October 20, 2009

How do you create market segments?

Posted in Uncategorized at 9:48 pm by Jennifer McDowell

Last week, we briefly talked about markets and market segments. To review –

A market is a group of consumers who have both the desire and ability to buy something. We applied terms from our study of consumer behavior, and developed another definition, “A market is a group of consumers who have the motivation and resources to buy something”.

A market segment is a sub-group, or segment, of the market. People the same segment share many more attributes and characteristics with other members of the same segment, than they do with people in other segments. Often, these market segments are defined by demographic, psychographic, and geographic attributes.

Geographics – where consumers work and/or live, including terrain, range

Psychographics – lifestyle (VALS and Claritas), for example, “Students are broke, goal-oriented, busy, sleep-deprived, stressed out, malnourished”. Another example, “Religious leaders are considerate or thoughtful about their choices and actions, tolerant, patient, spiritual”. Another example, “Roadies are busy, hard-working, skilled, technically-inclined, have problems with substance abuse.”

Demographics – gender, age, household income, size of household, ethnicity, religious affilitation, occupation. Example, “Baby Boomers – 1947-1965, male/female, satisfying self-actualization needs”.

Today, we’ll tackle two important marketing questions –

1. Why do marketers bother to define (select) specific markets, and market segments? Why don’t they simply try to sell their products and services to everyone?

2. Once the decision is made to focus their marketing, what is the process that marketers follow to choose a market? How do they then define relevant market segments?

3. Once the market and market segments are defined, how do marketers decide which segment to “target”?

4. Once a specific market segment is defined and targeted, how do marketers “initiate a conversation” with the target market?

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