Methods for Segmenting Markets

Describing segments is the second step in the Segmentation-Targeting-Positioning process. In this step, firms break down the entire market into segments with similar qualities, using a variety of methods and tools. This activity is important because there is no single best way to segment a market. Firms choose methods based on the type of goods/services they offer and on their goals. For instance, if the firm wants to identify its customers easily, geographic or demographic segmentation likely will work best. But if it wishes to dig deeper into why customers might buy its offering, then lifestyle, benefits, or loyalty segmentation are more appropriate. Geodemographic segmentation provides a blend of geographic, demographic, and psychographic approaches. Typically, a combination of several segmentation methods is most effective. The goal of this activity is to test your understanding of the different methods of segmenting a market. Read and match each statement to the segmentation method it exemplifies.

1. Targeted segment, Geodemographic 2. Targeted segment, Demographic 3. Product, Psychographic 4. Product, Demographic 5. Targeted segment, Benefit 6. Product, Benefit 7. Product, Geographic 8. Targeted segment, Psychographic 9. Targeted segment, Geographic 10. Product, Geodemographic

Categorize the following five questions according to the ten options given above

1) Because this company's product is specific to a winter climate, it focuses on northeastern states where it gets cold and snows often.

2) The company uses sex appeal and young adult/male humor to reach them.

3) It is important to this group of people who are very resourceful and innovative, to be guided by knowledge and ideals.

4) Many new moms are focused on their babies' future success; they willingly purchase products claiming to enhance baby development.

5) These young urban professionals live in fast-growing cities across the country and tend to inhibit certain neighborhoods where they spend the majority of their time.