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Market Segmentation

Market segmentation is the practice of dividing a market into smaller, homogenous groups with similar needs and purchasing capabilities. By applying four criteria—homogeneity, heterogeneity, substantiality, and operational viability—businesses can identify key segments for tailored marketing mixes. The targeting approaches include single, multiple, and combined strategies to optimize engagement with distinct customer segments—such as age, gender, income, and lifestyle. This guide explores essential principles for effective market segmentation and offers practical examples for strategic application in marketing.

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Market Segmentation

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  1. Market Segmentation Marketing I Mr. Yates

  2. What’s a Market Again? • Market – • All the people who have similar needs and wants, and who have the ability to purchase a given product

  3. Market Segmentation • Market Segmentation – the division of a market into smaller, relatively homogenous (similar) groups • How do you do it?

  4. 4 Criterias for Segmentation • 1. The segment is homogenous within – customers within the segment should be as similar as possible in regard to how they would respond to a marketing mix

  5. 4 Criterias for Segmentation • 2. The segment is heterogeneous (different) between – the customer should be as different as possible in regard to how they would respond to a marketing mix

  6. Criteria for Segmentation • 3. Substantial – the segment should be large enough to be profitable

  7. Criteria for Segmentation 4. Operational – the segmenting dimensions (gender, income, age, etc.) should be useful for identifying customers and deciding on the proper marketing mix

  8. Segmenting David Douglas • What segments do we have here? • Age • Gender • Grades • Sports • Clubs • Languages • Ethnicity • Culture

  9. Target Market • The particular segment of a total population on which the retailer focuses its merchandising expertise to satisfy the submarket in order to accomplish its profit objectives • Or…who’smoney they’re trying to get

  10. 3 Approaches to Targeting Markets • 1. Single Target Market Approach – segmenting the market and going after on particular segment with a tailored marketing mix

  11. 3 Approaches to Targeting Markets • 2. Multiple Target Market Approach – segmenting the market and choosing 2 or more segments, using different methods of the marketing mix for each

  12. 3 Approaches to Targeting Markets • 3. Combined Target Market Approach – combining 2 or more segments, into 1 larger segment and use 1 marketing mix for them

  13. Cell Phone Segmenting Matrix

  14. Pick a Target Market • Men 19-29 • What do we know (or can generalize) about them? • More money to spend on gadgets (lack of family) • Tech-savvy • Use a lot of minutes and want extra features (internet, Wi-Fi, texting, navigation, music downloads) • It all means extra income for the carrier every month

  15. Your assignment…A Segmentation Matrix • In groups of 2 or 3 • Choose a product or service • Select 2 demographics (age, gender, lifestyle, income) to segment the market • Identify examples of products that would fit into each box • Similar to the cell phone example…

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