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Segmentation and market mapping
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Not every customer wants the same thing. Splitting the market into groups helps a business target the right people.
Market segmentation
Segmentation divides a market into groups of customers with similar characteristics.
Common ways: location, demographics (age, gender, income, occupation) and lifestyle.
Common ways: location, demographics (age, gender, income, occupation) and lifestyle.
Market maps
A market map plots competing products on two axes, such as price (high to low) and quality (high to low).
It helps a business spot gaps in the market, see where competitors are and decide where to position its own product.
It helps a business spot gaps in the market, see where competitors are and decide where to position its own product.
Using segmentation
A business can then tailor its product, price, promotion and place to its target segment.
A gap on a market map is only worth filling if there is customer demand.
A gap on a market map is only worth filling if there is customer demand.
A market map of trainers shows many brands at high price and high quality, and many at low price and low quality, but none at low price and high quality. What could a business do?
- There is a gap at low price and high quality.
- Research whether customers would buy there.
- If demand exists, position a new brand in that gap.
Answer: Research and possibly fill the low-price, high-quality gap.
Segmentation splits customers by location, demographics or lifestyle. Market maps plot rivals on two axes to show gaps. Only fill a gap if there is demand.
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