Running Head: SEGMENTATION

Market Segmentation
Glenda Reese
Consumer Behavior MKT 625
Dr. Adebowale Onatolu
September 23, 2013

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Market Segmentation
When people think of Microsoft, most think computer software. However, what people
do not think about is the marketing concept behind the software, such as Microsoft Office Suite.
A brief look into Microsofts reasoning behind and history of this software will enlighten people
as the reason why it is more popular that other brands. Further discussion will cover the major
segmentation strategies of demographic, geographic, and psychographic showing what type of
strategy (or strategies) best suits Microsofts marketing campaign for Microsoft Office Suite
software. The VALS (an acronym for values and lifestyles) will be incorporated into the
discussion about segmentation strategies. Understanding the segmentation strategies will allow
one to determine the specific strategy (or strategies) appropriate for Microsoft Office Suite.
Microsoft Office Reasoning and History
The reason behind Microsoft Office is to provide a set of programs that allow anyone,
from school age to elders, to be able to produce written documents, slide shows, spreadsheets
and so forth, with ease and speed. Microsoft Office is a group of computer programs developed
in 1989, released January 23, 1990, and have gone through many additions and upgrades to the
original three programs. According to PR Newswire (2003), Microsoft Office system launched
with a record number of programs, servers, and services to raise data worker productivity
(para.1). In 2010, Microsoft came out with a beta version of Microsoft Office 365. Callahan
(2010) says that the latest edition to this software suite combines Microsoft Office, SharePoint
Online, Exchange Online, and Lync Online in a cloud based service (para.1). Now, with the
release of Microsoft Office 2013, online education businesses, such as Lynda.com, are offering
training courses in Microsoft Office 2013 and Office 365 (Business Wire, 2013, para.2).

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Market Segmentation and Types
Market segmentation is defined as the process of dividing a potential market into distinct
subsets of consumers and selecting one or more segments as a target market to be reached with a
distinct marketing mix (product, promotion, price, and channels of distribution) (Schiffman &
Kanuk, 2010, p.10). To begin a segmentation strategy, the base(s) that represent the core
characteristics of a group of existing or possible customers must b selected (Schiffman & Kanuk,
2010, p.57). Four quadrants make up the four-way classification characteristics used to segment
buyers of goods or services. Within these four quadrants are two sections, which are consumerrooted and consumption-specific, that deals with facts and two that deal with cognitions
(Schiffman & Kanuk, 2010, p.58). Further statement from Schiffman & Kanuk discusses the
breakdown of consumer-rooted segmentation bases into three types, which are demographic,
geographic, and psychographic.
Demographic
Demographic segmentation entails using aspects such as a persons age, gender, ethnicity,
and income as a way of segmenting potential buyers into groups (Schiffman & Kanuk, 2010,
p.58). Although Microsoft Office is an established product within all age ranges, income ranges
and ethnicity, demographics still play an important role in the marketing campaign because of
the range of Office products. For example, businesses would not use the student edition of
Office and vice versa, students would not use the more complex suites for student purposed.
Therefore, income and age, as well as other demographic aspects, are important to determine in
composting a marketing campaign. Microsoft has to target many different markets for Office
suites that are available.

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Geographic
Geographic is the location or address where people are. Geographic data probably played
the least role in the Microsoft Office campaign because the product is everywhere, schools,
homes, and businesses. According to Schiffman & Kanuk (2010), geographic segmentation is a
hybrid segmentation scheme based on the concept that people who live close together will have
similar tastes, preferences, lifestyles, and consumption habits (p.62). Geographically, Microsoft
should target businesses so they can sell the most expensive Office suite, which is the one more
suited for business purposes. However, Microsoft has abundant sales in all of the Office suites,
so geographical data is not very relevant for the marketing campaign.
Psychographics
Schiffman & Kanuk (2010) define psychographics as a persons activities, interests, and
opinions, which help form attitudes toward various issues, a lifestyle (p.58). Microsoft would
use this segmentation base to target groups of students or business people. These people usually
need products that are simple to use because of their fast-paced lifestyle. For example, students
have several classes in one day and having software that works for all types of classes makes the
use a lot simpler. Within the psychographic base (or lifestyle) is segmentation called VALS (an
acronym for values and lifestyles). If Microsoft used the VALS system of segmentation, they
would be able to figure out the repositioning aspect of their lowest selling Office Suite product,
the group(s) most interested and able to afford different levels of the product, and determine
which of the eight subgroups should be targeted the most.
Segmentation Strategy Evaluation

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All businesses want to make money the best way possible. For Microsoft, the sales from
its biggest office suite package are the way to do this. This package is best suited for business
purposed, but is usable by anyone. Therefore, Microsoft should target businesses when putting
together a marketing campaign for this product. A combination of all three segmentation bases
can be used, but the dominant one should be demographic. The marketing approach should
demonstrate, to the business community, the ease of use and potential for better production. For
example, PR Newswire (2003) said workers at Siemens AG cut 20 percent of the time it took to
insert contact data and standard legal text into company documents. In addition, they reduced
document error rate by 20 percent as well (para.7). Further comment spoke of the Scandinavia
company, Nordea, the anticipates the use of Microsoft Office Suite to cut project time almost in
half and pay for the solution with time and travel cost savings in just seven months (para.10).
Conclusion
Microsoft, although a successful business already, has to stay on top of marketing to
remain successful. Determining which marketing segments to target is an important step in the
marketing process. For Microsoft Office Suite, the Microsoft Corporation has to target several
different groups depending on which Office Suite package is being promoted. For example, the
target segment for the Office Professional Suite would be better targeted for businesses while the
student edition would be better targeted for home and school purposes. All three-segmentation
bases play a role in proper segmentation, but demographics are the dominant base that Microsoft
should use in its marketing campaign. This was determined through Microsofts reasoning
behind the Office Suite software, the segmentation strategies and VALS, and simple logic behind
the marketing process of any product.

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References
Callahan, S. (2010). Microsoft keeps office, even in cloud. B to B, 95(13), 3. Retrieved from
http://search.proquest.com/docview/814376354?accountid=32521
Lynda.com releases Microsoft Office 2013 training. (2013, January 30). Business Wire.
Retrieved from http://search.proquest.com/docview/1282406211?accountid=32521
Microsoft Office system launches with record number of programs, servers, and services to boost
information worker productivity. (2003, October 21). PR Newswire. Retrieved from
http://search.proquest.com/docview/446886266?accountid=32521
Schiffman, L.G., & Kanuk, L.L. (2010). Consumer behavior (10th ed.). Upper Saddle River,
NJ: Pearson Prentice Hall.