Market Segmentation Lecture

Introduction

• Segmentation: Dividing potential customers into groups or segments (e.g., gender, income, location, lifestyles).
• Objective: Identify the most profitable segment or one with long-term growth potential and target it.
• Strategy: Position the business and use a marketing mix tailored to the chosen segment.

Methods of Segmentation

1. Gender

• Products are offered based on gender differences.
  • Example: T-shirts in different shapes, sizes, and colors.
  • Example: Moisturizers with different packaging for different genders.

2. Income

• Products are offered based on income brackets.
  • Example: Basic vs. premium packages.
  • Example: Different car models for different income levels.

3. Location

• Products are tailored to specific geographic locations.
  • Example: McDonald's offering rice in the Philippines.
  • Example: Businesses expanding to new towns or cities based on profitability analysis.
  • Example: Using targeted promotions and coupons for specific areas.

4. Lifestyles

• Products are offered based on lifestyle preferences.
  • Example: Holiday providers offering various packages (all-inclusive, spa, family, nightlife, beach, sports).

Pros and Cons of Market Segmentation

Pros

• Meets customer needs better: Tailored products improve customer satisfaction.
• Brand loyalty: Increased chances of repeat customers.
• Reduced price sensitivity: Allows for higher pricing and possibly higher profits.

Cons

• Higher costs: Increased research and development, production, and marketing costs.
• Wider product range: Reduced ability to benefit from economies of scale.

Conclusion

• Market segmentation helps in better targeting and meeting customer needs, but it comes with increased costs and complexities.