1

8
Identifying Market
Segments and Targets
 Chapter Questions
 What are the different levels of market
segmentation?

How can a company divide a market into
segments?
 What are the requirements for effective
segmentation?

How should business markets be segmented?
 How should a company choose the most
attractive target markets?

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 Effective Targeting Requires…
 Identify and profile distinct groups of buyers
who differ in their needs and preferences

Select one or more market segments to enter
 Establish and communicate the distinctive
benefits of the market offering

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 What is a Market Segment?

A market segment consists of a group

of customers who share a similar set of
needs and wants.

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 Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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 Geographic Segmentation

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 Claritas’ Prizm
 Education and affluence

Family life cycle
 Urbanization
 Race and ethnicity

Mobility

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 Demographic Segmentation
 Age and life cycle

Life stage
 Gender
 Income

Generation
 Social class
 Race and Culture

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 Age and Lifecycle Stage

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 Gender and Income

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 Generational Influences

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 Race and Culture

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 Psychographic Segmentation
and The VALS Framework

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 Behavioral Segmentation Based
on Needs and Benefits

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 Behavioral Segmentation:
Decision Roles

Initiator

Influencer

Decider

Buyer

User

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 Behavioral Segmentation:
Behavioral Variables

Occasions

Buyer-Readiness
 Loyalty Status
 Benefits
 Attitude
 User Status

Usage Rate

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 Figure 8.2 Example of a Brand Funnel

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 Loyalty Status
 Hard-core

Split loyals
 Shifting loyals
 Switchers

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 Figure 8.3 Behavioral
Segmentation Breakdown

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 Segmenting for Business Markets

 Demographic

Operating variable
 Purchasing approaches
 Situational factors

Personal characteristics

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 Steps in Segmentation Process
 Need-based segmentation

Segment identification
 Segment attractiveness
 Segment profitability

Segment positioning
 Segment acid test
 Market mix strategy

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 Effective Segmentation Criteria

 Measurable

Substantial
 Accessible
 Differentiable

Actionable

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 Porter’s 5 Forces Model

Threat of Rivalry

Threat of Buyer Threat of Supplier

Bargaining Power Bargaining Power

Threat of Threat of
Substitutes New Entrants

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 Figure 8.4 Possible Levels
of Segmentation

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 For Review
 What are the different levels of market
segmentation?

How can a company divide a market into
segments?
 What are the requirements for effective
segmentation?

How should business markets be segmented?
 How should a company choose the most
attractive target markets?

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-25