Video: Marketing Segmentation

So welcome to this next module on marketing, and this module here, we're  going to talk about something that's really a critical concept in the overall  scheme of marketing your products or your services to whatever target market  that you're working with, and that is called segmentation in the marketing mix,  chronologically, we'll talk about mass production, how it used to be just, well, let  me back up mass production. It was the Model T everybody can have what  other whatever color of a car they wanted, as long as it was black. And then  along came product differentiation, in other words, cars that had more features  and capabilities to them. And finally, they started making cars specifically for  certain segments of the market, people who liked fast cars or muscle cars, for  example, or people who wanted a station wagon, or people who might want an  SUV that had four wheel drive on it so they could drive off road or whatever. So  there's all kinds of chronological timeline of how marketing has evolved over the  years. What's the definition of marketing segmentation? It's the subdividing of an overall global market into distinct subsets of customers, where any subset might conceivably be selected as a target market that you might select as a target  market to be reached with a distinctive marketing mix, or marketing plan.  Segmentation. Recognizes that people differ. There's different people based on  age groups. There's different people based on whether they went to college or  they just graduated from high school, or maybe they didn't even graduate from  high school. There's different tastes. Do you like dark roast coffee? Do you like  light roast or do you want medium roast coffee, different lifestyles, people who  are barely scraping by, versus people who have all the toys and a lot of money,  that kind of thing. What products or markets can you think of that have been  segmented. In other words, I gave you some examples of cars, but different  variations of the same product are all are offered to different groups of  customers. So I gave you cars where they have different cars that appeal to  women, they have different cars that appeal to different age groups. But I'm kind of wondering if you can come up and name a few of your own a moment.  Segmentation leads to marketing strategy that can result in changes in products  or services that are offered, changes in promotional appeals that you are offers  that you want to make to people, changes in distribution again, are you going  direct to a customer, or are you selling your products through a whole network of distributors or wholesalers? Then change segmentation can lead to marketing  strategy that might result in changes in pricing. So for example, if you're going to sell to distributors. You're going to ship a bunch of product out, you're going to  send them an invoice, and within 30 days, you expect to get paid. On the other  hand, maybe you're selling your product direct to the end customer via Amazon  and or via your own store or direct in some fashion, and you might even have  payment terms. You might accept credit cards. For example, you may end up  charging them $100 on their credit card for three months. You know, those types of tactics, is what we're talking about here. Some of the criteria for segmenting 

your market in a very efficient way, you've got to be able to you got to have a  market segment that's very identifiable, very definable, measurable  characteristics. How many people are there in this age group, in a specific US  zip code area, for example, are, how would you access them? How would you  get your message? How would you communicate to that group in that location?  You're going to do it with a billboard. You're going to do with direct mail. Are you  going to buy AdWords advertising, Pay Per Click advertising on Google? The  other thing that you've got to be aware of here is the size of this market. So if  you go measure a specific zip code in Montana, for example, they might have  10 people who are in the age bracket of 20 to 30. That's not going to make a  market. On the other hand, if you go in a specific zip code in New York City, for  example, they may have 50,000 people within a an age range of 20 to 30 years  old, and that in that particular case, you're going to have a very well depending  on product service you're offering, you could have a very viable market, and it's  got to be relatively stable. You're not going to have a huge influx or a huge  outflow of people into or out of an area, and be able to do a consistent job of  communicating your product or your service to these people. I mean, there's just too much going on, so you got to be careful of that too. So you want to have a  very clearly definable group of people. You want to make sure that you know  how to get to those people. I mean, different age brackets have different  methods, preferred methods, of communicating with with them. And you want to  make sure it's substantial, sub sizable, so that if you got 10 or 20% of the  market, that it actually means something to you, financially and then relatively  stable segmentation basis. Let's talk about geodemographic descriptions,  behaviors, psychographics. I don't know that there's a whole lot to talk about  relative well, maybe there is about behaviors and geodemographics. But the big  thing here that has really been a big trend over the last couple two to three  years. I'm talking like, say, 2014 through 2017 has been the psychographic part.  We used to have what we call the market marketing funnel, where you kind of  have a funnel shaped device, where you have advertising running, and people  would kind of respond to the ad. You put them in the category of interested  prospect, and you'd feed them some information, they'd start getting a little  interested, and they'd move down the funnel until finally they placed an order  and became a client. Psychographics, because of the digital revolution that's  taken place in our culture has enabled us to really measure people at every step of their journey through a marketing process. So it's more of a journey, it's more  of a pathway now than it is a funnel. So we talk about things now, like doing  specific things to make people aware of your product. So that's one  segmentation, one customer segment, I should say people who are aware of  your product. You got to get there before they can move to the next step on their journey, which would be to say, hey, you know, this is kind of exciting stuff. I'm  really pretty interested in this. And you can start measuring people who are 

moving from being aware of your product to people who are now excited about  it, people who are continuing on through that journey by getting more  information, beginning to interact with you, ask questions, checking out the  product, checking out your nonprofit agency or your ministry opportunity, right  along to the point where they go through the hook, line and sinker and make the commitment and all that, to the point where they actually turn around becoming  your ambassador, your or your advocate. So the whole psychographics thing  has gotten very well defined. The point here is that for each one of those steps  on that customer journey, they represent segments of your segmented market.  So let's say you're talking to women that are age 30 to 40. Well, pretty soon  you're measuring women who are in your target market, of, let's say, a single  state, who are aware of your product. You want to make sure all of them are  aware of it. So if there's a million women aged 30 to 40 in the state of New York,  you want to measure how many people, how many people in that group have  actually become aware of your product. That's your first segment. Your second  product psychographic segment would be, how many of those women have  actually started getting excited about how many of those women are actually  contacting you, having a conversation with you, about getting more information,  asking questions, that kind of thing. So that's what we're talking about with the  psychographics. That psychographic the emotional commitment that you're  getting from people to responding to that message that you're putting out market segments. This is just some examples based on some of the simple descriptors. I think we pulled this off of some menswear application, some menswear  marketing plan, and you can kind of look at an income range that they're looking at here, and they're looking at, they're kind of quantifying or qualifying different  age groups, like 16 to 25 where they want it. They want to market their products  to a particular age range and income range is what they're working with here.  Here's some more stuff that they're looking at, market segmentation,  descriptions or characteristics, variables. They're looking at gender, male,  female, age range or age segments up there, calling out they're identifying here, marital status. Are they single? Do they have a spouse? Are they divorced,  widowed, separated, whatever. occupation, full or part time, employment,  income, they're looking at every 10 per, you know, 10% segments, net wealth,  education, continuing on with that, they're looking at customer size, because this was an apparel item. They're looking at weight, they're looking at height, they're  looking at dress and suit sizes. What religion are they? Are they Atheist,  Christian, Muslim, Jewish, Hindu, whatever youth subcultures you're looking at  the list of different youth subcultures and the types of apparel that each of them  might wear. Family life cycles, young singles, young couples, no children, young couples with children, all the way up to older singles. And then they'll look at the  type of neighborhood. Is it urban or rural, different housing developments, that  sort of thing. Region of the country, north, east, south, west. Europe, United 

Kingdom, France, so on. And the other consideration for menswear is the hours  of sunshine, the average seasonal temperatures, the rainfall it all is going to  have an impact on the type of menswear that this particular outfit was trying to  understand. The other thing that we had talked about was behavioral or benefit  segmentation. The key concern here is how the consumer behaves and the  benefits that they're looking for from your product or your service. Marketing  segmentation, behavioral and benefit variables that we can talk about. Some  examples of behavioral segmentation is purchase loyalties, brand loyal,  switchers, you know, flipping back and forth to people who have no commitment. An example of that might be some of these airline mileage clubs. You get sky  miles for flying on Delta or KLM airlines, for example, purchasing modes from  comparison shopping to convenience outlets only. So do you spend a lot of time  online, pulling up stuff in Google to look at pricing, look at products and features  when you settle on a specific product, do you do a Google search on that or do  you go to Amazon and see who's selling that particular item? That's an example  of a behavior, usage rates, heavy users, medium users, light users. Again, it's a  behavioral characteristic expenditures to the Are there people that spend a lot of money on coffee every month, or do they just run down to the local store and  buy a $5 jug of ground coffee. Usage situations, working clothes, leisure wear,  evening wear, formal wear, suits, ties, that kind of stuff. Price sensitivity is  another behavioral characteristic that you want to be aware of. And we're talking about price aware, or conscious, to least price sensitive. An example of that  would be young couples with families, for example, they don't have a lot of  disposable income, as opposed to their parents, who are probably 60, 70 years  old, and they got quite a nest egg saved up and they can afford to take nice  vacations once or twice a year. That type of thing, benefits, easy care, garments, environmental friendly fabrics, durability, so on, psychographic segmentation  divides the market up in the way that people think and the things that motivate  them. You'll ask questions of people regarding how they spend their time on  their interest activities. I actually kind of explained this a minute ago about how it relates to this customer value journey that people take from the time they  become aware of your product or service all the way through buying or  subscribing or joining your product or your service to the point to where they  become advocates and believers and become advocates for what you're doing.  And that leads to a lot of different lifestyles, lifestyle changes. Um, cosmetic  markets. Let's look at the Lifestyle Analysis of that self aware fashion, direct type thing, the green goddesses, unconcerned, conscience stricken dowdies. So you  can segment your market based just on a lifestyle analysis in this specific and  this isn't obviously going to apply to every product, every service, but for  apparel, for cosmetics, it's something that's very important. Chart here that  shows the behaviors and descriptions of the cosmetic market, just purely as an  example segmentation strategies. Sometimes you get into undifferentiated 

marketing, and I'm trying to think of an example for that. I guess the one thing  that kind of struck me was that everything, everybody who owns a home or lives in their own home, whether it's an apartment or a condo or a home, or whatever  buys electricity. You know, there's only one electric electric supplier around that's the one that's got the wires running into your building, right? So there's not a  whole lot of marketing, necessarily, that takes place there. That would be  undifferentiated, to an extent that would be an undifferentiated marketing that  may not even be the best example, but that's just the one that popped in my  head, concentrated marketing that could be something just what the name  exactly applies. It's concentrated on a specific demographic or a specific age  group or a gender or somebody in a specific neighborhood. And a good example of that might be a restaurant, multi segment marketing. This is where you have a product or service that's useful across the whole like the name says multiple  segments of a potential market, different age groups, that sort of thing. Here's  an example of multi segment strategy, and it relates to apparel stuff again, and  looking at menswear, you got, you know, you can kind of read through this at  your leisure. I guess I don't need to really explain this a whole lot, but it gives  you kind of an idea what's going on. Number of outlets with each of the different  categories on there for women's wear, menswear and so on. Target marketing,  we're working with information. And just keep drilling down. You determine what  segments there are in that particular market, and then you figure out what  specific segment that you want to go with, market, target market. And again,  another example here of top man target markets for and again, we're dealing  with apparel related characteristics, and they show how they break it down into  core targets, primary targets and secondary targets, another example of this that you can see how they break this down. Segmentation is a critical concept. This  is a slide that I especially was referring to about the psychographic stuff, and  you can see where segmentation is just a critical concept, because it directly  affects the messages that you create and send out to every group of potential  clients at any stage of their journey along this value journey path, and it's got a  direct impact on the results that you're going to achieve. So pay a lot of attention to segmentation. It's just really critical that you get it right.