Market Segmentation

So today’s class was all about Market Segmentation which is the first bit of a 3 part process called STP (Segmentation, Targeting and Positioning).

The idea is that you segment your market and develop consumer profiles for each target segment. There a whole bunch of ways that you can segment a market by:

• geographic (important if you’re a pizza shop, no point in targeting markets outside your delivery area)
• demographic (income or age or stage in the family cycle)
• Psychographic (grouping people based on psychological or personality traits which is important for fast-moving consumer goods in a supermarket: is your target market an impulse buyer or a shopping list maker)
• Behavioural (are they a first time user or a repeat, are they buying from you in a professional context or a personal)

It’s also really important to understand what the market it. When you’re segmenting a market, it’s not just the users of your product, it’s anybody that can use it. The example we were given was fruit juice. The company in question sold fruit juice but had no segmentation of the market. They had a range of products, different flavors, different pack sizes but no real understanding of who wanted them and why. So they sat down and figured out what there main consumption groups were. Turns out there were 3 major times that people consumed juice: at breakfast; out-of-the-home as a snack/lunch drink in a cafe; after school when the kids come home and raid the fridge for anything that will tide them over until dinner.

Then they pushed deeper. Within the breakfast category the Juice company developed consumer profiles, sort of an amalgamated profile of the characteristics of that purchaser/user. There were those consumers who were looking for a meal replacement, others were looking for a heath product and another segment was looking for taste and variety. So the company developed a product for each of those segments. The first one turned out not to be a juice at all, it was a non-juice breakfast meal replacement drink, the second segment got several juices fortified with vitamin A, C & E and folate to capture that health market and the final segment got interesting blends of exotic juices and seasonal flavors.

Every business sells something and for someone with my background, manufacturing engineering, where the selling of the product is quite remote from the execution of the project there’s always the risk that your designers might not have any idea what it is that the consumer actually wants. Which is why marketing is important internally for an organisation. These are the guys who should be helping the designers and the engineers (or the lawyers, or the chemists) understand who the end user is, what motivates them and what their needs and wants are. I’ve never met a designer who wanted to make a crap product but it happens all the time because the communication between what the user wants and what the designer thinks they want isn’t clear (there’s the additional factor of what management will allow them to have but that’s something that marketing should be managing as well). Thoughts?