SEGMENTATION

Segmentation means to divide the marketplace into parts, or segments, which are definable, accessible, actionable, and profitable
and have a growth potential. In other words, a company would find it impossible to target the entire market, because of time,
cost and effort restrictions. It needs to have a 'definable' segment - a mass of people who can be identified and targeted with
reasonable effort, cost and time.

Segmentation allows a seller to closely tailor his product to the needs, desires, uses and paying ability of customers. It allows
sellers to concentrate on their resources, money, time and effort on a profitable market, which will grow in numbers, usage and
value.

Customer Segmentation: Geographic segmentation is the practice of segmenting a campaign’s target audience based on where
they are located. Segments can be as broad as a country or a region, or as narrow as one street of homes in a town.

Geographic segmentation is useful for both large and small businesses alike. Large businesses with international markets may
choose to offer products or services specifically for audiences in particular locations. For example, Home Depot may target US
northeastern states when advertising a sale on snow shovels. Presenting this ad to filipinos, for instance, would be irrelevant,
unnecessary, and could even desensitize the audience to future advertisements.

Particularly for small businesses, geographic segmentation can be used to target specific customers without wasting excess
advertising dollars on impressions that will not turn into leads. For example, a local bakery could present their ad to only people
within the town they are located.

Customer Segmentation:Demographic segmentation is segmenting the market based on certain characteristics of the audience.
Characteristics often include, but are certainly not limited to: race, ethnicity, age, gender, religious, education, income, marital
status, and occupation.

Also fairly easy to implement, demographic segmentation can be useful in a variety of ways. Luxury brands may choose to
market to a demographic consisting of people with household income > $200,000. Colleges may use messaging in their
advertising that appeals to 17-22 year olds.

Demographic segmentation is even more efficient when targeting multiple segments at once. Bridge ran an email marketing
campaign where we targeted local (geographic) females (demographic: gender) aged 25-50 years old (demographic: age) with
a household income of less than $100,000 (demographic: income) and an interest in furniture (behavioral). Targeting several
segmentations in conjunction with one another led to over 440 sales for the local furniture retailer, driving more than $180,000
in revenue.

Customer Segmentation: Psychographic segmentation divides the market on principles such as lifestyle, values, social class,
and personality.

This type of customer segmentation is significantly more difficult to implement than geographic or demographic segmentation.
To properly segment the market based on psychographics, marketers must really take the time to get to know their current and
past customers. This includes clearly defining the ideal buyer persona for the product or service and developing relationships
with the customer base.

A prime example of psychographic segmentation is targeting those who are budget conscious. These people value a good deal
and tend to be smart shoppers. Target ads to this segment by appealing to their intrinsic budget-savvy personality.

Discount stores, like Wal-Mart, utilize this tactic nicely. Wal-Mart uses messaging like “Unbeatable Prices” and “Best Online
Specials” because it will resonate with the audience they are trying to reach.

Customer Segmentation: lBehavioral segmentation is similar to psychographic segmentation on the basis that it is less concrete
than demographic or geographic segmentation. Behavioral segmentation is the practice of dividing consumers into groups
according to any of the following attributes: usage, loyalties, awareness, occasions, knowledge, liking, and purchase patterns.

When segmenting based on occasions, companies can target consumers who are less price sensitive during times like graduation
season and the holiday season.

Target Market
Many businesses say they target "anyone interested in my services." Some say they target small-business owners,
homeowners, or stay-at-home moms. All of these targets are too general.
Targeting a specific market does not mean that you are excluding people who do not fit your criteria. Rather, target marketing
allows you to focus your marketing dollars and brand message on a specific market that is more likely to buy from you than
other markets. This is a much more affordable, efficient, and effective way to reach potential clients and generate business.

For example, an interior design company could choose to market to homeowners between the ages of 35 and 65 with incomes
of $150,000-plus in Baton Rouge, Louisiana. To define the market even further, the company could choose to target only
those interested in kitchen and bath remodeling and traditional styles. This market could be broken down into two niches:
parents on the go and retiring baby boomers.

With a clearly defined target audience, it is much easier to determine where and how to market your company. Here are some
tips to help you define your target market.

Look at your current customer base. Who are your current customers, and why do they buy from you? Look for common
characteristics and interests. Which ones bring in the most business? It is very likely that other people like them could also
benefit from your product/service.

Check out your competition. Who are your competitors targeting? Who are their current customers? Don't go after the same
market. You may find a niche market that they are overlooking.

Analyze your product/service. Write out a list of each feature of your product or service. Next to each feature, list the
benefits it provides (and the benefits of those benefits). For example, a graphic designer offers high-quality design services.
The benefit is a professional company image. A professional image will attract more customers because they see the company
as professional and trustworthy. So ultimately, the benefit of high-quality design is gaining more customers and making more
money.

Once you have your benefits listed, make a list of people who have a need that your benefit fulfills. For example, a graphic
designer could choose to target businesses interested in increasing their client base. While this is still too general, you now
have a base to start from.

Choose specific demographics to target. Figure out not only who has a need for your product or service, but also who is
most likely to buy it. Think about the following factors:
 Age /Location/Gender/Income level/Education level/ Marital or family status/ Occupation

Consider the psychographics of your target. Psychographics are the more personal characteristics of a person, including:
 Personality/ Occupation/ Occupation Values/ Interests/hobbies/ Lifestyles/ Behavior

Determine how your product or service will fit into your target's lifestyle. How and when will your target use the product?
What features are most appealing to your target? What media does your target turn to for information? Does your target read
the newspaper, search online, or attend particular events?

Evaluate your decision.

Once you've decided on a target market, be sure to consider these questions:
 Are there enough people who fit my criteria?
 Will my target really benefit from my product/service? Will they see a need for it?
 Do I understand what drives my target to make decisions?
 Can they afford my product/service?
 Can I reach them with my message? Are they easily accessible?

Defining your target market is the hard part. Once you know who you are targeting, it is much easier to figure out which
media you can use to reach them and what marketing messages will resonate with them. Instead of sending direct mail to
everyone in your ZIP code, you can send it only to those who fit your criteria. Save money and get a better return on
investment by defining your target audience.

MARKET NEEDS

1. Create a list of your customers' names and addresses. Find a way to collect customer names, addresses, phone numbers and
email addresses. Create a frequency card or loyalty program to collect names and addresses.

2. Reward your customers according to their purchases in the frequency program. Provide customers with discounts based on
the volume of their purchases, for example. Use the customer list, however, to construct your list of customer names and
addresses.
3. Plan to conduct a survey among customers. Decide which methodology you will use to conduct the survey, including
phone, mail or email. Use phone or email surveys if you want to elicit the quickest response rate. Plan to survey at least 300
customers as this sample size should provide you with reliable or predictable data.

4. Write a questionnaire for your survey. Include questions that ask the customers what features they need or want in products,
or services they need. Include questions related to the price range in which customers are willing to pay. Write questions that
inquire about new product requests from customers. Add a question that inquires how often customers purchase items from
your store or company. Include questions about each customer's sex, age, income, family size, education and career.

6. Analyze the data to determine the overall needs of your target market. Find out what additional products they may want, for
example. Use the cross-tabulations to create a customer profile of your best customers, then particularly focus on their needs.

SAMPLE MARKET NEEDS

Size of Market

You need to know how big your potential market is. This is the group of people who are likely to buy your product or
service.For example, if you want to sell a new weight-loss program, you may have a large market of 50,000 people in your
area that are between the ages of 25 and 65 who are trying to lose weight. If your weight-loss program required surgery, you
are looking at group that's smaller than the 50,000 who have a medical need, as prescribed by their doctor. This group size in
the same geographical region might only be 5,000.

Customer Profile

In order to determine the size, you need to understand who your ideal customer is. As described in the weight-loss example,
knowing if someone is trying to lose a few pounds to look better in a bikini is different from a diabetic who must lose 25
pounds to prevent serious medical TREATMENT. The client who wants to look better at the beach is looking for products
based on fulfilling her desire, while the person who has a medical condition is looking for products based on fear of dying.
You can't market the same way to both.

Cultural Components

A marketing plan should consider the geographic and cultural elements of your target group. These could have a significant
difference on how what the buyers want to buy or even how they buy it. For example, a bridal shop in a a barrio might not
have the price as the gown of that of a city.

Special Interests or Needs

As a business owner, you can learn about the size of your market, based on very specific information. Essentially you can
segment your market to enable you to develop marketing campaigns that target specific buyers. For example, if you own a pet
store that caters to parrot owners, you probably don't want to target cat owners. A cell phone accessory store that sells Apple
products exclusively doesn't want to waste marketing dollars on Android users and vice versa. Narrow your niche to be more
successful.

COMPETITION
Understand your competitors

Knowing who your competitors are, and what they are offering, can help you to make your products, services and marketing
stand out. It will enable you to set your prices competitively and help you to respond to rival marketing campaigns with your
own initiatives.

You can use this knowledge to create marketing strategies that take advantage of your competitors' weaknesses, and improve
your own business performance. You can also assess any threats posed by both new entrants to your market and current
competitors. This knowledge will help you to be realistic about how successful you can be.

Who are your competitors?

All businesses face competition. Even if you're the only restaurant in town you must compete with cinemas, bars and other
businesses where your customers will spend their money instead of with you. Competition is not just another business that
might take money away from you.
What you need to know about your competitors
Monitor the way your competitors do business. Look at:
 the products or services they provide and how they market them to customers
 the prices they charge
 how they distribute and deliver
 the devices they employ to enhance customer loyalty and what back-up service they offer
 whether they innovate - business methods as well as products
 how they use IT - for example, if they're technology-aware and offer a website and email
 who owns the business and what sort of person they are
 their media activities - check their website as well as local newspapers, radio, television and any outdoor advertising
Find out as much as possible about your competitors' customers, such as:
 who they are
 what products or services different customers buy from them
 what customers see as your competitors' strengths and weaknesses
 whether there are any long-standing customers
 if they've had an influx of customers recently
What they're planning to do
Try to go beyond what's happening now by investigating your competitors' business strategy, for example:
 what types of customer they're targeting
 what new products they're developing
 what financial resources they have
Learning about your competitors
Read about your competitors. Look for articles or ads in the trade press or mainstream publications. Read their marketing
literature. Check their entries in directories and phone books. If they are an online business, ask for a trial of their service.
Are they getting more publicity than you, perhaps through networking or sponsoring events?
Hearing about your competitors
Speak to your competitors. Phone them to ask for a copy of their brochure or get one of your staff or a friend to drop by and
pick up their marketing literature.You could ask for a price list or enquire what an off-the-shelf item might cost and if there's
a discount for volume. This will give you an idea at which point a competitor will discount and at what volume.
How to act on the competitor information you get
Evaluate the information you find about your competitors.
Draw up a list of everything that you've found out about your competitors, however small.Put the information into three
categories:what you can learn from and do better, what they're doing worse than you, what they're doing the same as
you

BARRIERS TO ENTRY

Barriers to entry are obstacles that make it difficult to enter a given market. These hindrances may include government
regulation and patents, technology challenges, start-up costs, or education and licensing requirements. Let's discuss a few of
the most common barriers.
Types of Barriers to Entry
Government Regulation
The government may act as a barrier to entry into a certain market through restrictive licensing requirements or limiting the
ability to obtain raw materials.
Start-Up Costs
High start-up costs can keep new firms from entering an industry. Can you imagine trying to get into the car manufacturing
business? The amount of capital needed to buy the buildings, machinery, pay the workforce, and so on all serve as a barrier to
entry.
Technology
Sometimes it is difficult to enter a particular field or business because the technology you need to be successful is protected by
a patent. Therefore, you can't use it or are left to try and develop a new technology that may require lots of money to develop.
Product Differentiation
Product differentiation can be accomplished through strong brand recognition, great customer service, or a network effect. If
customers perceive existing products as high quality, then a new business owner will need to spend extra money to educate
customers about the unique qualities and benefits of its specific products. The term network effect refers to the situation
where a product or service becomes more valuable as more people use it. Examples are Craigslist and eBay. As more buyers
and sellers use the site, the websites become more and more valuable to consumers. This makes it extremely difficult to start
something that can compete with these websites and lure customers away.
Access to Suppliers and Distribution Channels
When a new business cannot gain access to the needed raw materials, this represents a barrier to entry. Existing companies
may have exclusive long-term contracts with key suppliers that will make it difficult for a new entrant to operate in the
industry.

REGULATIONS
There are two main types of government regulations: economic and social.
Economic regulation adjusts prices and conditions of the economy.
Social regulations protect the interests of the public, such as health and the environment, from economic activity.
Generally, social regulations have been highly popular since the 1960s, while economic regulations fell out of
favor at that time.