Understanding Market Research, Segmentation, and Targeting

Posted on Feb 9, 2025 in Marketing

  • Market Research

    These are activities that allow an organization to obtain information required to make decisions about their environment.

    Why do market research?
    • Competitive Pressure: essential for the company to exist.
    • Growth market.
    • Costs of errors.
    • Increasing expectations from consumers.
  • Marketing Information System (MIS)

    Definition: An ongoing process within organizations whose purpose is to generate, analyze, disseminate, store, and retrieve information used in decision-making.

    How should a Marketing Information System (MIS) be implemented?

    Steps to define a MIS:

    1. Identify what information is needed for decision-making.
    2. The design should provide a continuous flow of this information.

    The effectiveness of the system depends on the nature of the information, how it is processed, and the ability of the operators.

  • System Decision Support (SDS)

    Definition: A procedure that enables managers to interact with data and analysis methods to collect, analyze, and interpret information.

  • Definitions
    • Market: Persons or organizations with needs to satisfy, money to spend, and the desire to do so.
    • Market Segments: Groups of people within the market with different needs, buying preferences, and product usage behavior.
    • Market Goal: The specific group of customers for whom the firm is designing the marketing mix.
  • Market Segmentation

    Definition: The process of dividing the total market for a good or service into several smaller and internally homogeneous groups.

    Benefit: We identify the needs of customers within a submarket and then decide whether it is practical to design a marketing mix to satisfy it.

  • Criteria of Segmentation
    • Geographic Segmentation

      Definition: The division of markets into segments based on their location.

      This division is based on the needs of consumers, and the use of the products are directly related to the location of the consumer.

    • Demographic Segmentation

      Divide the market into segments according to features like:

      • Age
      • Ethnicity
      • Gender
      • Stage of the family life cycle
      • Income
      • Schooling
    • Psychological Segmentation

      Examine attributes related to thoughts, feelings, and behaviors of a person.

      Use features like:

      • Dimensions of personality
      • Lifestyle features
      • Values
    • Targeting Behavior

      Division is defined by the behavior that the customer has regarding the product.

      In this case, it can be segmented in two ways:

      • Benefits desired from the product (Benefit-specific)
      • Rate of use of the product
  • Strategies for Target Markets

    Guidelines for selecting the target market:

    • The markets must be compatible with the goals and image of the organization.
    • Adapt the organizational resources to the market opportunity.
    • The market must have a sufficient volume of sales.
    • It must be a segment where there is not much competition.

    There are 3 strategies to define the target markets:

    1. Aggregate markets.
    2. Concentrate on a single segment.
    3. Select several segments as the target market.
  • Market Aggregation Strategy

    In this strategy, the company sees the market as a single undifferentiated segment division.

    This strategy is based on product differentiation, i.e., the company wants to differentiate its product from competitors.

    The main benefit of this strategy is that it minimizes costs.

  • Strategy of a Single Segment

    It consists of selecting a single market segment as the total target market.

    • Allows you to penetrate deeply into a market and acquire a reputation as a specialist.
    • There is a risk of focusing all forces on a single segment.