Market Segmentation

Market Segmentation Project

INTRODUCTION

The purpose of this project is to give the student an opportunity to practice their market segmentation skills. Consumers come into the market with their own unique set of preferences and resources. However, from the perspective of both the researcher and marketer there are sufficient similarities between individual consumers to warrant grouping them into "segments." These similarities are not restricted to their demographic characteristics alone, they may include motivations, values, lifestyles, the way in which consumers use products, their spending patterns, purchase behavior, and so on. The definition of a consumer market segment is "a relatively homogenous group of individuals whose motivations, product needs, and purchase behaviors, are similar."

GOAL OF THE PROJECT

The goal of the project is to provide a market segmentation framework for a specific product market. The framework must include:

Identifying and naming TWO market segments within the market.

Fully analyzing each of these market segments following the procedures explained in class.

Coming to some conclusions about the market attractiveness (profit potential) of each segment, and market segments not being served in the current market environment which potentially could be profitable.

PRODUCT MARKET

The specific product forming the focus of the market segmentation analysis will be announced in class.

GUIDELINES FOR PREPARING MARKET SEGMENTATION PROJECT

Step 1: Library Research

Students must undertake extensive library research about their product market and consumers (active and potential) in the market. This information can be found by using computer data-base searches such as "Proquest" and "ABI Info" in Mann or Johnson School Business libraries. If you have never done a database search before, a tutorial session will be organized with one of the TAs. This library research will provide vital information for you on your product, how your product has been marketed to date, and what researchers have found out about consumers in the market.

Please note that a full and complete bibliographic reference list will be required as part of the written report on this project, so be careful to obtain all the information you need from a source before you leave the library/website.

Step 2. Summarizing Library Information

Succinctly summarize what you know about consumers in this market using the segmentation framework described in class. Make special note of the information you are still missing from this library search. It will form the basis for your empirical study.

Step 3. Deciding on the Primary Segmenting Dimension

Based on the library research a decision must be made regarding the consumer characteristics most closely related to product use. This is your PRIMARY SEGMENTING DIMENSION and will include one of the following dimensions: demographic, geographic, psychographic, benefits sought, behavioral, lifestyle.

Step 4. Empirical Research

The library research you have conducted will not provide sufficient information to successfully segment your market. You will be missing information on some dimensions of the consumer market. The purpose of the empirical research is to provide this additional missing information.

Using the information (or lack thereof) from your library research summarized in Step 2, design a short consumer survey to collect the missing information. The purpose of the survey is to obtain the missing information you need for your segmentation analysis. You must have one version of your survey for each of your two market segments. Each of these versions must be restricted to one page in length. The surveys must be typed, look professional, and be sufficiently detailed to provide the information needed. All surveys must be conducted by the student individually.

OBTAINING TA APPROVAL OF SURVEYS

All surveys MUST be approved by your TA prior to February 18, 2002. To obtain approval the students must hand into their TA a document containing the following information:

cover page with student name, course number and date (one page)

typed summary of their library research (one page)

Page containing: a statement of the primary segmenting dimension; a name and short (50 word) description of each segment to be surveyed; a short paragraph describing how each survey will be administered (one page limit)

TWO typed survey instruments

After approval the surveys may be implemented. Approximately 20 consumers per market segment is sufficient.

Step 5. Analysis of Results

All data collected should be tabulated and analyzed. Typed and tabulated data will be included in an appendix of your final report. Students may use computer software to analyze their data, although this is not required given the small sample size.

Using results from the library research and survey results,