Chapter 8

Market segmentation –identification of individuals or organizations with similar characteristics that have significant implication for the determination of marketing strategy. Advantages of marketing segmentation:

- target market selection

- tailored MM

- Differentiation

- opportunities & threats

Target market –a segment of market a company would like to focus on

Behavioral	Psychographic	Profile
Benefits sought (price, pleasure, convenience, performance)	Lifestyle (trendsetters, conservatives, sophisticates)	Demographic (age, gender, life-cycle)
Purchase occasion (self-buy, gift, special occasion, eating, etc.)	Personality ( brand choice is a direct manifestation of life position)	Socio-economic (social class, education age)
Geographic variables
Geodemographic (ACORN & MOSAIC, divide consumers, basing on their geographic & demographic characteristics)
Purchase behavior (solus buying, brand switching, innovators)
Usage (heavy, middle, light users)
Perception, beliefs and values (favorable, unfavorable)

Due to Development of the internet there are following changes in marketing approaches:

1. Each customer can be a part of microsegment with an extra-precise level of segmentation

2. Online shops as well as bricks-and-mortars ones define attitude of customers

Segmentation of organizational markets (B2B)

Macrosegmentation	Microsegmentation
Organizational size	Choice criteria (price, economic value, service, etc.)
Industry	Decision- making unit structure (people, who play the most significant part in taking decisions about the purchase)
Geographic location	Decision-making process (short, long)
	Buy class (straight rebuy, modified rebuy, new task), purchasing organization (centralized or decentralized)
	Organizational innovativeness (innovator, follower, laggard)
Purchasing organization (centralized, decentralized)

Target marketing

- choice of specific segments to serve and is a key element in marketing strategy. The firm needs to evaluate the segments and decide, which one of them to serve.

Nature of competition

New entrants

Competitive differentiation

Segment size

Bargaining power of b.

Bargaining power of s.

Segment growth rate

Segment profitability

Price sensitivity

When evaluating market segments, a company should examine two broad issues: market attractiveness and the company’s capability to compete in this segment.

PEST

Market factors

Entry/exit barriers

Competitive factors

Market attractiveness

To aseeess company’s ability to compete, used the following key pararmetetrs:

To assess company’s abilities to compete are used the following parameters:

- exploitable market assets

- cost advantages

- managerial commitment and capabilities

- technological edge

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