6.1 Market Segmentation and Target Market Selection

Market segmentation is all about dividing customers into groups based on shared traits. It's like sorting your closet - you group similar items together. This helps businesses tailor their products and marketing to specific customer types.

Once you've segmented your market, you pick your target. It's like choosing which friends to invite to a party. You focus on the groups that fit best with what you're offering, considering things like how much they might buy and how easy they are to reach.

Market Segmentation Types

Demographic and Geographic Segmentation

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• Demographic segmentation divides a market based on characteristics such as age, gender, income, education, and occupation
• Allows businesses to tailor products, services, and marketing messages to specific groups (millennials, high-income earners)
• Geographic segmentation divides a market based on location, such as country, region, city, or neighborhood
• Enables businesses to adapt to local preferences, cultural differences, and environmental factors (urban vs. rural consumers)

Psychographic and Behavioral Segmentation

• Psychographic segmentation divides a market based on personality traits, values, attitudes, interests, and lifestyles
• Helps businesses understand the motivations and preferences of different consumer segments (environmentally conscious consumers, adventure seekers)
• Behavioral segmentation divides a market based on consumer behavior patterns, such as purchase frequency, brand loyalty, and product usage
• Allows businesses to identify and target specific groups based on their actions and decisions (frequent flyers, heavy users of a product)

Target Market Selection

Market Segmentation and Target Market Identification

• Market segmentation is the process of dividing a market into distinct groups of consumers with similar needs, characteristics, or behaviors
• Enables businesses to identify and focus on the most promising segments for their products or services
• A target market is a specific group of consumers within a larger market that a business aims to serve and sell to
• Selecting a target market involves evaluating the attractiveness, profitability, and feasibility of different segments (parents of young children, luxury car buyers)

Niche Marketing and Market Positioning

• Niche marketing involves targeting a highly specific, often small segment of a market with specialized products or services
• Allows businesses to differentiate themselves and build a loyal customer base in a narrow market (vegan pet food, vintage vinyl records)
• Market positioning refers to the way a business presents its products, services, and brand to occupy a distinct position in the minds of target customers
• Effective positioning involves highlighting unique features, benefits, and values that set a business apart from competitors (eco-friendly cleaning products, premium quality handmade goods)

Customer Analysis

Customer Personas and Segmentation Variables

• Customer personas are fictional representations of ideal customers based on market research and real data about existing customers
• Personas include demographic, psychographic, and behavioral characteristics, as well as goals, challenges, and preferences (budget-conscious single parent, tech-savvy millennial)
• Segmentation variables are the specific characteristics used to divide a market into segments
• Common segmentation variables include age, gender, income, education, occupation, personality traits, values, attitudes, interests, lifestyles, purchase frequency, brand loyalty, and product usage (geographic location, online shopping behavior)