Marketing Theory and Practice
BSC (HONS) BUSINESS
MANAGEMENT
Regent College London
BMP404 CONTEMPORARY ISSUES IN
MARKETING
Week 1
Marketing Theory and Practice:
Segmentation: Consumer and Organisational
Markets
• To define the term segmentation and to explain
why it is a key concept in marketing
• To explain how companies segment consumer
markets
• To explain how companies segment organisational
markets
What is Segmentation?
The identification of individuals or organizations
with similar characteristics that have significant
implications for the determination of marketing
strategy.
Mass Market
Market Segments
• Isn’t One Product per Market a Good Idea?
– Larger economies of scale
– Lowers costs of marketing and production
– Simpler to manage
• The Reality
– The needs and wants of individual consumers can vary
greatly
– What may be suitable for one customer may be
completely inappropriate for another
One Market?
Benefits of
Segmenting ….
Opportuniti
es
and threats
Market
segmentation
Tailored
marketing
mix
Differentia
tion
Target
market
selection
Source: After Jobber, D. (2018); Principles
and Practice of Marketing, McGraw-Hill
The process of market
segmentation and target
marketing
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The disaggregated
market
The segmented
market
The target
market
The characteristics of
individual customers
are understood
Customers are
grouped into segments
on the basis of having
similar characteristics
Segment 3 is judged
to be most attractive
and a marketing mix
strategy is designed
for that target market
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1 2 3
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1 2 3
Marketin
g mix
targeted
at
segment
3
Source: After Jobber, D. (2010); Principles
and Practice of Marketing, McGraw-Hill
Segmenting
Consumer Markets
Consumer segmentation
Behavioural
Benefits sought
Purchase occasion
Purchase behaviour
Perceptions
Usage
Lifestyle
Personality
Demographic
Geographic
Psychographic Profile
What is a Base for Segmentation?
A variable by which people can be divided
into groups of ‘similar customers
Source: Jobber, D. (2010); Principles and Practice of Marketing, McGraw-Hill
Segmenting
Consumer Markets
Example: Geographic Segmentation
• Is:
– Dividing a market into different geographical
units such as nations, regions, counties, cities
or districts
• Differences of:
– Weather, temperature, homes, infrastructure
(e.g. public transport)
• Examples of Geographic Segmentation
– Ikea and out-of-town outlets
– Habitat – urban living
Segmenting
Consumer Markets
• Is:
– Dividing the market into groups based on demographic variables such as
age, gender, income, religion, education and ethnic group
• Age
– Vitamins –mixes for children, pregnant women and the elderly
– Holidays – 18-30 Vs Saga
• Ethnicity
– Products can be aimed at specific ethnic groups
– Examples: Naan breads, kosher/halal foods – haggis!
• Gender
– Cars – women want safety features, men want speed and power
• Income
– Luxury Vs Value brands – M&S Vs Aldi
Example: Demographic Segmentation
Segmenting
Consumer Markets
• Is:
– The study of the relationship between geographical location
and demographics
– Essentially, is a combination of geographic and
demographic variables
• Examples
– Essex Man – Soccer Moms
• Often Based on Proprietary GIS Software
– ACORN – A Classification of Residential Neighbourhoods)
– UK – CACI
• Example Uses
– Starbucks – store location strategies
– Macmillan Cancer – targeting promotional efforts
Example: Geodemographic Segmentation
Segmenting
Consumer Markets
• Is:
– Dividing a market into groups based on social class,
lifestyle or personality characteristics
• Social Class
– Butlin’s Vs Club Med
• Lifestyle
– Health conscious foods
– The sports enthusiast – football sponsorship
• Personality
– Extrovert Vs introvert Vs practical – Porsche Vs Toyota Vs
Skoda
Example: Psychographic Segmentation
Segmenting
Consumer Markets
• Is:
– Dividing a market into groups based on purchase
occasion, purchase behaviour, benefits sought,
usage, perceptions, attitudes, beliefs and values
etc
• Occasions
– Gift or self purchase?
– Emergency or routine buy?
• Benefits Sought
– Toothpaste – tarter control Vs cosmetic Vs fresh
minty breath Vs economy Vs taste
Example: Behavioural Segmentation #1
Benefit Segmentation in the Fruit Drink
Market
Benefits sought Products favoured
Extra energy Lucozade Energy Orange
Vitamins Ribena Blackcurrant Juice drink
Natural Innocent Apple & Mango
Low calories PLJ Lemon Juice Cordial
Convenience Capri-Sun Orange sachets
AssignmentTutorOnline
Segmenting
Consumer Markets
• Usage Rate
– Amount of product consumed
– Dialup Vs Broadband
– Peak Vs Offpeak phone calls, rail tickets
• Loyalty Status
– Frequent flyers for airlines
• Buyer-Readiness Stage
– Awareness, knowledge, liking, preference, conviction and
preference
• Attitude Towards Product
– Positive Vs Indifferent Vs Hostile
– Voting intentions, Insurance
Example: Behavioural Segmentation #2
Organizational
segmentation
Macrosegmentation
Organisational
Size
Industry Geographical
location
Microsegmentation
Choice
criteria
Decision-ma
king unit
structure
Decision-ma
king process Buy
class
Purchasing
organization
Organizational
innovativeness
Segmenting
Organisational Markets
• It Must be Possible to Segment the
Market Effectively
• A Segment is Only Worthwhile if:
– It can be a source of profit or competitive
advantage
– The needs and wants of these customers
can be met by the firm
Examining Segments
———–
BSC (HONS) BUSINESS MARKETING THEORY AND PRACTICE
MANAGEMENT
London’s Regent College
BMP404 CURRENT ISSUES IN
MARKETING
Week One
Marketing Theory and Practice:
Segmentation: Consumer and Organisational
Markets
• To define the term segmentation and to explain
why it is a key concept in marketing
• To explain how companies segment consumer
markets
• To explain how companies segment organisational
markets
What is Segmentation?
The identification of individuals or organizations
with similar characteristics that have significant
implications for the determination of marketing
strategy.
Mass Market
Market Segments
• Isn’t One Product per Market a Good Idea?
– Larger economies of scale
– Lowers costs of marketing and production
– Simpler to manage
• The Reality
– The needs and wants of individual consumers can vary
greatly
– What may be suitable for one customer may be
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