Segmentation and product marketing are two very important aspects of marketing, for both the consumer and business market. Segmentation allows a marketer to direct his or her efforts to a particular segment, and product marketing is the how, when and where of how to market a product.

Segmentation

Segmentation is the act of dividing a large market into smaller well-defined segments. Each of the smaller segments have similar needs, wants, and characteristics. Using segments enables a marketer to better focus their efforts on a particular group that would have an interest in a product, and ignores the segments that have no interest.

Very few companies are large enough to be able to meet the needs of the entire buying market. Therefore, using segments is an easy way to direct marketing efforts at the segments that promise the best results.

There are four basic factors that affect market segmentation:

1. Identifying the segment

2. Measurability of the size

3. Accessibility for promotional efforts

4. Appropriateness to the resources of the company

There are four basic segmentation strategies:

1. Behavioral

Behavioral segmentation divides a market into groups, depending on their knowledge and attitudes, and how they might use the product.

A marketer looking to segment a market based on behavioral segments would look at the following:

1. Occasions – Is there a certain occasion where the consumer is most likely to buy the product? Think of items primarily sold for Mother's Day or Valentine's Day. A heart-shaped box of candies will sell around Valentine's Day only; on February 15^th the price is usually cut in half, or more.

2. What the consumer is seeking – What does the consumer want to get from the product? What benefits are they seeking?

3. Usage – How often does the consumer use the product? This segment can be broken down into smaller segments: light, medium, and heavy users.

4. The status of the user – Segment users, depending on whether they have used the product, and if so, how often they use it.

5. Loyalty – Whether a user is loyal to a product, occasionally loyal, or the consumer switches back and forth between the two. Loyalty is one of the most important things a marketer can gain.

6. Readiness – Is the consumer ready to buy?

2. Demographic

Demographic segmentation divides a market into groups based on their demographics. Demographics include age, family size, gender, and life cycle. Demographics break down a person into several different definable groups.

A marketer looking to segment a market based on demographic segments would look at the following:

1. Age – A consumer's needs will change with age. A 15-year-old and a 75-year-old will not have the same needs. Segmentation allows a marketer to break down a large market into smaller segmented age groups.

2. Income – Income is an important part of the segmentation process. A marketer might want to sell a high-end product to a consumer, and knowing their income will be a better way to refine the income group.

3. Gender – The sex of the consumer is often very important. There are simply products that are for women, and products for men. Being able to segment them into two distinct groups is very helpful.

4. Life Cycle & Family Size – The life cycle segment not only takes age into consideration, but also where a consumer is in life. There are nine segments for the life cycle.

• Bachelor Stage – This is the young, single adult who doesn't live at home.

• Newly Married Couples – These are young, married adults with no children.

• Full Nest 1 – Youngest Child in home is under 6 years of age.

• Full Nest 2 – Youngest child in home is over 6 years of age.

• Full Nest 3 – Older married couple with dependent children.

• Empty Nest 1 – Older married couples with no children living with them.

• Empty Nest 2 – Older married couples that are retired, with no children living at home.

• Solitary Survivor 1 – In the labor force.

• Solitary Survivor 2 – Retired.

3. Psychographic

Psychographic segmentation is used by marketers to target a particular group within a general population. This type of segmentation uses a consumer's lifestyle, interests and activities to define a segment.

Psychographic segmentation is similar to behavioral segmentation, except that psychographic segmentation also considers the psychological behaviors of consumers.

The psychological aspects are lifestyle, activities, opinions, and social status.

Here are the factors considered when dividing a population into psychographic segmentation.

Lifestyle – This is a very popular segment often used in retail. The lifestyle segment can help determine the type of clothing worn, movies watched, or types of music listened to.

For example, everyone wears different styles of clothing based on their lifestyle. A career woman in her mid-30s will dress differently than a young college student.

AIO – This segment is broken down into three groups: activities, interests and opinions.

Activities – This group can be broken down by their hobbies, such as sports, music, or crafts.

Interests – This group can be broken down by interests, such as technology, fashion, or music.

Opinions – This is tougher to segment, but when done correctly, is extremely valuable to the marketer. Opinions are of particular interest to the entertainment industry, which routinely hosts focus groups to ascertain whether the public will enjoy a movie. Producers have been known to change the ending of a movie based on the opinions of people in a focus group.

Social Status – This segment is also very important to marketers, as it will give clues to income, and more importantly, buying power. A consumer always maintains their social status. Luxury brands almost always use this segment in their marketing strategies. For example, Louis Vuitton will want to sell their expensive handbags to a segment of consumers who are of a high social status, and who have a great deal of buying power.

Key Term!

AIO =

Activities

Interests

Opinions

4. Geographical

Geographic segmentation is used by marketers to define a group based on where they live. A segment can be broken down by country, state, county, city, and even neighborhood.

This information will be used to divide into further segments, including language, climate, and lifestyle. This type of segmentation is usually used by large multi-national companies.

Product Marketing

Product marketing is the art of marketing a product to the consumer. Once a marketer has a strategy, they will use the "7 P's" of marketing to evaluate and re-evaluate their strategy. This evaluation must be constantly evolving, as the market for the product evolves.

The Seven P's are:

1. Product

2. Price

3. Promotion

4. Place

5. Packaging

6. Positioning

7. People

As products and markets change, it is important that the marketer uses these P's as a way to track the success of their marketing strategies.

Product

The seven P's begin with the product, the central focus of the marketer. The marketer must be able to look at the product as if they were the consumer.

If the product isn't selling well, the marketers must be able to look at their product honestly, and ask themselves whether or not the product meets the needs of their customers.

The marketer should be able to ask hard questions, such as whether the product should still be on the market, and whether their competitors have a better or worse product. Should the product be in the current market?

Prices

The second P is price. The price should always be considered by the marketer. He must be willing to continually look at the price, and make sure it is consistent with the market, and with competitors.

At times, it might be necessary to lower prices, and sometimes raising prices is feasible. If a product doesn't make much profit, prices might need to be lifted, knowing the company might lose some customers.

For the marketer, whenever there is any resistance in sales or the marketing plan, he must be willing to look at prices. It is always possible that the current pricing strategy will not work in the current market. A good marketer is always open to revising the pricing structure in order to stay competitive.

Promotion

The third P is promotion. Marketers are always thinking about promotion. Promotion includes the many ways a marketer can sell to a customer.

Even small changes in promotion techniques can cause extreme results. New advertising campaigns can lead to increased sales. Just changing a headline can often increase response rate.

All types of companies continually look for better ways to promote their product. No method will work forever. Advertising campaigns become monotonous and promotions can become tired.

Therefore, marketers must always be on the lookout for new and better ways to promote their product.

Place

The fourth P is place. This refers to where the product is sold. A marketer will continually look at where their products are sold, and whether the place meets the needs of the product. Sometimes a change in place can lead to increased sales.

A product can be sold in various places. There is direct selling, retail sales, online sales, and many other mediums. A company can also use a combination of these methods. Often you will see items sold through infomercials on the shelves of your local drug store or big-box retailer.

The marketer must choose the best possible place to sell their product, and find the best way to get their product in front of consumers.

Packaging

The fifth P is packaging. Consumers are visual people, so how a product is packaged can be the difference between making a sale or not.

Again, a marketer must be able to look at the product and the packaging from the eyes of the consumer. First impressions are not only important: They are vital. A consumer will make a decision about the product within 30 seconds of first laying their eyes on the product. So the marketer must consider this when designing the packaging.

Packaging is how a product looks from the outside. It can also refer to your office (if you are a service provider), or even your employees. Remember, all eyes are on the product.

Positioning

The sixth P is positioning. This describes how a product is positioned in the heart and mind of the consumer. Do people say good things about the product, or bad things? Do they describe the product in a certain way?

A marketer must always consider the position of their product, and how they can improve it. A marketer should determine his or her ideal position, and shoot for that goal. They also have to be willing to be honest, if their position is failing.

People

The seventh and final P is people. This refers to the people in and outside of your business. These people are responsible for all business activities for the company.

It's important to a business to surround itself with the best people possible. A successful business must be able to delegate responsibilities properly, so as to not waste time. It's also key to hire the right people, and to take the time necessary to train new employees. The best people often cost more, but a good manager will understand the importance of a good team.

Key Terms!

The Seven P's

Product

Price

Promotion

Place

Packaging

Positioning

People