Levels and Patterns of Market Segmentation, Marketing Management Video Lecture | Marketing Management - B Com

in today's lecture we're going to talk
about the importance of market
segmentation and market segmentation is
something that's done by businesses to
get a more ideal set of characteristics
for who ultimately their consumers are
we know that businesses simply can't
target everyone in their marketing
efforts because basically or very simply
their products don't mean the same
things to all people originally there
was this thought process that you can do
what's called mass market which means
take your existing product and we want
to target everyone we think everyone
should buy this but unfortunately in
targeting everyone you're essentially
diluting your message because our
messages mean different things to
different people
now what someone who is maybe in their
early 20s might find is interesting
someone maybe in their 50s or 60s is
gonna find little relevance in terms of
the impact of their daily lives and so
for marketers what we do is we gave
engage in this process called market
segmentation and that allows businesses
to better satisfy the needs of their
customers you see by targeting everyone
oh it's very difficult to determine what
the needs of everyone are because a lot
of times they're in direct conflict one
another but through market segmentation
we can identify a specific group a
specific customer base that all have
shared characteristics and then we can
develop a message that is much more
powerful in reaching that particular
group and so that's the the purpose of
market segmentation the goal is to
develop what we call a target market
which is a group of people who are most
likely to purchase your particular
product and then focusing on this
particular group and there are a number
of different ways than we can actually
segment an overall market we can do what
we call demographic segmentation and
demographic segmentation is simply
dividing the market into segments based
upon certain characteristics and those
characteristics can include everything
from age to gender to ethnicity to
income levels marital status education
a number of different variables that we
can accomplish in segmenting that market
and the goal with demographic
segmentation once again is to cater to
specific groups if we have a particular
product that we know maybe we sell
clothing and we know the clothing is
designed for young adults ages 17 to 25
well we know that those people are most
likely to purchase our products and so
we of course want to develop our
promotional strategies for them we don't
want to market to everyone because we
know ultimately we design the clothing
we know who it's for so let's target
that specific group and so we would
focus on that particular age group now
what happens is marketers usually don't
simply focus on just one particular
source of segmentation and so if you
take an overall market you know
obviously it's very very large you know
take the clothing market for example and
so what we have to do is we really have
to kind of split this up into smaller
chunks if you will that we can actually
target because as smaller companies we
may not have the resources to really go
after everyone specifically but through
segmentation we can identify a smaller
subset of that particular market for the
purpose of actually targeting them and
we can do this a number of different
ways you know first let's say we engage
in demographic segmentation so we go
ahead and we take a look at things like
income age gender marital status
education right there are certain
products that maybe people are more
inclined to purchase best upon education
levels based upon income levels right
certain classes of cars certain types of
homes for example are usually reserved
people with certain incomes so obviously
you wouldn't want to target someone
who's not in that particular income
level but in addition to that let's say
you segment based upon age even within
that group let's say you take for
example thirteen to seventeen year olds
and you're targeting that particular
group in your particular product or for
your product I should say within the
thirteen a 17 year olds you can then
focus on different different segments
within that overall group so once again
we're getting more focused and more
find for the purpose of developing a
specific segment so when we focus on 13
and 17 year olds that have parents with
incomes that are greater than $100,000
because we know that they're gonna have
more disposable income
we know that 13 to 17 year olds are very
good at persuading parents and
purchasing decisions they are large
influencers in households and so let's
focus on people with more disposable
incomes and also with 13 to 17 year olds
who historically are good influencers in
terms of family purchase decisions
things like vacations and different
things and so we once again get more and
more specific so that ultimately we
develop a very effective message for
reaching this particular group now
outside of simply just demographic
segmentation marketers do a number of
different things just outside of that
form of segmentation so another form of
segmentation that can be used is what we
call geographic segmentation and this is
simply looking at the places that people
live and focusing on people that reside
in certain areas and so a geographic
segmentation we may divide the market
into segments based upon where consumers
live and so we'll look at things based
upon urban versus rural areas because
obviously people that live in urban
areas may have a different need than
someone who lives in a rural area look
at transportation and we wouldn't focus
on selling big trucks in a urban area
similar to San Francisco because the
roads are a lot smaller they're very
congested difficult to parallel park and
so we wouldn't focus on selling that
type of vehicle there maybe in a rural
area we would ramp up our marketing
efforts in that area because we realized
there is a need you also look at
locations in the globe not just simply
rural versus urban areas and you can
also look at population density of
course you can look at specific areas
where you have to deal with climate so
for example in certain areas the United
States we get a lot of Sun of course and
you see a larger percentage of solar
companies locating in those particular
areas because obviously it wouldn't make
sense to locate in an area like
Cleveland for example which gets very
very
number of sunny days per year and so why
would you try and sell solar equipment
and solar panels in a location where
ultimately they're not going to use them
similar to selling snow equipment in
someplace like Arizona and so you would
want to segment your market and focus
ultimately not only on where you can
find the most customers but ultimately
on where your message is going to be the
most impactful of course very very
important thing now outside of
demographics and Geographics the problem
with them is that we're focusing on
essentially the makeup and location of
people you know we're essentially
stating that if you're between the ages
of 18 and 25 if you make a certain
income if you're a certain gender and if
you have a certain education level
you're probably going to buy our
products which may or may not be the
case right we rarely do we fall into
certain groups it used to be that you
can target someone simply based on their
job title and so you'd say well people
are if you're a teacher you have certain
needs and so you we can target you based
upon that but really there's such a wide
variety of interest even within job
titles now you know you have teachers
that range widely in age for example you
have some that are in maybe mid to late
20s some that are in potentially 6070
years old and so there's a wide variety
of needs within those groups and so as a
result you can't just target specific
jobs but you also can't target your
specific characteristics like simply
demographic segmentation so one of the
things that we can do or that marketers
do to kind of set themselves apart and
ultimately focus on a more impactful
market is engage in what we call
psychographic segmentation and
psychographic segmentation really goes a
little bit further than simply
demographic or Geographic segmentation
with psychographic segmentation we are
focusing on things like lifestyles and
even interests
and also attitudes essentially things
that have more to do with ultimately the
end purchase then simply just your race
ethnicity marital status education
income level and those different things
because those can be misleading so why
not focus ultimately on your lifestyle
or what are your interests what are your
hobbies what are your attitudes it
addresses the problems with Geographic
and demographic segmentation by looking
at characteristics that may actually
predict purchasing decisions and so
there's a great deal of variability
obviously in terms of lifestyles and
interests you can have for example
college students is a certain lifestyle
right but even within that you can have
college students with certain incomes of
course college students attending a
certain type of university versus
another and so there's a lot of
variability but the purpose is by
focusing on college students I'm
focusing on a more specific group than
simply men and women ages 17 to maybe 23
24 which is kind of that general College
range as a whole for the most part now
by focusing on college students though I
instantly know that if you're a college
student usually you have similar needs
to one another typically you're not
making a great deal of money typically
you live on campus housing possibly or
clothes nearby and so you have similar
needs of course versus simply just
females and males ages 17 to 23 or 24 or
there's a lot of variability there's a
lot of change within that one group so
focusing on lifestyles and interests is
very very important Facebook which we
all probably know does a great job of
focusing on lifestyles and attitudes and
interests because when you have a
Facebook account obviously they are free
but Facebook gathers a lot of
information on us for the purpose of
selling advertising and so one of the
things that keeps track of is all the
things that we like that we post about
in different things of that nature and
then it sells us targeted ads or not
sells us but sells
Verte eyes errs targeted ads and it
shows them on our facebook walls or
pages based upon things that we've liked
because it's assuming that if you have
an interest in a certain type of music
maybe you'll be more inclined to
purchase a or download music related to
a certain band that falls under that
category if you will if you have an
interest in sports you may see certain
advertisements related to sports because
you've identified an interest with that
and so they feel like if you're
interested then of course why wouldn't
you be more inclined to purchase
something related to that so you can
argue that psychographic segmentation is
much more effective than simply
demographic and geographic segmentation
because you're not just looking at the
actual makeup and characteristics of
people you're looking more at what they
actually are interested in for the
purpose of predicting purchasing
decisions now there obviously is a flaw
with regards to psychographic
segmentation and that is we're making an
assumption and assuming that if you have
a certain lifestyle if you are between
you know have children and live in the
suburbs that you are more inclined to
make purchasing decisions which you are
of course most likely however it's not a
guaranteed thing and so marketers
ultimately want to make sure that the
money that is spent on those things is
done so in an effective manner right no
one wants to you know throw money away
for for not any reason we want to make
sure that we're using it very
effectively and so one of the things
that marketers do is they actually can
engage in what we call behavioral
segmentation and behavioral segmentation
is going beyond what are the lifestyles
what are the interests attitudes of a
particular market you know what are
those shared lifestyles and interests
and attitudes and they're looking
specifically at consumers behavior
towards various products they're looking
at dividing a market into smaller
segments based upon how consumers behave
with regards to various products and one
company that does a really good job and
for the most part was one of the the
pioneers in terms of behavioral
imitation is Amazon and most of you are
most likely familiar with Amazon the
different services they offer different
products they sell a wide variety of
course obviously involved in developing
hardware like the Kindle and selling
books and those different types of
things and they've branched out into a
lot of different services but one of the
things that made Amazon so successful is
they engaged in behavioral segmentation
if you think of when you purchase
something via Amazon do you notice that
the second that you log back in in a few
day a few days few weeks later on at
some point in time you'll notice that
they offer you similar products based
upon your purchasing behavior which is
much more effective because you're
targeting people ultimately based upon
what they do rather than what they say
they will do and there's a lot of
difference between what people actually
do or engage in as compared to what they
actually say or what their lifestyle or
interests are so to speak and so if you
target people based upon their ultimate
behavior it's much more effective
because behavior is indicative of what I
truly want what I'm truly interested in
and so if I purchase books for example
related to a certain discipline say I
purchased books that are related to the
field of economics and Amazon sees this
and all of a sudden now when I log in
there are similar books being advertised
that I have a background in economics in
some way shape or form because they feel
that if I purchase something before
related to that field I'm probably
interested in that and so I'm probably
going to purchase things again which is
a little frustrating when you purchase
things that are gifts for example so
like my wife we have a daughter and my
wife ended up using we have separate
accounts usually what sometimes she uses
mine and so she used my account to
purchase some goods and items for our
daughter like diapers and different
things like that and so now when I log
on in Amazon because they said hey you
purchased things that are related to
baby type products now whenever I log on
it's all baby type products and so you
know for me personally that probably
isn't targeted directly towards me but
once again they're looking at past
behavior and so if you purchase things
for
if that aren't necessary for yourself
then you can't make the argument that
maybe it's not effective because you're
gonna get advertisements and
recommendations that weren't in your
interest you just purchase things
related to that of course so that is
obviously a criticism but overall it is
much more effective to target people
based upon what they ultimately do
rather than what they say they will do
there and that is truly one of the
benefits of behavioral segmentation