Click on the cover image above to read some pages of this book! This book brings together current innovative methods and approaches to segmentation and outlines why segmentation is needed to support more effective social marketing program design. It presents a variety of segmentation approaches alongside case studies of their application in various social marketing contexts. The book extends the use of segmentation in social marketing, which will ultimately lead to more effective and better-tailored programs that deliver change for the better.
As such, it offers a detailed handbook on how to conduct state-of-the-art segmentation, and provides a valuable resource for academics, social marketers, educators, and advanced students alike. Help Centre. My Wishlist Sign In Join.
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Link Either by signing into your account or linking your membership details before your order is placed. The business historian, Richard S. Tedlow , identifies four stages in the evolution of market segmentation: . The practice of market segmentation emerged well before marketers thought about it at a theoretical level. Retailers, operating outside the major metropolitan cities, could not afford to serve one type of clientele exclusively, yet retailers needed to find ways to separate the wealthier clientele from the "riff raff".
Segmentation in Social Marketing : Process, Methods and Application
One simple technique was to have a window opening out onto the street from which customers could be served. This allowed the sale of goods to the common people, without encouraging them to come inside. Another solution, that came into vogue from the late sixteenth century, was to invite favored customers into a back-room of the store, where goods were permanently on display. Yet another technique that emerged around the same time was to hold a showcase of goods in the shopkeeper's private home for the benefit of wealthier clients.
Samuel Pepys, for example, writing in , describes being invited to the home of a retailer to view a wooden jack. Evidence of early marketing segmentation has also been noted elsewhere in Europe. A study of the German book trade found examples of both product differentiation and market segmentation in the s. Contemporary market segmentation emerged in the first decades of the twentieth century as marketers responded to two pressing issues. Demographic and purchasing data were available for groups but rarely for individuals and secondly, advertising and distribution channels were available for groups, but rarely for single consumers.
Between and , George B Waldron, working at Mahin's Advertising Agency in the United States used tax registers, city directories and census data to show advertisers the proportion of educated vs illiterate consumers and the earning capacity of different occupations etc.
Segmentation in Social Marketing : Timo Dietrich :
Thus, segmentation was essentially a brand-driven process. Wendell R. Smith is generally credited with being the first to introduce the concept of market segmentation into the marketing literature in with the publication of his article, "Product Differentiation and Market Segmentation as Alternative Marketing Strategies. However, with the advent of digital communications and mass data storage, it has been possible for marketers to conceive of segmenting at the level of the individual consumer.
Extensive data is now available to support segmentation at very narrow groups or even for the single customer, allowing marketers to devise a customised offer with an individual price which can be disseminated via real-time communications. The limitations of conventional segmentation have been well documented in the literature. Market segmentation has many critics. But in spite of its limitations, market segmentation remains one of the enduring concepts in marketing and continues to be widely used in practice. One American study, for example, suggested that almost 60 percent of senior executives had used market segmentation in the past two years.
A key consideration for marketers is whether to segment or not to segment. Depending on company philosophy, resources, product type or market characteristics, a business may develop an undifferentiated approach or differentiated approach. In an undifferentiated approach, the marketer ignores segmentation and develops a product that meets the needs of the largest number of buyers.
In consumer marketing, it is difficult to find examples of undifferentiated approaches. Even goods such as salt and sugar , which were once treated as commodities, are now highly differentiated. Consumers can purchase a variety of salt products; cooking salt, table salt, sea salt, rock salt, kosher salt, mineral salt, herbal or vegetable salts, iodised salt, salt substitutes and many more. Sugar also comes in many different types - cane sugar, beet sugar, raw sugar, white refined sugar, brown sugar, caster sugar, sugar lumps, icing sugar also known as milled sugar , sugar syrup, invert sugar and a plethora of sugar substitutes including smart sugar which is essentially a blend of pure sugar and a sugar substitute.
Each of these product types is designed to meet the needs of specific market segments. Invert sugar and sugar syrups, for example, are marketed to food manufacturers where they are used in the production of conserves, chocolate, and baked goods. Sugars marketed to consumers appeal to different usage segments — refined sugar is primarily for use on the table, while caster sugar and icing sugar are primarily designed for use in home-baked goods.
A number of factors are likely to affect a company's segmentation strategy: . The process of segmenting the market is deceptively simple. Seven basic steps describe the entire process including segmentation, targeting, and positioning. In practice, however, the task can be very laborious since it involves poring over voluminous data, and requires a great deal of skill in analysis, interpretation and some judgment.
Targeting comprises an evaluation of each segment's attractiveness and selection of the segments to be targeted. Positioning comprises the identification of optimal position and development of the marketing program. The market for a given product or service known as the market potential or the total addressable market TAM. Given that this is the market to be segmented, the market analyst should begin by identifying the size of the potential market. For existing products and services, estimating the size and value of the market potential is relatively straightforward. However, estimating the market potential can be very challenging when a product or service is totally new to the market and no historical data on which to base forecasts exists.
A basic approach is to first assess the size of the broad population, then estimate the percentage likely to use the product or service and finally to estimate the revenue potential. Another approach is to use historical analogy.
To support this type of analysis, data for household penetration of TV, Radio, PCs, and other communications technologies is readily available from government statistics departments. Finding useful analogies can be challenging because every market is unique. However, analogous product adoption and growth rates can provide the analyst with benchmark estimates, and can be used to cross-validate other methods that might be used to forecast sales or market size. A more robust technique for estimating the market potential is known as the Bass diffusion model , the equation for which follows: .
The major challenge with the Bass model is estimating the parameters for p and q. However, the Bass model has been so widely used in empirical studies that the values of p and q for more than 50 consumer and industrial categories have been determined and are widely published in tables.
Psychographic Segmentation: Definition
A major step in the segmentation process is the selection of a suitable base. In this step, marketers are looking for a means of achieving internal homogeneity similarity within the segments , and external heterogeneity differences between segments. In addition, the segmentation approach must yield segments that are meaningful for the specific marketing problem or situation. For example, a person's hair color may be a relevant base for a shampoo manufacturer, but it would not be relevant for a seller of financial services.
Selecting the right base requires a good deal of thought and a basic understanding of the market to be segmented. In reality, marketers can segment the market using any base or variable provided that it is identifiable, substantial, responsive, actionable and stable. For example, although dress size is not a standard base for segmenting a market, some fashion houses have successfully segmented the market using women's dress size as a variable.
Marketers normally select a single base for the segmentation analysis, although, some bases can be combined into a single segmentation with care.
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For example, geographics and demographics are often combined, but other bases are rarely combined. Given that psychographics includes demographic variables such as age, gender, and income as well as attitudinal and behavioural variables, it makes little logical sense to combine psychographics with demographics or other bases.
Any attempt to use combined bases needs careful consideration and a logical foundation. The following sections provide a detailed description of the most common forms of consumer market segmentation. Geographic segmentation divides markets according to geographic criteria. In practice, markets can be segmented as broadly as continents and as narrowly as neighborhoods or postal codes. The geo-cluster approach also called geodemographic segmentation combines demographic data with geographic data to create richer, more detailed profiles. They classify residential regions or postcodes on the basis of census and lifestyle characteristics obtained from a wide range of sources.
This allows the segmentation of a population into smaller groups defined by individual characteristics such as demographic, socio-economic or other shared socio-demographic characteristics. Geographic segmentation may be considered the first step in international marketing, where marketers must decide whether to adapt their existing products and marketing programs for the unique needs of distinct geographic markets. Tourism Marketing Boards often segment international visitors based on their country of origin.
A number of proprietary geo-demographic packages are available for commercial use. Geographic segmentation is widely used in direct marketing campaigns to identify areas which are potential candidates for personal selling, letter-box distribution or direct mail.