Chapter 4: Identifying Market

Segments and Targets

Identifying Market
Segments and Targets
Discussion Questions
1. What is market segmentation?
2. In what ways can a company divide a market
into segments?
3. What are the requirements for effective
segmentation?
4. How should business markets be segmented?
5. How should a company choose the most
attractive target markets?

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Market Segmentation
• Market segmentation is the process of dividing
the total, heterogeneous market for a product
in to distinct and meaningful groups of buyers,
each of which tends to be homogenous in all
significant aspects.
• Management then selects one or more of
these market groups or segments as the
organization's target market.

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 Target Marketing Requirements
1. Identify and profile distinct groups of
buyers (market segmentation).

2. Select one or more market segments to

enter (market targeting).

3. For each, establish and communicate

benefits of offering (market positioning).

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4.1 Bases for Segmenting Consumers

Geographic

Demographic

Psychographic Behavioral
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4.2 Geographic Segmentation

Geoclustering

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4.3 Demographic Segmentation

Age and Life-cycle Stage

Life Stage
Gender
Income
Generation
Race and Culture

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Age and Life-Cycle Stage

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Life Stage

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Gender
Women:
Influence 80% of consumer purchases
Make 75% of new home decisions
Purchase 60% of cars

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Income

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Generation

Gen X (1964-1978)
Baby Boomers (1946-1964)
Silent Generation (1925-1945)

Millennials (Gen Y) – (1979-1994)

-78 Million people
-$187 annual spending power

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Race and Culture

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4.4 Psychographic Segmentation

• Personality traits
• Lifestyle
• Values

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 VALS Segmentation System

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4.5 Behavioral Segmentation
Usage occasions
Initiator
User status
User Influencer
Usage rate

Buyer-readiness
Buyer Decider Loyalty status
Decision Roles User and Usage

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Cont...
Needs and Benefits Loyalty Status-marketers
• Enthusiast usually envision four
• Image Seekers groups based on brand
• Savvy Shoppers loyalty status:
1. Hard-core loyals
• Traditionalist
2. Split loyals
• Satisfied Sippers 3. Shifting loyals
• Overwhelmed 4. Switchers

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 Brand Funnel

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Consumer Attitudes

Enthusiastic Positive Indifferent Negative Hostile

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 Behavioral Segmentation

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4.6 Bases for Segmenting B2B Markets

Demographic Industry, company size, location

Operating Variables Technology, user status, customer capabilities

Purchasing Approach Power structure, nature of existing relationship

Situational Factors Urgency, specific application, size of order

Personal Characteristics Buyer-seller similarity, loyalty, risk attitude

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Effective Segmentation Criteria

Measurable
Substantial
Accessible
Differentiable
Actionable

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 Cont..Effective Segmentation Criteria

Porter’s Five Force

Substitute Buyer
Products Power

Supplier
New Power
Entrants
Rivalry

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4.7 Market Targeting and Positioning
• Targeting: is the process of assessing the
relative worth of different market segments
and selecting one or more segments in which
to compete- these become the target segment.
• Positioning: is the identification of a particular
appeal that the firm can make to customers in
each target segment, which is designed to
convenience customers to choose that firm
over its rivals.
• Target market: a group of customers at which
the seller directed the marketing programs.
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Evaluating and Selecting Segments

Multiple segment
specialization

Full market coverage

Single-segment
concentration Individual marketing
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Levels of Segmentation
• Full Market Coverage
o Undifferentiated or mass marketing
o Differentiated marketing
• Multiple Segment Specialization
o Product Specialization
o Market Specialization
• Single-segment Concentration
o Niche (Sub Segmenting)
• Individual Marketing: One-to-one Marketing

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ETHICAL CHOICE OF MARKET TARGETS
• Marketers must target carefully to avoid
consumer backlash. Some consumers resist
being labelled.
• Singles may reject single-serve food packaging
because they don’ t want to be reminded they
are eating alone.
• Elderly consumers who don‘t feel their age,
may not appreciate products that label them
‘old’.

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Discussion
• Is Mass Marketing Dead or alive?
With marketers increasingly adopting more and
more refined market segmentation schemes
fuelled by the Internet and other customization
efforts some claim mass marketing is dead.
Others counter there will always be room for
large brands employing marketing programs to
target the mass market.

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