Ch-09-S-Identifying Market Segments and Targets

5/19/2022
Discussion Questions
1 1. What are the different levels of market

segmentation?
2. In what ways can a company divide a
9 market into segments?
Identifying Market 3. What are the requirements for effective
Segments and Targets segmentation?
4. How should business markets be
segmented?
5. How should a company choose the most
attractive target markets?
16/e Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 9-2
Value Creation for Targeted Bases for Segmenting Consumer

Customers Markets
Geographic
Demographic
Psychographic Behavioral
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 9-3 Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 9-4
Bases for Segmenting Consumer Markets

Bases for Segmenting Consumer
Markets Bases for Segmenting Consumer Markets
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Bases for Segmenting Consumer

Geographic Segmentation
Markets
 Divides the market into ̶ Grouped into 14
Marriott offers different geographical units distinct groups and 66
various brands of distinct lifestyle
 Pay attention to local
lodging in order segments
variations
to meet the ̶ 39 factors in 5 broad
̶ Grassroots marketing
needs of takes activities as personally
categories
particular relevant to individual • Education & affluence
customer customers as possible • Family life cycle
Click the picture above to play video
segments. • Urbanization
̶ Nielsen Claritas’ geoclustering
• Race and ethnicity
approach called “PRIZM”
• Mobility
Demographic Segmentation Age and Life-cycle Stage
• Divides the market into groups • Can be very tricky

• Wants and abilities
based on demographic variables variables and guard
change with age
• The most popular bases against stereotypes
̶ Crest and Colgate
offer 3 lines of ̶ Target market of some
̶ Easier to measure than other
products to target products may be
variables psychologically young
kids, adults, and other
̶ Highly associated to consumer older consumers ̶ Ford introduced
needs and wants inexpensive sports
car—Mustang
SINBAD: Single Income, No Boyfriend and Absolutely Desperate
Age and Life-cycle Stage Life Stage
P&G targets kids with • A person’s major concern like

Crest Kid’s Cavity divorce, taking care of an old
Protection toothpaste. parent or living together
It’s gentle on tooth ̶ People in the same part of the
life-cycle may differ in their life
enamel and has “fun-
stage
filled sparkles and
̶ Opportunities lie in coping with
sparkle fun flavor just the major concerns of life-stage
for kids.”
Different toothpastes for different
age groups
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Gender Income
• Tricky variable and

Women: guard against
̶ Influence 80% of consumer stereotypes
purchases
̶ Blue-collar workers’ color
̶ Make 75% of new home decisions TV buying
̶ Purchase 60% of cars ̶ Economical car buying
Gender and Income Generation

• Each generation or cohort is profoundly influenced
by the times in which it grows up
• Victoria’s Secret
studied women and Millennials (Gen Y)
learned that while 1979-1994
women need
underwear, they Gen X
want lingerie
1965-1978
• It went on to develop
the retail chain very Baby Boomers
successfully based 1946-1964
on this insight
Silent Generation
1925-1945
Race and Culture Psychographic Segmentation
• Divides buyers into

Multicultural marketing Hispanic Americans different groups based
on socioeconomic • Psychographics is
recognizes that different
Asian Americans class, status, life style, the science of using
ethnic and cultural
or personality psychology and
segments have different
African Americans characteristics demographics to
needs and wants and better understand
require targeted marketing consumers
activities LGBT
̶ People within the same
demographic group can
exhibit very different
psychographic profiles
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Psychographic Segmentation Behavioral Segmentation
• Socioeconomic class: Quintiles AB, C, D, E, FG

• Status: Education, income and occupation levels • Divide buyers on the basis of their knowledge
are used in combination to indicate status of, attitude toward, use of, or response to a
product
• Values, attitudes and lifestyle groupings:
Visible Achievement, Something Better, Young • Bases are:
Optimists, Socially Aware, Look at Me, A Fairer ̶ Needs and benefits
Deal, Basic Need, Real Conservatism, Traditional ̶ Decision roles
Family Life, Conventional Family Life
̶ User and usage-related variables
• Personality: Compulsive, gregarious,
authoritarian, ambitious
Needs and Benefits Decision Roles
• People have five roles in a buying decision

• Buyers of a product may vary in: ̶ Initiator
̶ Needs and wants (needs-based segmentation) ̶ Influencer
̶ Benefits sought (benefit-based segmentation) ̶ Decider
̶ Buyer
̶ User
User and Usage-related Variables Consumer Attitudes
• Occasions—Time of day, week, month, year (Mother’s

Day)
• User Status—Nonusers, ex-users, potential users, 1st
time users, regular users
• Usage Rate—Light, medium, heavy
• Buyer-Readiness Stage—To buy a product
• Loyalty Status—Hard core, split, shifting, switchers Enthusiastic Positive Indifferent Negative Hostile
• Attitude—Enthusiastic, positive, indifferent, negative,

hostile
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Behavioral Segmentation Breakdown Segmenting Business Markets
Demographic Industry, company size, location
Technology, user status, customer

Operating Variables
capabilities
Power structure, nature of existing

Purchasing Approach
relationship
Situational Factors Urgency, specific application, size

of order
Buyer-seller similarity, loyalty, risk

Personal Characteristics attitude
Segmenting International Markets Effective Segmentation Criteria
To be useful, market segments must be:

Geographic Location Intermarket (cross-
market)
segmentation
Political-legal Factors divides consumers Measurable Accessible Substantial
into groups with
similar needs and
Economic Factors buying behaviors
even though they Differentiable Actionable
are located in
Cultural Factor different countries
Effective Segmentation Criteria Market Targeting

Porter’s Five Force
Targeting involves:
a) Evaluating various segments and
b) Deciding how many and which segments it

can serve best
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Evaluating Market Segments Selecting Target Market Segments
• Segment’s overall attractiveness

̶ Score on Porter’s 5 forces
̶ Segment’s size, profitability, growth,
and risk
• Company objectives and resources

Fig: Market Targeting Strategy
Selecting Target Market Segments Undifferentiated Marketing
Selective
Undifferentiated Local or
(Product or Concentrated
or Differentiated
Marketing
Market) Marketing Individual • Targeting the whole market with one offer
Specialization Marketing
̶ Mass marketing
̶ Focuses on common needs rather than what’s
different
Fig: Levels of Segmentation
Differentiated Marketing Concentrated Marketing
• Targeting several different market segments

• Targeting a small share of a large market
and designs separate offers for each
̶ Goal is to achieve higher sales and stronger • More efficient and effective if the
position company has
̶ More expensive than undifferentiated marketing ̶ Limited resources
̶ Limited knowledge of the market
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Micro Marketing Mass customization
Effectiveness
Customization
• Tailoring products and marketing programs • Customizing offerings to the
to suit the tastes of specific individuals and tastes and preferences of
locations individual buyers in high
̶ Local marketing volumes and at a relatively
̶ Individual or one-to-one marketing low cost
Mass Marketing
Efficiency
Legal and Ethical Issues with

Segment-by-Segment Invasion Plans
Market Targets
• Avoid consumer backlash
and public controversy • Not bad all targeting • Enter one by one without
revealing expansion plans
─ Colgate-Palmolive's
• Don’t label consumers ─ PepsiCo first attacked Coca-
Colgate Junior
• Don’t target vulnerable of toothpaste Cola in the grocery, then in the
vending machine, then in the
disadvantaged groups • Issue is not who is fast-food market
• Avoid potentially harmful targeted
products (McDonald's) ─ But rather how and for • How to enter blocked
what they are targeted market?
• Don’t market adult
products
Mega Marketing Pepsi used Mega Marketing in India
• The strategic coordination of economic,

psychological, political & public relations
skills to gain the cooperation of a number of
parties in order to enter or operate in a
given market
─ Pepsi used 2 more Ps: politics and public
opinion
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Marketing Debate
Is mass marketing dead?

Take a position:
1. Mass marketing is dead.
2. Mass marketing is still a viable way to build
a profitable brand.
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 9-43

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5/19/2022

1 1. What are the different levels of market

Value Creation for Targeted Bases for Segmenting Consumer

Bases for Segmenting Consumer Markets

Bases for Segmenting Consumer

Demographic Segmentation Age and Life-cycle Stage

• Divides the market into groups • Can be very tricky

SINBAD: Single Income, No Boyfriend and Absolutely Desperate

Age and Life-cycle Stage Life Stage

P&G targets kids with • A person’s major concern like

• Tricky variable and

Gender and Income Generation

Race and Culture Psychographic Segmentation

• Divides buyers into

Psychographic Segmentation Behavioral Segmentation

• Socioeconomic class: Quintiles AB, C, D, E, FG

Needs and Benefits Decision Roles

• People have five roles in a buying decision

User and Usage-related Variables Consumer Attitudes

• Occasions—Time of day, week, month, year (Mother’s

• Attitude—Enthusiastic, positive, indifferent, negative,

Behavioral Segmentation Breakdown Segmenting Business Markets

Demographic Industry, company size, location

Technology, user status, customer

Power structure, nature of existing

Situational Factors Urgency, specific application, size

Buyer-seller similarity, loyalty, risk

Segmenting International Markets Effective Segmentation Criteria

To be useful, market segments must be:

Effective Segmentation Criteria Market Targeting

b) Deciding how many and which segments it

Evaluating Market Segments Selecting Target Market Segments

• Segment’s overall attractiveness

• Company objectives and resources

Selecting Target Market Segments Undifferentiated Marketing

Fig: Levels of Segmentation

Differentiated Marketing Concentrated Marketing

• Targeting several different market segments

Micro Marketing Mass customization

Legal and Ethical Issues with

Mega Marketing Pepsi used Mega Marketing in India

• The strategic coordination of economic,

Is mass marketing dead?

Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 9-43

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