They are the people or companies that will buy the product because they obtain a benefit from it: it gives them satisfaction, improves their situation, allows them to make a profit, solves a problem or reduces their costs.  




Segmentation



It consists of defining the group of people or companies to whom the product is directed. Design, channels, advertising, pricing, and sales efforts will target only that group.   4  53



A " market segment " is a sub-group of people or companies that share one or more characteristics that make them have similar product needs; segmentation, therefore, consists of dividing a market into identifiable significant segments or groups. 





       

Examples of segments for consumer products


Over 60 years



Millennial generation 


Men 20 to 35 years old



Population pyramid





Your product must be directed to a clearly defined segment, which corresponds to the best buyers , since this way the efforts and investments will have greater profitability: more sales, less costs, or more profit margin.



Segmentation criteria for consumer products



Geographic : by countries, states, cities, neighborhoods, or even streets. Usually you start with a geographic segmentation and continue with more criteria.


Demographic

- By age, sex, or generation: young people between 20 and 30 years old, adults, generation X.

- For Income: Class A, B, C, D., families with incomes greater than $ X USD / year

- By family life cycle: single young people, married young people without children, with children, single adults, married adults, old age .





Consumers follow varied and changing behaviors, the classic segments such as "young" are too broad, you have to be more specific, obviously in what is relevant to your product.  



Psychographic : according to their personality, motives, lifestyles, geo-demographic. Sociable, activists, hobbyists, innovators, popular neighborhoods, creatives, diabetics, pet owners, political preference.


For benefits: for the benefits they seek in a satisfier. Low price, luxury, quality, prestige, health, change, recognition, ease.


By usage rate : by the amount of product consumed. The consumption of red wine in the US is 10 l / inhab-year, in Spain and Argentina 23 l / inhab-year, and in Mexico 0.8 l / inhab-year. Furthermore, consumption varies in different groups within those countries; Such a segmentation is useful if it is the specific product (wine), as if it is substitutes (beer, juice) or complementary (drinks, pairing, glass).


Others : Defined according to the need for your product, or the particularities of the market, and it is not clear which category of the above it belongs to. Attendees of the New Year's party in New York, people who pay a lot for their car insurance, homes with gardens of more than 40 m2, users of public transport.








The LongTail or long-tail economy


If you have a new product, in industries such as technology, content, software, video games, apps, music, film, documentaries, industrial design, education, or applied art, consider making an effort to sell in global markets and reach a more dispersed segment. The Internet gives you new tools that did not exist in the traditional economy, which is known as The LongTail Economy.






Demand



It is the quantity of product that will be sold in the market at various prices during a specific period and is expressed through a graph called 'demand curve' 21 4 





Law of demand: the higher the price, the lower the quantity demanded





DEMAND CURVE







Price



Demand





Quantity



La curva de demanda muestra, para un producto y para un mercado (Brasil, Europa, California), la cantidad demandada por unidad de tiempo, generalmente un año, como piezas/año, litros/año, en relación con su precio.







Sheet


Cómo llenar la Tabla 


Define the characteristics of the main segments, remember that you must obtain information from this segment both quantitative (how many they are, how much they are growing) and qualitative (what purchasing power they have, how sensitive are they to prices). number of segments is not that large, focus on the three or four best segments for your product.










Segment

Description

Companies 

Total consumption






Units per year



5121_film and video

NAICS 5121, small and medium, national.

1200

48 000


5152_content production

SCIAN 5121, small and medium, national.

890

17 800


TOTAL



65 800








Segmento 


Choose a descriptive name for the segment. In this example, companies are identified by their code in the industrial classification, this will make it easier to quantify them and know their main characteristics in economic censuses, this means that most of the clients will be in those companies, although in other chapters you might find that users real could also meet other criteria.




5252 film and video industry




Its characteristics are easy to find in censuses



Companies that produce multimedia content




They belong to many industries, and even people, it is more laborious to gather their characteristics, but it could be more precise.


An industrial product could be for an "activity" not for a "sector", choose the most practical way to segment, the important thing is to define a profitable segment, which is easy to identify, communicate with him, and send him the product. 


Identify how many individuals, people, or companies exist in the market area within the segment. Register the sources.



- Youth ages 15-24 in California: 5.9 million [Census Bureau ] 


- People over 60 years of age in urban areas of Spain: 7.2 million [Estimate with various statistics -population pyramid, and urban population ]. 


- E-commerce users in Mexico: 89 million s [FORBES with data from Blacksip  ]


- Industrial gas manufacturing companies in North America, SCIAN / NAICS 32512: 306  [DENUE from Mexico , SICODE from USA  , and ISED from Canada ]


- Women between 18 and 40 years old, who live in urban areas, and who are interested in vegetarian diets, in Argentina: 120,000 [Estimate with data from INDEC , from the BBC with information from the Argentine Nutrition Society and others. Such detailed estimates require secondary information, indirect estimates, and your own information, such as observation, surveys, or experiments. Remember we saw this topic here .



Total consumption 


Make a general estimate of the unit consumption that you have or could have of the product category. This estimate must be supported by your current consumption, your needs, your problems, or your costs. 



In very novel, technological, or non-wanted products there might not be a 'current demand', so you would have to look for a 'potential demand', taking into account that the new products are in an early phase of adoption. Your market segmentation should include that if you are targeting 'innovators', or 'early majority' 77





Processor

SAMPLE



Describe the segment precisely, either with the help of the table, with a description, or with graphs; remember to mention quantify it.



Cosmetics and personal care.


The cosmetics industry , which is considered part of the chemical industry, includes the manufacture of soaps, perfumes, creams, sunscreen, shampoo, and deodorants.



Domestic consumption of personal care products represents 3% of household spending, US $ 230 / person-year in the US and Europe, and at least US $ 100 / person-year in developing countries.  



The main distribution channels are by retailers (department stores, self-service, specialized, and pharmacies) 51%, catalog 20%, beauty salons 10%, and other 18%.. 15










Market study



Chapter 1.2. Customers




Segmentation


VindalyWine are cosmetic, natural and ecological products. The target segment for the first stage are women from 25 to 60 years old interested in personal care and environmental sustainability, socioeconomic level A, B, and C +, who buy online.


We call them " protectors of nature" because, like us, they take care of the planet very seriously.







Segmentation



Segment

Characteristics

Quantity


1. Protectors of national nature

Women, 25-60, ABC +, urban.

900.000

2. Protectors of continent nature

Woman, 25-60...

1'200,000

3. Guardians

Man, 25-60...

560,000



Demand

The total demand for beauty products in segment 1 is $ 120 / year.




Export

In 5 years, with differentiated brands, we will take advantage of export opportunities , and enter the male market.










A segment is identifiable, homogeneous, and accessible , the more detailed the better, although it must also have a critical mass , that is, have a minimum number of people for the dynamics of promotion, communication, selection, and purchase to occur. As mentioned in 'identification', when you are designing the price, channels, marketing, and other chapters, you will see the costs, and you will find opportunities that will allow you to redefine, expand, reduce, or refine the target segment.






On the web:


What Is the Long Tail?

Market Segment

Factors affecting demand


















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