Market Segmentation

Introduction to Market Segmentation00:00:00

Market segmentation involves dividing potential customers into different groups based on characteristics like gender, income, location, or lifestyles. Businesses then choose the most profitable segment to target and position their products and marketing mix accordingly.

Segmentation by Gender00:00:56

Businesses can offer products based on gender. For instance, a t-shirt business might offer different shapes or sizes, or a moisturizer company might use different packaging colors to target men or women.

Segmentation by Income00:01:22

Products can also be tailored to different income levels. This could involve offering basic and premium packages, or a car business providing a range of cars to suit various income brackets.

Segmentation by Location00:01:42

Location-based segmentation involves adapting products or marketing strategies to specific geographic areas. McDonald's in the Philippines, for example, offers rice with meals instead of just chips to cater to local preferences. Businesses also use location to decide where to expand next.

Segmentation by Lifestyle00:02:43

Lifestyle segmentation categorizes customers based on their behaviors and interests. Holiday providers commonly use this, offering all-inclusive, spa, family, nightlife, beach, or sports holidays to cater to different lifestyle choices, enabling more efficient marketing.

Pros of Market Segmentation00:03:12

The benefits of market segmentation include better meeting customer needs, which can lead to increased brand loyalty, repeat customers, reduced price sensitivity, higher prices, and ultimately, increased profits.

Cons of Market Segmentation00:03:55

However, market segmentation also has drawbacks, such as higher research and development costs, increased production costs due to wider product ranges, additional marketing costs, and a reduced ability to exploit economies of scale.