Week 2 Project

Market Segmentation

Different consumers have different product needs and use products differently. Segmentation seeks to group different demands and needs into clusters with similar demand patterns. The groups are called market segments and the process of dividing a market into segments is called market segmentation.

Market Managers segment markets on the basis of four different dimensions:

demographic,

geographic,

psychographic,

and behavior.

Marketing managers use multiple variables within each dimension as the actual basis for segmentation. One of the key applications of marketing research in marketing management is determining a combination of four dimensions that works best for the purposes of market segmentation.

The selection of the target markets is based on different criteria.

Organization's Objectives: What are the �nancial goals of the �rm and its market objectives? Is the �rm seeking to pursue a global or a domestic strategy? This is the starting point for the selection evaluation.

Cost of Serving the Market Segments : Particular attention is paid to the economies of scale that might be accomplished by serving multiple market segments. Once the cost of serving market segments is identi�ed, the next step for marketing managers is to identify the organizational resources available for serving the different market segments.

Organizational Resources : Organizational resources include not only �nancial resources but also product experience, market knowledge, and distribution channels. These resources are then matched to speci�c market segments to determine the best match.

Market Size : The �nal step in the process is to determine the market size. This looks at not only the pro�t potential of the market segment but also its growth potential and the level of its competition. Segments having the potential to expand or deliver high-pro�t levels are the most desirable.

Strategies for Selecting the Target Market

There are three strategies for selecting a target market

Undifferentiated Targeting Strategy - In this strategy, an organization selects customers within one segment that have the same wants and needs, for example, the business traveler. In the hospitality industry, a hotel organization might focus on the business traveler and business meetings and develop a conference hotel within a market that has a need for such services.

A Concentrated Targeting Strategy - In this strategy, an organization selects one group within a market segment, for example, the basic business traveler at Microtel versus the upscale executive business traveler at the Ritz-Carlton.

A Differentiated Multi-target Marketing - In this strategy, an organization offers several brands with varying services to a multitude of target markets. An example would be Marriott, which provides Fair�eld Inn for economy class, Courtyard for business clientele, Marriott Hotels for full service, and Residence Inn for extended-stay guests, all within the business segment.

Additional Materials

View a Pdf Transcript of  Market Segmentation (media/transcripts/Week_1/SUO_MKT3010%20W2%20L3.pdf? _&d2lSessionVal=2l62M8CfZKmEhm3v7ZkPzOSfo&ou=80393)

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