MARKET SEGMENTATION
updated 2014 Feb 10
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INTRODUCTION
The main reason why we have Segmentation is because we have so many types of customers.

The reason why Segmentation has become important in teaching and learning about marketing is because these groups of different customers have:
  1. become more numerous, we have many more types of segments
  2. the differences among groups have become more distinct
  3. the groups have become large in number

WTGR

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MRK 106 text
Chpt 8
(11th edition)

Demographic 
Segmentation
 

 

Segmentation is not easy, once you decide that it is necessary to do, you may find that it is challenging to create these segments with any workable or meaningful definition
Sommers & Barnes "Marketing, 10th Edition"
(text used in CCT322 in 2004)
chpt 4, page 98/99

- globalization and the increase in competition worldwide - your customers can buy from more and more vendors, which makes segmentation difficult
- ecommerce "fragments a market by exposing customers to companies with which they were once totally unfamiliar"
- this means there may be people looking at stuff on your site, who are people not suited to be a customer

.
Criteria
for
Segmentation
 

 

Criteria for Segmentation
- things you have to think about in order to decide if a potential group is worthwhile being considered a "segment"

1. Homogenous 
- are the people in the proposed segment all similar without too many differences
- you could say right handed people is a segment, but.... if half the right handed people were women, and half were men, then this might not work if the gender also was an issue.

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Criteria
for
Segmentation
2. Heterogenous
- the people between the segments should be very different
- right handed and left handed might not be worthwhile if you are talking about a market segment for a product like pull-on boots
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Criteria
for
Segmentation
 

 

3. Substantial
- the people in the segment should be large enough in number to be worthwhile
- right handed men might be a large enough segment
- right handed men, who wear glasses, and speak Spanish and right motorcycles might be too small
- the group has to be large enough to "generate sufficient sales volume at a low enough cost to result in a profit " says Sommers 10th Ed.
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Criteria
for
Segmentation
 

 

4. Competition
Sommers 10th Ed. suggests that a company should target segments "where the numbr of competitors and their size are such that the firm is able to compete effectively"
 example
- some people buy trucks, some SUVs and some cars and some mini-vans
- some companies have a product segment devoted to truck buyers, like Ford
- car companies, like Nissan and Toyota might be advised to avoid selling trucks in North America because the competition is intense and they might not make a profit
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Criteria
for
Segmentation
 

 

5. Resources
Sommers 10th Ed. suggests that a company should make sure the segment relates to the resources of the company. If the company can mfg. variations to fit its key demographics, great, but it should not take on additional demographics if it does not have the capability
example
- a lingerie company taking on plus sizes - which would mean reconfiguring the fabric pattern cut-out which would effect fabric cost, waste amounts, etc.
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A Powerpoint on Segmentation
"If you want to download Chpt Eight (re: 11th edition) to view it and print it out yourself, go here
 http://people.senecac.on.ca/tim.richardson/MRK106-9th-Edition/Chpt8~9thedition.ppt
this powerpoint was still downloadable Oct 2007 (not in 2012)
in 2012 use  witiger.com/powerpoints/MRK106/segmentation.PPT
and  witiger.com/powerpoints/MRK106/segmentationprocess.ppt
this powerpoint discusses
- two basic types of markets
- clustering
- 4 criteria for determining if the segment is useful
- criteria for segmenting
- aggregating segments
- VALS - values, attitudes, lifestyles
- positioning
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Segmenting 
done in 
"real life"
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Segmenting 
done in 
"real life"

An example of a marketing consulting company that provides advice on market segmentation
 http://www.marketap.com/Segmentation.htm (link good Feb 2014)
 
http://www.marketap.com/Segmentation.htm This company has a pretty good explanation of some segmentation topics on their site, click on the screen capture to go to this page

just don't use blue font on blue background !!

marketap.com explains "Segmentation models developed to identify specific attributes of a customer group that are similar and dissimilar to others within the same group....  Segmentation model output is used to define and predict the success levels of sales & marketing initiatives.."

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Demographic 
Segmentation
 

 

Population information is an important part of "Demographic Segmentation"
click here to see Demographic information on the population in Toronto
 http://www.thestar.com/news/immigration/gta_immigration_history.html (2001-2006)

Municipal  http://www.toronto.ca/toronto_facts/diversity.htm (2006)

Toronto Demographics Portal http://www1.toronto.ca/wps/portal/co...default (2011)
 
click to see Visible Minority population numbers in Toronto and ROC - Rest of Canada

source
 http://www1.toronto.ca/city_of_toronto
/social_development_finance_
_administration/files/pdf/nhs_
backgrounder.pdf
 

.
Demographic 
Segmentation
 

 

Demographic Segmentation"
 
. Since Toronto is one of the most international cities in the world, it is helpful to know what countries our new Canadians come from so that services and facilities can be available to match the need. Many companies and Non-profit organizations use demographic information to be better able to provide services that are language and culture appropriate.

Sometimes, certain ethnic groups under-report their true population due to fear of dealing with government officials (which may be based on experiences in the country they came from). 

When an ethnic group makes efforts to hide their true population this often turns out to be a disadvantage because they are then not able to get government services and language services proportionate to their need. The need is based on reported numbers which turn out to be lower than the actual real numbers. This effects many things such as providing language assistance for municipal government services, calculating employment equity for large government agencies and service providers, etc..

WTGR

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Targeting
a
Specific 
Segmentation

CCT 322 text
Chpt 4
pp 109

 

http://www.jeep.com
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MRK 106 text
Chpt 9

co-branding
co-branding - the joint marketing of two different products by two different companies to the same target market segment
.
. A good example of what happens when two companies have the same target market segement, and decide to take advantage of this to create a product to "upsell" to the segment

WTGR

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Market
Segmentation

Successes
and
Failures

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Market Segmentation in the auto industry

Read this scan of a newspaper article to see a good example of Market Segmentation that succeeded and Segmentation that failed.
 

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advanced
technologies
facilitating
target
market
segmentation
CBC journalist Paul Jay wrote an article titled
"Hitting the target: Increased personalization of ads here to stay, despite privacy concerns"
The article ran on cbc.ca in the first week of October 2007 and quoted extensively from an interview given by Prof. Richardson 

The basics of the story is, as Paul outlined in the first sentance

"Social networking sites and advances in mobile technology are giving advertisers an unprecedented ability to focus their pitch to a very specific focus group: you."
 
"Increasingly, sophisticated mobile handsets are incorporating Global Positioning System satellite technology to provide users with mapping information. Tying mapping data into advertising is a natural move, said Richardson."
In the interview Prof. Richardson also stated

"One of the greatest weaknesses of marketing is you don't know location, you don't know how close people are to your store... But if advertisements were tied to a phone's GPS, the consumer might get an ad telling them not only about a sale nearby, but how to get there...This could be the holy grail for advertisers, the next killer application,

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advanced
technologies
revealing
privacy
vulnerabilities
"Hitting the target: Increased personalization of ads here to stay, despite privacy concerns"

While such a capability may be possible Richardson says "People become a little nervous if they think you know too much information about them...If you target them too closely, it can have an adverse or opposite effect,"

"Even when consumers know how and where the information is being obtained for example, through a MySpace page or a Google search there's still a sense that privacy has been violated," said Richardson.

see
 http://www.cbc.ca/news2/background/tech/hightech/personalized-ads.html 

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added Feb 10th 2014
 http://econsultancy.com/blog/62437-five-uncommon-ways-for-ecommerce-retailers-to-segment-their-email-list good

added Feb 6th 2012
 http://forums.crackberry.com/general-discussion-f2/blackberrys-target-market-segment-628600/
 
 
 
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