Understanding Consumer Behavior and Market Segmentation

Chapter 2

Market SegmentationAlso known as mass marketing or

undifferentiated marketing.

“Producing a single product and offering it to

all consumers with a single marketing

program”.

Opposite of segmentation.

Characteristics Offering standard product.

Little or no change from competition.

Heavy use of mass promotion.

Distinguishing the product as being superior.

Products are as per the choice of producers

not consumers.

Market Segmentation“Dividing the market into different

segments.”

Today is the “Age of Diversity.”

All consumers are different.

So are their demands.

Selecting the right segment is the key to

success.

Characteristics Viewing market as being made up of small

segments.

Homogeneous within the segment.

Heterogeneous with other segments.

Different products are produced for different

people.

E.g. General Motors, P&G etc

Benefits of Market Segmentation Know what consumers WANT.

Fewer and similar consumers.

Detailed knowledge of consumers

characteristics.

Consumer database is also built and used.

Results in more profits.

Niche Marketing is also an example.

Costs of Market Segmentation Shorter production.

Higher manufacturing costs.

Higher R&D costs.

Higher promotional costs.

Cannibalization.

Criteria for Effective Segmentation1. Identifiable and Measurable.

2. Accessible

3. Substantial

4. Responsive

Performing Market Segmentation1. Define the Problem.

2. Select a segment basis.

(In advance or Natural Groupings)

3. Choose a set of Descriptors.

4. Select a Sample of Consumers.

5. Collect data on segment descriptors from

sample of consumers.

6. Form Segment based on chosen consumer

descriptors.

7. Establish profiles of segments.

8. Translate result into marketing strategy.

Demographic Characteristics and Market Segmentation

Demography is the study of human

population statistics. Like;

Age

Size

Gender

Occupation

Income etc.

Assignment no 1

What are the Demographic Characteristics of Pakistani Market? Explain in detail.