Topic 9.2 Market sectors and segments
Designers must consider the market when targeting their product, service or system. The smaller the sector, the more the target audience will have in common. Companies may decide to compete in the whole market or only in segments that are attractive and/or familiar. A designer’s understanding of the identified market is essential. By identifying the market sectors and segments a product will be designed for, a designer can gain data directly from the perspective of the potential consumer |
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Categories of market sectors Designers need to clearly be able to identify the needs of the target market and target audience. These can be classified into two categories: •Geographical sectors, which focus on the values, culture and characteristics of purchasers in that region along with purchasing power • Client-based sectors, which may focus on consumers, industrial, public sector and commercial |
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•Market sector is a broad way of categorising the kinds of market the company is aiming for. The sectors have similar characteristics such a technology, utilities, telecommunications etc
•Market segment is dividing up the markets into smaller segments targeting customers that share characteristics.
4 Types of Market Segmentation.
If you looked at my Pandora radio playlist, you’d see a pretty eclectic mix of music. My stations include The Police, Bon Jovi, Pink Floyd, Sugarland, Nickel Creek and Crosby Stills & Nash. Like most people, I never paid attention to the occasional ads that interrupt my music stream, but something caught my attention this week. Some days, I heard ads from water parks and Chevrolet, and other days I heard from Mercedes Benz. And it occurred to me that each playlist was streaming ads appropriate for the expected listening audience.
In marketing terms, Pandora had segmented their listeners into market segments, based on the typical demographics and interests of Bon Jovi versus Crosby Stills & Nash fans.
The goal of market segmentation is to separate the general market into categories, which can then be targeted and marketed to most effectively. There are four general types of market segmentation:
If you looked at my Pandora radio playlist, you’d see a pretty eclectic mix of music. My stations include The Police, Bon Jovi, Pink Floyd, Sugarland, Nickel Creek and Crosby Stills & Nash. Like most people, I never paid attention to the occasional ads that interrupt my music stream, but something caught my attention this week. Some days, I heard ads from water parks and Chevrolet, and other days I heard from Mercedes Benz. And it occurred to me that each playlist was streaming ads appropriate for the expected listening audience.
In marketing terms, Pandora had segmented their listeners into market segments, based on the typical demographics and interests of Bon Jovi versus Crosby Stills & Nash fans.
The goal of market segmentation is to separate the general market into categories, which can then be targeted and marketed to most effectively. There are four general types of market segmentation:
1. Geographic segmentation separates a market into different geographical boundaries which can impact the marketing mix of product, price, promotion and channel to market. For instance, you may not sell many down comforters in Arizona, but the market in Michigan is pretty good. Ever been to Hawaii? The price of goods is substantially higher than the continental United States. And the way you promote and sell a product in southern California will be quite different from Vermont.
2. Demographic segmentation separates a market by demographic indicators including gender, age, household type, education level and income. Simply put, the type of products we buy, how much we spend, and how we buy them are largely determined by demographic factors.
3. Psychographic segmentation separates a market by lifestyle as well as values and beliefs. There are large target markets which fit psychographic segmentation, such as outdoor recreation and fitness.
4. Behavioral segmentation separates a market by shopping and buying behaviors. Are you an online shopper or do you prefer to handle products in the store? How often do you shop? Do you research a purchase carefully before making a decision, or do you tend to buy on impulse? All of these factors determine how consumers are segmented and marketed to.
If you’re a critical thinker like me, you may be wondering about those people who fall in between, or are made up of a combination of, those segments. My experience on Pandora is a great example. Am I the Chevy or Mercedes demographic? Although market segmentation isn’t a perfect science, it will certainly get you closer to understanding your target audience and increasing your marketing return on investment
2. Demographic segmentation separates a market by demographic indicators including gender, age, household type, education level and income. Simply put, the type of products we buy, how much we spend, and how we buy them are largely determined by demographic factors.
3. Psychographic segmentation separates a market by lifestyle as well as values and beliefs. There are large target markets which fit psychographic segmentation, such as outdoor recreation and fitness.
4. Behavioral segmentation separates a market by shopping and buying behaviors. Are you an online shopper or do you prefer to handle products in the store? How often do you shop? Do you research a purchase carefully before making a decision, or do you tend to buy on impulse? All of these factors determine how consumers are segmented and marketed to.
If you’re a critical thinker like me, you may be wondering about those people who fall in between, or are made up of a combination of, those segments. My experience on Pandora is a great example. Am I the Chevy or Mercedes demographic? Although market segmentation isn’t a perfect science, it will certainly get you closer to understanding your target audience and increasing your marketing return on investment
The fact that the consumer market is divided in segments allows companies and organisations to develop promotional campaigns targeting specific segments. For example business people for business class on airlines or executive automobiles. This means the company can develop products that better suit the consumer of segment.
•income (high, middle and low levels of finance) – Daewoo and Corolla vehicles for price sensitive customers whereas Mercede and BMW aim their cars at the more affluent.
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•profession (types of jobs one has which can influence social groups or personal interests) – marketing e-book for executives,
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•age (babies, toddlers, tweens, teenagers, young adults, middle aged to the elderly) – such as diapers/nappies for babies, toys for children, clothes for teenagers
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•family – (single no kids, single kids, married two kids, empty nesters etc) – a family with kids would purchase furniture that is more family orientated as opposed to a single living alone (trendy furniture).
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•values (the ethical, worthiness or importance of something that is held by an individual or group, opinions) – environmentally friendly products vs a throw away society.
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•behaviour (shopping mannerisms, loyalty, occasion buying, such as impulsive, online vs brick ‘n mortar, or the researcher) – buying turkeys at christmas and thanksgiving (occasion buying), Apple customers (loyalty),
•income (high, middle and low levels of finance) – Daewoo and Corolla vehicles for price sensitive customers whereas Mercede and BMW aim their cars at the more affluent.
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•profession (types of jobs one has which can influence social groups or personal interests) – marketing e-book for executives,
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•age (babies, toddlers, tweens, teenagers, young adults, middle aged to the elderly) – such as diapers/nappies for babies, toys for children, clothes for teenagers
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•family – (single no kids, single kids, married two kids, empty nesters etc) – a family with kids would purchase furniture that is more family orientated as opposed to a single living alone (trendy furniture).
•
•values (the ethical, worthiness or importance of something that is held by an individual or group, opinions) – environmentally friendly products vs a throw away society.
•
•behaviour (shopping mannerisms, loyalty, occasion buying, such as impulsive, online vs brick ‘n mortar, or the researcher) – buying turkeys at christmas and thanksgiving (occasion buying), Apple customers (loyalty),
•In China there is a need of low cost street commuter bicycles (no gears, basket, simple brakes) to cater for a market segment of low income earners which is a large target market. The scale of production would be that of volume. • •Mont Blanc pens target a market segment of middle to high income earners and possibly business men and women. These would be batch produced. The cheapest at an UK online pen store in April 2015 was £170. Whereas a a box of 60 Bic pens in the USA costs $15. These would be volume produced. |
Product Family' A group of related goods that are manufactured by a single company. Companies benefit from creating product families in that they can leverage the loyalty their existing customers feel toward an existing product to get them to buy additional, related products