Market Segmentation

Chapter 5
The logic of marketing segmentation is quite simple and is based on the idea that a single product item can seldom meet the needs and wants of all customers. Typically, consumers vary as to their needs, wants, and preferences for products and services, and successful marketers adapt their marketing programs to fulfill these preference patterns. If a particular group can be served profitably by a firm, it is a viable market segment. Market segmentation is defined as the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) for the firm to serve. The group or market segment that a company selects to focus on is called a target market.
The market segmentation process consists of delineate firm’s current situation, determine consumer needs and wants, divide markets on relevant dimensions, develop product positioning, decide segmentation strategy, and design marketing mix strategy.
Delineate the firm’s current situation is intended to be a reminder of tasks to be performed prior to marketing planning. Determine consumer needs and wants emphasize on marketing strategies that depend on discovering and satisfying consumer needs and wants. Consumer attitudes, preferences, and benefits sought, which are determined through marketing research, are commonly used for segmentation purposes.
The next step is divide markets on relevant dimension. This step is often considered to be the whole of marketing segmentation. Three important questions should be considered: (1) should segmentation be a priori or post hoc? (2) How does one determine the relevant dimensions or bases to use for segmentation? (3) What are some bases for segmenting consumer and organizational buyers markets?
An a priori segmentation approach is one in which the marketing manager has decided on the appropriate basis for segmentation in advance of doing any research on market. Post hoc segmentation is an approach in which people are grouped into...