Chapter

9
Identifying
Market Segments
and Targets

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 Bases for Segmenting Consumer
Markets
• Market segment
– A group of customers who share a similar set
of needs and wants

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation

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 Geographic Segmentation
• Geographical units
– Nations, states, regions, counties, cities, or
neighborhoods
• Nielsen Claritas’ PRIZM
– Education and affluence
– Family life cycle
– Urbanization
– Race and ethnicity
– Mobility
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Geographic Segmentation

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Demographic Segmentation

Age & life-

Life stage
cycle stage

Race & Gender

culture

Generation Income

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 Demographic Segmentation
• Age and life-cycle stage
– Our wants and abilities change with age
• Life stage
– A person’s major concern (e.g., divorce)

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 Demographic Segmentation
• Gender
– Men and women have
different attitudes and
behave differently
• Income
– Income segmentation is
a long-standing practice

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 Demographic Segmentation
• Generation
Millennials (Gen Y)
Selective, confident, and impatient Gen X
1977 and 1994 1964-1978
Student Ambassadors Pragmatic and individualistic
Street Teams
Cool Events

Baby Boomers Silent Generation

1946 and 1964
1925 and 1945
“Fifty is the new thirty.”

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 Demographic Segmentation

• Race and culture

Hispanic Americans Asian Americans

African Americans LGBT

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 Psychographic Segmentation
• Buyers are divided into groups on the basis of
psychological/personality traits, lifestyle, or
values

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PSYCHOGRAPHIC SEGMENTATION

VF Corporation
offers a closet
full of more than
30 premium
lifestyle brands.

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 Figure 9.1: VALS
Segmentation System
Experiencers-
Young, ambitous,
rebellian, react
with emotions.
They spend a
comparatively
high proportion of
income on
Believers- fashion,
Conservative, entertainment,
traditional, and
obedient socializing

Survivors—
Elderly, passive
people concerned
about change and
loyal to their
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favorite brands 9-12
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 BEHAVIORAL SEGMENTATION
• Marketers divide buyers into groups on the
basis of their knowledge of, attitude toward,
use of, or response to a product

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 BEHAVIORAL SEGMENTATION

• Needs and benefits

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 BEHAVIORAL SEGMENTATION
• Decision roles
– Initiator
– Influencer
– Decider
– Buyer
– User

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 BEHAVIORAL SEGMENTATION

Schwinn
makes bikes
for every
benefit
segment.

Seven major benefit groups: cruisers, hybrid, bike path, mountain, road,
urban, and kids.

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 USER AND USAGE-RELATED
VARIABLES
nonusers, ex-users,
potential users,
first-time users, and
enthusiastic,
regular users
positive,
indifferent,
negative, and
Occasions User status light, medium,
hostile and heavy
product users.

Attitude Usage rate

Buyer-
Loyalty
readiness
status unaware, aware,
stage
informed,
interested,
intention to buy

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 Figure 9.3
Behavioral Segmentation Breakdown

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How Should Business Markets Be
Segmented?

 Demographic
 Operating variables
 Purchasing approaches
 Purchasing approaches
 Situational factors
 Personal characteristics

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Market targeting

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 Effective
Segmentation Criteria
 Measurable (size, purchasing power, and characteristics )
 Substantial (large and profitable enough to serve)
 Accessible
 Differentiable (distinguishable and respond differently to
different marketing mix elements and programs)

 Actionable (effective programs can be formulated for

attracting and serving the segments)

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 Porter’s five forces

Threat of Rivalry

Threat of Threat of
New Entrants Substitutes

Threat of Buyer Threat of Supplier

Bargaining Power Bargaining Power

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Evaluating & Selecting the Market
Segments
• Figure 9.4: Possible Levels of Segmentation

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 One-to-one marketing
Identify your prospects and customers

Differentiate customers in terms of their needs

and value to your company

Interact to improve your knowledge about

customers’ needs and to build relationships

Customize products, services,

and messages to each customer

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 Legal and Ethical Issues
• Marketers must avoid
consumer backlash
– Labeling consumers
– Vulnerable groups
– Disadvantaged groups
– Potentially harmful
products

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