Session 10-11

Segmentation, Targeting,
13/9/2021
Learning Objectives
• Define the major steps in designing a customer-driven marketing strategy: market
segmentation, targeting, & positioning
• List and discuss the major bases for segmenting consumer ,business markets and
inter
• Explain how companies identify attractive market segments and choose a market-
targeting strategy.
Marketing Strategy
Customer Driven Marketing Strategy
 Market Segmentation

Market segment is a group of individuals, groups or organizations who may share the same interests, traits
and characteristics.

Market segmentation requires dividing a market into smaller segments with distinct needs, characteristics, or
behaviors that might require separate marketing strategies or mixes.

Successful segmentation allows a firm to focus its resources and to create goods and services that better meet
customer needs.

Who has the need/Budget/decision maker/group them in a segment

• Segmenting consumer markets

• Segmenting business markets
• Segmenting international markets
Segmenting Variables

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation
 Geographic Segmentation

Geographic segmentation is a marketing

strategy to target products to people who
live or shop in a specific location. This
approach is particularly useful if you sell
products that are subject to differences in
regional culture, climate or population.
C c Demographic segmentation
Demographic segmentation
groups customers and potential
customers together by focusing on
certain traits such as age, gender,
income, occupation , race , culture &
family status.
•Age and life-cycle stage segmentation divides a market into different
age and life-cycle groups.
•Gender segmentation divides a market into different segments
based on gender(Male , Female, Unisex)
•Income segmentation divides a market into different income
segments
•Generation: X, Y, Millennial, baby boomers
•Race Culture- Asian Americans, African Americans, LGBT, Hispanics
 Psychographic Segmentation
Psychographic segmentation is defined as
a market segmentation technique where
groups are formed according to
psychological traits that influence
consumption habits drawn from people's
lifestyle and preferences. and “what” do
they aspire their life to be.
 Behavioral Segmentation

Behavioral segmentation is
about understanding customers not just by
who they are, but by what they do, using insights
derived from customers' action/behaviours .

It allows businesses to divide customers into

groups according to their knowledge of, attitude
towards, use of, or response to a product,
service or brand
Behavior segmentation divides consumers into groups according to their observed buying
behaviors, Customer preferences, purchasing trends, Variety or Complex

Usage Occasion- Regular Occasion, Special Occasion, Festive Occasion

User Status – First Time user, Regular User, Non-User
Usage Frequency-Light user, heavy user, Moderate User
Loyalty Status- Loyal, Switcher, Non-Loyal , Lapsed
Buyer Readiness-Unaware, aware, Intention to buy
Benefits Sought- Quality, Service level, Convenience
Behavioural Segmentation Breakdown(Data)
Segmenting Business Markets
• Consumer and business marketers use many of the same
variables to segment their markets.
• Additional variables include:
• Demography -Industry, Company size, Location
• Operating Characteristics- Technology, User status, Customer
capabilities (many or few services )
• Purchasing approaches/Purchasing Value
• Situational factors- Urgency, Specific application and size of order
• Personal characteristics – Loyal, ethical Risk taking
 Segmenting International Markets
Companies can segment international markets using one or a combination of
several variables.

Geographic location: Nations close to one another will have many

common traits and behaviors.
Economic factors: Countries may be grouped by population income
levels, or by their overall level of economic development.
Political and legal factors: Type and stability of government, receptivity
to foreign firms, monetary regulations, and the amount of bureaucracy.
Cultural factors: Grouping markets according to common languages,
religions, values and attitudes, customs, and behavioral patterns.
Requirement for Effective Segmentation

Measurable Accessible Substantial

Differentiable Actionable
 Market Targeting
Target Market Segments
A target market is a set of buyers who share common needs or characteristics that the
company decides to serve.

How companies identify attractive market segments and choose a market-targeting

strategy.
• Segment Size and Growth
• Segment Structural attractiveness
• Company Objectives and Resources
Market Targeting Strategies
 Market Targeting Strategies (Cont.)
Undifferentiated marketing targets the whole market with one offer.
• Mass marketing
• Focuses on common needs rather than what’s different
Differentiated Marketing
Differentiated marketing targets several different market segments and designs
separate offers for each.
• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing
Niche Marketing
• Niche /Concentered Marketing-When a firm commit all if its
marketing resource to serve a single market segment

•Concentrated marketing targets a large of a smaller market.

• Limited company resources
• Knowledge of the market
• More effective and efficient
 Market Targeting Strategies
Micromarketing is the practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations.
• Local marketing
• Individual marketing
Local marketing involves tailoring brands and promotion to the needs and wants of
local customer segments.
Cities
Neighborhoods
Stores
 Individual Marketing /Customized Marketing

Individual marketing
involves tailoring
products and marketing
programs to the needs
and preferences of
individual customers.
 Selecting Marketing Segments
Choosing a targeting strategy depends on
• Company resources
• Product variability
• Product life-cycle stage
• Market variability
• Competitor’s marketing strategies