Marketing Management

Global Edition
Kotler & Keller

Chapter 8
Identifying Market
Segments and Targets
 Chapter Questions

In what way can a company divide the consumer market

into segments?

How should business markets be segmented?

How should a company choose the most attractive target

markets?

What are the requirements for effective segmentation?

What are the different levels of market segmentation?

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 Chapter Question 1:
In what way can a company
Levels of Market Segmentation divide the consumer market
into segments?

Effective target
Segment
marketing requires
• Identify and profile distinct
that marketers: groups of buyers who differ in
their needs and preferences

Target

• Select one or more market

segments to enter

Position

• Establish and communicate the

distinctive benefits of the
market offering

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 Chapter Question 1:
In what way can a company
What’s a Market Segment divide the consumer market
into segments?

A market segment
• consists of a group of
customers who share a similar
set of needs and wants.

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 Chapter Question 1:
In what way can a company
Bases for Segmenting Consumer divide the consumer market
into segments?
Markets

GEOGRAPHIC DEMOGRAPHIC PSYCHOGRAPHIC BEHAVIORAL

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 Chapter Question 1:

Geographic Segmentation In what way can a company

divide the consumer market
into segments?

NATIONS

GOVERNORATES

URBAN/ RURAL

REGIONAL

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 Chapter Question 1:
In what way can a company
Demographic Segmentation divide the consumer market
into segments?

Age and Life Cycle

Life Stage

Gender

Family size

Income

Generation

Social Class

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 Chapter Question 1:
In what way can a company
Age and Lifecycle Stage divide the consumer market
into segments?

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 Chapter Question 1:
In what way can a company
Gender and Income divide the consumer market
into segments?

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 Chapter Question 1:
In what way can a company
Generational Influences divide the consumer market
into segments?

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 Chapter Question 1:
In what way can a company
Psychographic Segmentation divide the consumer market
into segments?

Resourcefulness

One of the most popular

classification systems
based on psychographic
measurements is VALS

Motivation

The VALS Segmentation System

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 Chapter Question 1:
In what way can a company
Behavioural Segmentation divide the consumer market
into segments?

In behavioural
Occasions
segmentation, marketers
divide buyers into groups
on the basis of their User Status

knowledge of, attitude

toward, use of, or Usage Rate
response to a product.
Buyer-Readiness
(Behavioral Variables)
Attitude

Loyalty Status

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 Chapter Question 1:

Loyalty Status In what way can a company

divide the consumer market
into segments?

Loyalty Status Marketers usually

envision four groups based on
brand loyalty status:

HARD-CORE SPLIT
LOYALS

SHIFTING SWITCHERS
LOYALS

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 Chapter Question 1:
In what way can a company
Decision Roles divide the consumer market
into segments?

INITIATOR INFLUENCER DECIDER BUYER

USER

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 Chapter Question 2:

Segmenting for Business Markets How should business

markets be segmented?

Demographic
•Specialty
•Potentiality (size)
•Location

Operating Variable
•Technology used by the customer
•Heavy users, medium users, light users, or nonusers
•Prescribing attitudes / patterns

Purchasing Approaches
•Purchasing function organization: Highly centralized or decentralized
purchasing organization
•Nature of existing relationships: customers with which we have strong
relations or go after the most desirable?
•General purchasing policies: bids, direct order…etc.
•Purchasing criteria: customers seeking quality, service? Price sensitivity?
Original? Generic loyalty?

Situational Factors
•Urgency: Quick or sudden requests
•Loyalty status to suppliers

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 Chapter Question 3:

Market Segmentation to Targeting How should a company

choose the most attractive
target markets?

Best practices in customer identification and

segmentation include the following:

Create and maintain

a customer
Use
information
SWOT analysis.
Use
system.
customer and
Choose
market surveys
to evaluate a segmentation
customer and strategy that
market fits the
perceptions of strategic intent
the in the context
organization. of opportunity.

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 Chapter Question 3:
Market Targeting How should a company
choose the most attractive
Once the firm has identified its market-segment opportunities, target markets?

it must decide how many and which ones to target.

Table 8.2: Steps in the Segmentation

Process

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 Chapter Question 3:

Market Targeting How should a company

choose the most attractive
target markets?

Evaluating Market Segments:

Segment Size & Growth:

Analyze sales, growth rates and expected profitability

Segment Structural Attractiveness:

Consider effects of competitors, availability of substitute products and the
power of buyers and suppliers.

Company objectives & Resources:

Company skills & resources relative
Look for competitive advantages
to the segment(s).

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 Chapter Question 3:
Levels of Market Segmentation & Targeting How should a company
choose the most attractive
target markets?
Possible Strategies

•Mass marketing •Create different

marketing mixes
for each segment

Undifferentiated Differentiated
Marketing (no Marketing (some
segmentation) segmentation)

Customized
Concentrated
(Micro)
(Niche)
Marketing
Marketing (more
(complete
segmentation)
segmentation)

•Create a separate •Create a

marketing mix for marketing mix for
EACH customer only one or a few
segments.

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 Chapter Question 3:

A. Undifferentiated Marketing How should a company

choose the most attractive
target markets?

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 Chapter Question 3:

B. Differentiated Marketing How should a company

choose the most attractive
target markets?

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 Chapter Question 3:

C. Concentrated (Niche) Marketing How should a company

choose the most attractive
target markets?

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 Chapter Question 4:

Effective Segmentation Criteria What are the requirements

for effective segmentation?

Measurable Substantial Accessible Differentiable

Actionable

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 Chapter Question 5:

Porter’s 5 Forces Model What are the different

levels of market
segmentation?

Threat of Threat of
Supplier Threat of
Threat of Buyer Threat of
New
Rivalry Bargaining Bargaining Substitutes
Entrants
Power Power

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 Chapter Question 5:

Possible Levels of Segmentation What are the different

levels of market
segmentation?

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 Chapter Question 5:

Patterns of Target Market Selection What are the different

levels of market
segmentation?

After evaluating different segments, the company can

consider five patterns of target market selection:

Single-segment concentration

Selective specialization

Product specialization

Market specialization

Full market coverage

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