of a new service or product through techniques such as surveys, product testing, and focus groups.Observation research
: Observation research is the process of gathering data by watching consumers in their natural environment to understand how they interact with products or services. It helps businesses tailor their offerings to meet specific customer needs within different market segments.Olive Garden
: Olive Garden is an American casual dining restaurant chain specializing in Italian-American cuisine, offering a range of menu items from pasta dishes, salads, and breadsticks. It serves as an example of how businesses apply market segmentation strategies by catering to families and individuals seeking affordable Italian dining experiences.Psychographic segmentation
: Psychographic segmentation is a marketing strategy that divides consumers into sub-groups based on shared psychological characteristics, such as lifestyle, values, attitudes, and interests. This approach helps businesses tailor their products and marketing messages to more effectively meet the specific needs and desires of different consumer segments.Stouffer’s
: Stouffer’s is a brand known for producing frozen prepared foods that cater to various taste preferences and dietary needs. In the context of market segmentation, it exemplifies how a company can target different segments of the market by offering a diverse product line that includes single-serving meals, family-sized dinners, and specialized options like gluten-free or high-protein dishes.survey research
: Survey research is a method of collecting information from a group of people to understand their opinions, behaviors, or characteristics. It is widely used in market segmentation to tailor products and pricing strategies to meet diverse customer needs.volume segmentation
: Volume segmentation is a marketing strategy that divides the market based on the quantity of product bought or consumed by customers. It categorizes consumers into groups such as heavy, medium, and light users to tailor marketing efforts and product offerings more effectively.11.5 Market Segmentation
1 min read•may 7, 2024
- Market segmentation: The process of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs.
- Purpose: To identify target markets and tailor marketing mixes (5Ps) to these segments for more effective marketing strategies.
Forms of Consumer Market Segmentation
Demographic Segmentation
- Involves categories like age, education, gender, income, and household size.
- Most common form due to ease of obtaining data, especially from sources like the U.S. Census Bureau.
- Limitation: May not fully reveal consumer preferences or behaviors.
Geographic Segmentation
- Divides markets by regional location, population density (urban, suburban, rural), city or county size, and climate.
- Tailors products to regional preferences and buying habits.
Psychographic Segmentation
- Focuses on consumer's lifestyle, personality, interests, values, and attitudes.
- Groups consumers with common activities and opinions under "lifestyle names."
Benefit Segmentation
- Based on the benefits consumers seek from products or services.
- Targets consumers by specific product attributes that meet their needs.
Volume Segmentation
- Categorizes consumers based on the quantity of product use: heavy, moderate, light users, or nonusers.
- Often targets heavy users as they may account for a larger portion of product sales.
Business Market Segmentation
Unlike consumer markets:
- May include segments based on product usage specifics (e.g., polyethylene for different applications).
- Considers characteristics of the purchasing function (committees vs. managers).
- Size of client organization can dictate segmentation.
Marketing Research Utilization
To serve current customers better and find new ones:
- Marketing research: Planning, collecting, analyzing data relevant to marketing decisions.
- Uses include adjusting products or discovering new concepts based on customer feedback.
Types of Marketing Research Methods:
- Survey Research: Gathers factual data through questionnaires via various communication methods.
- Observation Research: Monitors respondent behavior without direct interaction using advanced technology like portable people meters (PPMs).
- Experimental Research: Changes variables such as price or package design to observe effects on sales (causality).
Marketing research helps companies allocate their marketing budgets more efficiently by understanding customer preferences and perceived product benefits.
Key Terms to Review (16)
Arbitron
: Arbitron, now known as Nielsen Audio, is a consumer research company specifically focusing on analyzing radio audiences and their behaviors. It provides detailed data on listenership which helps businesses target their advertisements and content to appropriate market segments.Benefit segmentation
: Benefit segmentation is a marketing strategy where the market is divided into distinct groups based on the specific benefits that consumers seek from a product or service. It focuses on understanding and catering to the different needs or desires that motivate consumer purchases within various segments.California Pizza Kitchen
: California Pizza Kitchen is a restaurant chain known for its innovative and non-traditional pizzas, such as the BBQ Chicken Pizza, that combines global flavors with California-style cooking. It exemplifies how businesses can successfully target specific market segments by offering unique products that meet the diverse taste preferences of customers.Crest
: In market segmentation, a "crest" refers to the peak or highest point of market interest or demand for a particular product or service within a specific segment. It represents the optimal timing and condition under which the targeted segment's engagement and responsiveness to marketing efforts are at their highest.Demographic segmentation
: Demographic segmentation is the process of dividing a market into smaller groups based on demographic factors such as age, gender, income, education level, or family size. This strategy helps businesses tailor their products and marketing efforts to more effectively meet the needs and preferences of specific customer segments.experiment
: An experiment in the context of market segmentation is a methodical process businesses use to test different marketing strategies or product features among specific segments of their market to determine what best meets the customers' needs. It involves creating a controlled environment to observe, measure, and analyze the effects of variations on consumer behavior or preferences.Geographic segmentation
: Geographic segmentation is a marketing strategy that divides a target market into segments based on geographic locations such as countries, cities, or regions. This approach allows businesses to tailor their products and marketing efforts to meet the specific needs and preferences of customers in different areas.Hallmark
: In the context of market segmentation, a hallmark is a distinctive characteristic or attribute that makes a product or service stand out in a specific segment of the market. It serves as a key identifier for why a target demographic would prefer it over competitors.market segmentation
: Market segmentation is the process of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics. It aims to identify high-yield segments to target marketing efforts and resources efficiently.Marketing research
: Marketing research involves the process of gathering, analyzing, and interpreting information about a market, including the identification of a target market's needs and preferences. It is used to determine the viability of a new service or product through techniques such as surveys, product testing, and focus groups.Observation research
: Observation research is the process of gathering data by watching consumers in their natural environment to understand how they interact with products or services. It helps businesses tailor their offerings to meet specific customer needs within different market segments.Olive Garden
: Olive Garden is an American casual dining restaurant chain specializing in Italian-American cuisine, offering a range of menu items from pasta dishes, salads, and breadsticks. It serves as an example of how businesses apply market segmentation strategies by catering to families and individuals seeking affordable Italian dining experiences.Psychographic segmentation
: Psychographic segmentation is a marketing strategy that divides consumers into sub-groups based on shared psychological characteristics, such as lifestyle, values, attitudes, and interests. This approach helps businesses tailor their products and marketing messages to more effectively meet the specific needs and desires of different consumer segments.Stouffer’s
: Stouffer’s is a brand known for producing frozen prepared foods that cater to various taste preferences and dietary needs. In the context of market segmentation, it exemplifies how a company can target different segments of the market by offering a diverse product line that includes single-serving meals, family-sized dinners, and specialized options like gluten-free or high-protein dishes.survey research
: Survey research is a method of collecting information from a group of people to understand their opinions, behaviors, or characteristics. It is widely used in market segmentation to tailor products and pricing strategies to meet diverse customer needs.volume segmentation
: Volume segmentation is a marketing strategy that divides the market based on the quantity of product bought or consumed by customers. It categorizes consumers into groups such as heavy, medium, and light users to tailor marketing efforts and product offerings more effectively.
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About Us
About Fiveable
Blog
Careers
Code of Conduct
Terms of Use
Privacy Policy
CCPA Privacy Policy
Resources
Cram Mode
AP Score Calculators
Study Guides
Practice Quizzes
Glossary
Cram Events
Merch Shop
Crisis Text Line
Help Center
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.