Retail Marketing

Segmentation
- N. Mohammed Nizar

03/30/09 Nizar
• A market is a group of potential
customers with similar needs who are
willing to exchange something of value
with sellers offering various goods and
services tat can satisfy these needs

Marketer

Mass Marketing Segmentation

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 Market Segmentation
• The process of dividing the heterogeneous
Total market into small group of customers
who share similar set of wants
Ex. Women

Working Housewife

• Different groups have different promotional

strategies and mkg mixes because they have
diff. wants and needs
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 Sub-segments
Women

Working Housewife

Children No Children

• Segmentation helps the retailer to customize the

product and tailor its promotional campaigns

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 Stages in Segmentation

Segmentation Targeting Positioning

3. Choose variable for 3. Decide on targeting 3. Understanding the

segmentation market 4. Identify which target segment
2. State a profile of segments will be 2. place offering in the
Segment Targeted mind of the target
3. Verify prospective 3. How many segment segment
segment should be targeted 3. Evolve mkting mix

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 Benefits
• Development of Marketing Mix
• Store location decisions
• Understand customer behavior
• Merchandising decision
• Promotional campaigns
• Positioning

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 Criteria for effective segmentation
• Homogeneous within
• Heterogeneous between
• Substantial
- should be large enough
• Actionable
• Accessible
• Measurable

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 Dimensions for Segmentation

• Geographic
• Demographic
• Psychographic
• Behavioral

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 SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Region Southwest, Mountain States, Alaska, Hawaii
City Size Major metropolitan areas, small cities, towns
Density of area Urban, suburban, exurban, rural
Climate Temperate, hot, humid, rainy
Demographic Segmentation
Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Sex Male, female
Marital status Single, married, divorced, living together, widowed
Income Under $25,000, $25,000-$34,999, $35,000-$49,999,
$50,000-$74,999, $75,000-$99,000, $100,000 and over
Education Some high school, high school graduate, some college,
college graduate, postgraduate
Occupation Professional, blue-collar, white-collar, agricultural,
military

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 SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Needs-motivation Shelter, safety, security, affection, sense of self-worth
Personality Extroverts, novelty seeker, aggressives, low dogmatics
Perception Low-risk, moderate-risk, high-risk
Learning-involvement Low-involvement, high-involvement
Attitudes Positive attitude, negative attitude
Psychographic
(Lifestyle) Segmentation Economy-minded, couch potatoes outdoors enthusiasts
status seekers
Sociocultural Segmentation
Cultures American, Italian, Chinese, Mexican, French, Pakistani
Religion Catholic, Protestant, Jewish, Moslem, other
Subcultures (Race/ethnic) African-American, Caucasian, Asian, Hispanic
Social class Lower, middle, upper
Family life cycle Bachelors, young married, full nesters, empty nesters

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 Values
• Refers to belief system
ex. Benetton targeted customers who value protection of
environment, it encourages recyclable packaging and
refill services

• Cultural values

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 VALS
• Begins with people instead of products
• Classifies people by their unique style of
living
• It then determines how marketing factors
fit into their lives
- The self-driven materialists
- the independent Explorer
- The Passive traditionalist
- The enthusiastic experiments
- The mature Sensible
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 Behavioral
• Reason/ occasion for purchase
• Frequency of purchase
• Quantity of purchase
• Product usage
• Loyalty status
• Buyers readiness stage
• Source of purchase

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 Market Targeting
• Choosing the segment
• Measure the attractiveness and its capacity to
serve in the segment
Factors
• Size of the segment
• Purchasing power
• Growth rate
• Presence of competition
• profitability
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 Customer Profile
Profiles help the retailer in understanding
the needs of the target segments and its
shopping behavior
• Customer demographics
• Family decision making
• Psychographics
• Purchsing behavior
• Motivation for purchase
• Purchasing process
• Time utility
• Space utility
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