Chapter 8 Summary
Market segmentation is the process of dividing a market into groups of potential buyers who have similar needs and wants, value perceptions, or purchasing behaviors. Having accomplishes this task, the marketing manager can then identify target markets, i.e., particular markets to serve. In serving this target markets, the marketing manager can use either a mass marketing, segment marketing, niche marketing, differentiated marketing, or individual marketing approach.
There are a number of methods available to segment markets. The first is demographic segmentation which is dividing markets based on population characteristics such as gender, age, race, income, education, profession, family size, and family life cycle. A second approach is by geography like region, population density, and climate. A third possibility is through psychograpics (lifestyle and personality). The fourth method of segmentation is referred to as buyer thoughts and feelings. Encompassed is attitudes, benefits sought, readiness stage, innovativeness, perceived risk, and involvement. The final method is called purchase behavior that includes usage rate, source loyalty, and user status.
As with any process, steps need to be developed and followed. For market segmentation, the steps are as follows whether in the domestic or global marketplace:
Analyze the customer - product relationships - determine what the customer wants and what the firm can offer
Investigate segmentation bases - how to divide the market into segments
Develop product positioning - perception of the firm's product against competing products
Select the segmentation strategy to apply - mass marketing, segment marketing, individual marketing
