answer the questions on the file call Milestone questions

Applied Marketing Strategies

2 Target Markets / Page 2.4 How Markets Are Segmented On this page: 3 of 3 attempted (100%) | 3 of 3 correct (100%)

How Markets Are Segmented

Market segmentation is the process of breaking down all consumers into groups of potential buyers with similar characteristics. For example, a business can choose to pursue consumer (B2C) markets, business-to-business (B2B) markets, or both. The business would want to segment the market into consumer markets and B2B markets and evaluate the opportunities in each of the market segments.

Different factors influence consumers to buy certain things. Many of the same factors can also be used to segment customers. A business will often use multiple segmentation bases, or criteria to classify buyers, to get a fuller picture of its customers and create real value for them. Each variable adds a layer of information, including demographic and psychographic information and other criteria such as situational factors and personal characteristics.

MULTIPLE-CHOICE QUESTION

Types of Segmentation Bases

Marketers use both demographics and psychographics to develop a comprehensive understanding of a target market.

Segmenting buyers by personal characteristics such as age, gender, ethnicity, location, and employment status is called demographic segmentation.

NOTIFICATIONS

What are segmentation bases?

Correct. Segmentation bases are criteria marketers use to classify customers into different

groups. By segmenting customers, marketers gain a comprehensive understanding of the

market.

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criteria used to test the quality of new products

criteria used to survey potential customers

criteria used to classify customers into different groups

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Demographics are commonly used to segment markets because demographic information is publicly available online. Psychographic segmentation is used to divide consumers into groups based on their shared psychological traits and characteristics, like personality, values, attitudes, interests, and lifestyles. When marketing professionals think about how to segment markets they might ask themselves:

• How do the ages, races, genders, and ethnic backgrounds of our customers affect what they buy? • What do our customers think about and value? How do they live their lives?

As you’ve learned, market segmentation allows you to get to know your customers so that you can market your offering to them effectively. While marketers explore their target markets along many dimensions, the focus in this course is on demographic and psychographic characteristics. The following list summarizes some of the information that is defined for each.

Demographics Psychographics

Age Personality

Gender Values

Ethnicity Attitudes

Location Interests

Employment Status Lifestyles

Next we’ll look at the ways in which consumer markets can be segmented.

2 MULTIPLE-CHOICE QUESTIONS

2 of 2 attempted | 2 correct

What is the difference between demographics and psychographics?

Correct. Demographics are observable external factors about consumers, such as their age or

income level. Psychographics are internal personal traits, such as interests and values.

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Demographics analyze current market information, while psychographics attempt to

predict future trends.

Demographics are external factors, while psychographics are internal personal traits.

Demographics concentrate on consumer needs, while psychographics ask what

consumers really want.

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