Core Market

Core marketing refers to the fundamental principles and strategies that form the foundation of a
company's marketing efforts. It involves identifying and understanding the target market, creating a
compelling value proposition, developing effective marketing messages, and choosing the right marketing
channels to reach and engage customers.

Core marketing typically includes activities such as market research, segmentation, targeting, positioning,
branding, product development, pricing, promotion, and distribution. These activities are essential for
building brand awareness, generating leads, converting prospects into customers, and retaining existing
customers.

Overall, core marketing is about creating and delivering value to customers in a way that differentiates a
company's products or services from competitors and drives business growth. It is the bedrock on which a
company's marketing strategy is built and plays a crucial role in achieving the organization's goals and
objectives.

What is Marketplace

A marketplace is a large online shopping center, where products from many brands
are offered and in which you can find any product, anytime and from anywhere.

Marketplaces work in a simple, effective and economical way. The goal is that both
customers and sellers have it easy when it comes to selling and buying.

These online shopping centers act as intermediaries,offering buyers the full range of
products they house, facilitating the work of sellers and guaranteeing the security of
the purchase and sale.

Core Market Place Concept

The core marketplace concept revolves around understanding the dynamics between
buyers and sellers, and how value is created through exchange. Here are some of the
key ideas:
 1. Needs, Wants, and Demands: This forms the foundation. It highlights the
basic human needs (physiological, safety, social, etc.), desires (specific
products or services), and what people are willing to buy given their resources
(demand). Marketers must understand these motivations to tailor their
offerings.
2. Market Offerings: These are the products, services, experiences, or even
information that sellers provide to satisfy customer needs and wants. They can
be tangible goods, intangible services, or a combination of both.
3. Value and Satisfaction: Customers make choices based on perceived value.
This is the difference between what they get (benefits) and what they give
(cost, time, effort). A successful marketplace creates value propositions that
lead to customer satisfaction and loyalty.
4. Exchanges and Relationships: The core of a marketplace is the exchange
process. Buyers exchange resources (money, time) for offerings that fulfill
their needs. Strong marketplaces foster relationships between buyers and
sellers, building trust and repeat business.
5. Markets: This refers to the entire system of exchange – the actual and
potential buyers and sellers of a particular product, service, or experience.
Understanding the competitive landscape within a market is crucial for
businesses to position themselves effectively.

Group Assignment Question 1

What is market segmentation?

Market segmentation is the practice of dividing your target market into approachable groups. Market
segmentation creates subsets of a market based on demographics, needs, priorities, common interests,
other psychographic or behavioral criteria used to better understand the target audience.
By understanding your market segments, you can leverage this targeting in product, sales, and
marketing strategies. Market segments can power your product development cycles by informing how
you create product offerings for different segments like men vs. women or high income vs. low income.

Read on to understand why segmentation is important for growth and the types of market segmentation to
use to maximize the benefits for your business.

Free eBook: How to drive profits with customer segmentation

The benefits of market segmentation

Companies who properly segment their market enjoy significant advantages. According to a study
by Bain & Company, 81% of executives found that segmentation was crucial for growing profits. Bain
also found that organizations with great market segmentation strategies enjoyed a 10% higher profit than
companies whose segmentation wasn’t as effective over a 5-year period.

Other benefits include:

1. Stronger marketing messages: You no longer have to be generic and vague – you can speak
directly to a specific group of people in ways they can relate to, because you understand their
characteristics, wants, and needs.

2. Targeted digital advertising: Market segmentation helps you understand and define your
audience’s characteristics, so you can direct your online marketing efforts to specific ages,
locations, buying habits, interests etc.

3. Developing effective marketing strategies: Knowing your target audience gives you a head start
about what methods, tactics and solutions they will be most responsive to.

4. Better response rates and lower acquisition costs: will result from creating your marketing
communications both in ad messaging and advanced targeting on digital platforms like Facebook
and Google using your segmentation.

5. Attracting the right customers: targeted, clear, and direct messaging attracts the people you
want to buy from you.

6. Increasing brand loyalty: when customers feel understood, uniquely well served, and trusting,
they are more likely to stick with your brand.

7. Differentiating your brand from the competition: More specific, personal messaging makes
your brand stand out.
 8. Identifying niche markets: segmentation can uncover not only underserved markets, but also
new ways of serving existing markets – opportunities which can be used to grow your brand.

9. Staying on message: As segmentation is so linear, it’s easy to stay on track with your marketing
strategies, and not get distracted into less effective areas.

10. Driving growth: You can encourage customers to buy from you again, or trade up from a lower-
priced product or service.

11. Enhanced profits: Different customers have different disposable incomes; prices can be
set according to how much they are willing to spend. Knowing this can ensure you don’t oversell
(or undersell) yourself.

12. Product development: You’ll be able to design new products and services with the needs of your
customers top of mind, and develop different products that cater to your different customer base
areas.

Companies like American Express, Mercedes Benz, and Best Buy have all used segmentation strategies
to increase sales, build better products, and engage better with their prospects and customers.

The basics of segmentation in marketing

Understanding segmentation starts with learning about the various ways you can segment your market as
well as different types of market segmentation. There are four primary categories of segmentation,
illustrated below.

Behavioral
Demographic (B2C) Firmographic (B2B) Psychographic (B2B/B2C) (B2B/B2C)

Definition Classification based on Classification based on Classification based on

individual attributes company or organization behaviors like product usage,
attributes technology laggards, etc.

Examples Geography Gender Industry Location Lifestyle Personality Traits

Education Level Income Number of Employees Values Opinions
Level Revenue

Decision You are a smaller You are a smaller You want to target customers You want to target
Criteria business or you are business or you are based on values or lifestyle< customers based on
running your first project running your first
 Behavioral
Demographic (B2C) Firmographic (B2B) Psychographic (B2B/B2C) (B2B/B2C)

project< purchase behaviors

Difficulty Simpler Simpler More advanced More advanced

Types of market segmentation

With segmentation and targeting, you want to understand how your market will respond in a given
situation, like what causes people to purchase your products. In many cases, a predictive model may be
incorporated into the study so that you can group individuals within identified segments based on specific
answers to survey questions.

Demographic segmentation

Demographic segmentation sorts a market by elements such as age, education, household income, marital
status, family size, race, gender, occupation, and nationality. The demographic approach is one of the
simplest and most commonly used types of market segmentation because the products and services we
buy, how we use those products, and how much we are willing to spend on them is most often based on
demographic factors. It’s also seen as a simple method of predicting future behavior, because target
audiences with similar characteristics often behave in similar ways.

How to start demographic segmentation

Demographic segmentation is often the easiest because the information is the most readily available. You
can send surveys directly to customers to determine their demographic data, or use readily available third
party data such as government census data to gather further information.

Geographic segmentation

Geographic segmentation can be a subset of demographic segmentation, although it can also be a unique
type of market segmentation in its own right. As its name suggests, it creates different target customer
groups based on geographical boundaries. Because potential customers have needs, preferences, and
interests that differ according to their geographies, understanding the climates and geographic regions of
customer groups can help determine where to sell and advertise, as well as where to expand your
business.

How to start geographic segmentation

Geographic segmentation data again can be solicited from customers through surveys or available third
party market research data, or can be sourced from operational data such as IP addresses for website
visitors.

Firmographic segmentation

Firmographic segmentation is similar to demographic segmentation, except that demographics look at

individuals while firmographics look at organizations. Firmographic segmentation would consider things
like company size, number of employees and would illustrate how addressing a small business would
differ from addressing an enterprise corporation.

How to start firmographic segmentation

Firmographic segmentation data can be found in public listings for companies and information that the
business makes available, as well as trade publications. Again, surveying existing and potential customers
can help to build out this data.

Behavioral segmentation

Behavioral Segmentation divides markets by behaviors and decision-making patterns such as purchase,
consumption, lifestyle, and usage. For instance, younger buyers may tend to purchase bottled body wash,
while older consumer groups may lean towards soap bars. Segmenting markets based on purchase
behaviors enables marketers to develop a more targeted approach, because you can focus on what you
know they are looking for, and are therefore more likely to buy.

How to start behavioral segmentation

Of all the types of market segmentation, behavioral segmentation is likely best started with the
information you have on an existing customer base. Though it can be bolstered by third party market
research data, the information you already have on customer purchase and usage behavior will be the best
predictor of future behavior.

Psychographic segmentation

Psychographic segmentation considers the psychological aspects of consumer behavior by dividing

markets according to lifestyle, personality traits, values, opinions, and interests of consumers. Large
markets like the fitness market use psychographic segmentation when they sort their customers into
categories of people who care about healthy living and exercise.

How to start psychographic segmentation

Pychographic segmentation relies on data provided by the consumers themselves. Though market
research might provide insights on what particular segments are most likely to believe or prefer,
psychographic segmentation is best completed with information direct from the source. You can use
survey questions with a qualitative focus to help draw out insights in the customers’ own voice.

On-demand webinar: How to drive product design and profits with customer segmentation

How to get started with segmentation

There are five primary steps to all marketing segmentation strategies:

1. Define your target market: Is there a need for your products and services? Is the market large or
small? Where does your brand sit in the current marketplace compared to your competitors?

2. Segment your market: Decide which of the five criteria you want to use to segment your
market: demographic, firmographic, psychographic, geographic, or behavioral. You don’t need to
stick to just one – in fact, most brands use a combination – so experiment with each one to figure
out which combination works best for your needs.

3. Understand your market: You do this by conducting preliminary research surveys, focus
groups, polls, etc. Ask questions that relate to the segments you have chosen, and use a
combination of quantitative (tickable/selectable boxes) and qualitative (open-ended for open text
responses) questions.

4. Create your customer segments: Analyze the responses from your research to highlight which
customer segments are most relevant to your brand.

5. Test your marketing strategy: Once you have interpreted your responses, test your findings by
creating targeted marketing, advertising campaigns and more for your target market, using
conversion tracking to see how effective it is. And keep testing. If uptake is disappointing, relook
at your segments or your research methods and make appropriate changes.

Market segmentation strategy

Why should market segmentation be considered a strategy? A strategy is a considered plan that takes you
from point A to point B in an effective and useful way. The market segmentation process is similar, as
there will be times you need to revisit your market segments, such as:

In times of rapid change: A great example is how the Covid-19 pandemic forced a lot of businesses to
rethink how they sell to customers. Businesses with physical stores looked at online ordering, while
restaurant owners considered using food delivery services.

If your customers change, your market segmentation should as well, so you can understand clearly what
your new customers need and want from you.

On a yearly basis: Market segments can change year over year as customers are affected by external
factors that could alter their behavior and responses.

For example, natural disasters caused by global warming may impact whether a family chooses to stay
living in an area prone to more of these events. On a larger scale, if your target customer segment moves
away from one of your sales regions, you may want to consider re-focussing your sales activities in more
populated areas.

At periodic times during the year: If you’ve explored your market and created market segments at one
time of the year, the same market segments may have different characteristics in a different season.
Seasonal segmentation may be necessary for better targeting.

For example, winter has several holidays, with Christmas being a huge influence on families. This
holiday impacts your market segments’ buying habits, how they’ll behave (spending more than normal at
this time than any other) and where they will travel (back home for the holidays). Knowing this
information can help you predict and prepare for this period.

When considering updating your market segmentation strategy, consider these three areas:

1. Acknowledge what has changed: Find out what has happened between one time period and
another, and what have been the driving forces for that change. By understanding the reasons why
your market is different, you can make key decisions on whether you want to change your
approach or stay the course.

2. Don’t wait to start planning: Businesses are always adapting to long-term trends, so refreshing
market segmentation research puts you in a proactive place to tackle these changes head-on. Once
you have your market segments, a good idea is to consider the long-term complications or risks
 associated with each segment, and forward-plan some time to discuss problem-solving if those
issues arise.

3. Go from “what” to “why”: Why did those driving forces come about? Why are there risks with
your target market? At Qualtrics, we partner with companies to understand the different aspects
of target markets that drive or slow success. You’ll have the internal data to understand what’s
happening; we help unleash insight into why with advanced modeling techniques. This helps you
get smart market segmentation that is predictive and actionable, making it easier for future
research and long-term segment reporting.

Free eBook: How to drive profits with customer segmentation

Market segmentation use case examples

Where can you use market segmentation in your business? We’ve collected some use case scenarios to
help you see how market segmentation can be built out across several departments and activities:

Market and opportunity assessments

When your business wants to enter into a new market or look for growth opportunities, market
segmentation can help you understand the sales potential. It can assist in breaking down your research, by
aligning your findings to your target audience groups.

For example, When you’ve identified the threats and opportunities within a new market, you can apply
your customer segment knowledge to the information to understand how target customers might respond
to new ideas, products, or services.

Segmentation and targeting

If you have your entire market separated into different customer segments, then you have defined them
by set criteria, like demographics, needs, priorities, common interests, or behavioral preferences.

With this information, you can target your products and services toward these market segments, making
marketing messages and collateral that will resonate with that particular segment’s criteria.

Customer needs research

When you know a lot about your customers, you can understand where your business is connecting well
with them and where there can be improvements.
Market segmentation can help with customer needs research (also known as habits and practices research)
to deliver information about customer needs, preferences, and product or service usage. This helps you
identify and understand gaps in your offerings that can be scheduled for development or follow-up.

Product development

If the product or service you’ve developed doesn’t solve a stated problem of your target audience or isn’t
useful, then that product will have difficulty selling. When you know what each of your market segments
cares about an/d how they live their lives, it’s easier to know what products will enrich or enhance their
day-to-day activities.

Use market segmentation to understand your customers clearly, so that you can save time and money
developing products and services that your customers will want to purchase.

Campaign optimization

Marketing and content teams will value having detailed information for each customer segment, as this
allows them to personalize their campaigns and strategies at scale. This may lead to variations in
messaging that they know will connect better with specific audiences, making their campaign results
more effective.

When their marketing campaigns are combined with strong calls to action targeted to the specific
segment, they will be a powerful tool that drives your target market segments towards your sales
channels.

Ensuring effective segments

After you determine your segments, you want to ensure they’ll be useful. A good segmentation analysis
should pass the following tests:

 Measurable: Measurable means that your segmentation variables are directly related to
purchasing a product. You should be able to calculate or estimate how much your segment will
spend on your product. For example, one of your segments may be made up of people who are
more likely to shop during a promotion or sale.

 Accessible: Understanding your customers and being able to reach them are two different things.
Your segments’ characteristics and behaviors should help you identify the best way to meet them.
For example, you may find that a key segment is resistant to technology and relies on newspaper
or radio ads to hear about store promotions, while another segment is best reached on your mobile
 app. One of your segments might be a male retiree who is less likely to use a mobile app or read
email, but responds well to printed ads.

 Substantial: The market segment must have the ability to purchase. For example, if you are a
high-end retailer, your store visitors may want to purchase your goods but realistically can’t
afford them. Make sure an identified segment is not just interested in you, but can be expected to
purchase from you. In this instance, your market might include environmental enthusiasts who
are willing to pay a premium for eco-friendly products, leisurely retirees who can afford your
goods, and successful entrepreneurs who want to show off their wealth.

 Actionable: The market segment must produce the differential response when exposed to the
market offering. This means that each of your segments must be different and unique from each
other. Let’s say that your segmentation reveals that people who love their pets and people who
care about the environment have the same purchasing habits. Rather than having two separate
segments, you should consider grouping both together in a single segment.

Market segmentation is not an exact science. As you go through the process, you may realize that
segmenting based on behaviors doesn’t give you actionable segments, but behavioral segmentation does.
You’ll want to iterate on your findings to ensure you’ve found the best fit for the needs of your
marketing, sales and product organizations.

Common segmentation errors

We’ve outlined the do’s, so here are some of the dont’s:

 Avoid making your segments too small or specialized: Small segments may not be quantifiable
or accurate, and can be distracting rather than insightful

 Don’t just focus on the segment rather than the money: Your strategy may have identified a
large segment, but unless it has the buying power and wants or needs your product, it won’t
deliver a return on investment

 Don’t be inflexible: Customers and circumstances change, so don’t let your segments become
too entrenched – be prepared to let them evolve.

Qualtrics solutions for market segmentation

Market segmentation doesn’t need to be complicated to be effective. We would advise, though, to get
automated from the beginning. Forget spreadsheets – choose market segmentation software to measure
and streamline your marketing strategy; as you grow, the technology will scale with you.
Innovative features such as Experience did allow you to build your own customer segments and start
personalizing experiences at scale based on the rich insights into your critical customer groups.

If you want to get a feel for your market segmentation upfront, before taking a step towards a streamlined
and integrated system, trust us to take you through the research with our Market Segmentation Research
service.

References

American Marketing Association: [Link]

better-insights/ (This website offers a general definition and overview of market segmentation.)

Doyle, Peter, and Peter Stern. "Marketing Management and Strategy." McGraw-Hill Education,
2006. (This book includes a chapter on market segmentation and its role in marketing strategy.)

Everett, Roger, and Rodney W. Hancock. "Marketing." Pearson Education Limited, 2010. This
book provides a general overview of marketing concepts, including market segmentation.

Investopedia: [Link] (This website

provides a concise explanation of market segmentation with relevant examples.)

MarketingSherpa: [Link] (This website offers

practical tips and examples of market segmentation in action.)

Schmitz, Bernd. "Market Segmentation and Targeting." Springer, 2018. This book delves deeper
into the theory and practice of market segmentation.

Small Business Administration:

[Link] (This website
provides resources for small businesses on how to implement market segmentation strategies.)

Wedel, Michel, and Wagner Kamakura. "Market Segmentation: Conceptual and Methodological
Foundations." Springer Science & Business Media, 2000.

Wind, Yoram (Jerry), and David R. Bell. "Market Segmentation." In The Marketing Book, edited
by Michael J. Baker and Susan J. Hart, 6th ed., 222–244. Burlington, MA: Butterworth-
Heinemann, 2008.