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Market Segmentation and Segmentation Strategies A market segment is a specific group of customers with unique customer needs, purchase

behaviors, and identifying characteristics

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Selecting and Entering Market Segments Single-segment concentration M1 P1 P2 P3 P1 P = Product M = Market P2 P3 Product specialization M1 M2 M3 Selective specialization M1 P1 P2 P3 M2 M3 M2 M3 6-2 .

Selecting and Entering Market Segments (cont) Market specialization M1 M2 M3 P1 P2 P3 P1 P2 P3 P = Product M = Market Full market coverage M1 M2 M3 6-3 .

Segmentation Strategies Mass Market Large Segment Adjacent Segment MultiSegment Small Segment Niche Segment Mass Customization Segment A Segment A Segment A Seg A1 Seg A2 Seg A3 Seg A4 Seg A5 Seg B1 Seg B2 Seg B3 Seg C1 Seg C Seg C2 Seg C2 6-4 Segment B Seg C Segment B .

Blatz . Schlitz . #8 N=15 Hamms . Falstaff . Regular . .Perceptual Map Light #7 N=30 #6 N=39 Miller . #3 N=52 #2 N=79 Premium Budweiser Meisterbrau #4 N=43 #1 N=82 #5 N=32 Hearty 6-5 . Pabst .

gender.Forces that Shape Consumer Market Needs Segmentation is the Process of Dividing a Larger Market into Smaller Pieces Based on One or More Characteristics. 1. Demographic Age. family structure. Usage Quantity. social class. Lifestyle Attitudes. income. race & geography 2. interests 3. time of use. values. activities. frequency of use 6-6 .

West North Central. gender. income. cold 6-7 . Middle Atlantic. 5.000-19. rural Size of city. Demographic (Age. 20. 100. suburban. etc… Urban.999.999. country or standard metropolitan statistical area Population density Climate Warm. 250. Geographic Segmentation Region Pacific. South Atlantic.000-499.999. family structure. race & geography) 1.000249. East North Central.1.00049. New England Under 5.999. 50. East South Central. Mountain.000. social class.000-99.999.

$15. 30-39. retired.999. 13-19. etc. $25.000-$34.000 Professional.000-$49. Female 1-2. Over $50. 50-59. 5+ persons Under $15. 40-49. 60+ Gender Family size Income Male.1. farmers.999. 6-12.000. homemakers. 20-29.999. unemployed. Occupation 6-8 .000-$24.. craftspeople. foremen. Demographic Segmentation Age Under 6. $35. 3-4.. students.

Ale Yogurt 50 76 35-49 50-64 103 92 104 84 108 87 125 93 135 85 110 126 74 125 173 95 > 65 67 49 60 62 39 114 271 6-9 65 .PROPENSITY TO CONSUME PRODUCTS BY AGE CATEGORY Laxatives 35 45 Car Wax Frozen Metal Polish Diarrhea Remedies 99 116 Male Female 18-24 25-34 107 115 141 118 120 117 94 110 110 119 Pizza Beer.

Ultra Brite Large families Crest Men Colgate. Brightness Benefit Product of teeth Sought appearance Decay prevention Price Demographic Strengths Brands Favored Children Teens. Lifestyles (Attitudes. Young people Macleans. values.2. activities. Stripe Brands on sale 6 . Plus White.10 . interests) Interests: Benefit Segmentation of the Toothpaste Market Sensory Independent Segment Sociables Worriers Segment Principal Flavor.

Lifestyles Psychographic Categories Interests Family Home Opinions Themselves Social issues Demographics Age Education Activities Work Hobbies Social events Vacation Entertainment Job Community Recreation Politics Business Economics Income Occupation Family size Club membership Fashion Community Shopping Sports Food Media Achievements Education Products Future Culture Dwelling Geography City size Life cycle stage 6 .2.11 .

12 .VALS2 ACTUALIZERS High Resources Principle Oriented Status Oriented FULFILLEDS ACHIEVERS Action Oriented EXPERIENCERS BELIEVERS STRIVERS MAKERS Low Resources STRUGGLERS SRI Consulting’s Values and Lifestyle System (VALSTM) 6 .

high self-esteem. satisfied. impulsive and rebellious Practical people who have constructive skills and value self-sufficiency Chronically poor.7 11. active.0 14.5 Believer Achiever Striver Experiencer Maker Struggler 17. self-definition and approval from the world around them Young. knowledge and responsibility Conservative.8 12.7% 10. sophisticated. low skilled.VALSTM Segment as Percent of the United States Population VALSTM SEGMENT Actualizer Fulfilled Successful. vital. conventional people with concrete beliefs and strong attachments to traditional institutions Successful career and work-oriented who control their lives Seek motivation.13 9. and abundant resources Mature.0 6 . ill-educated.5 . without strong social bonds PERCENT OF POPULATION 11.9 12. comfortable people who value order. enthusiastic.

medium. potential user Work. American Express. commuting 6 . frequency of use) Usage Segmentation Media usage Specific media usage Payment method Loyalty status Usage rate User status Usage situation Newspaper. Internet Sports Illustrate. magazine. TV. some.3. total Light. ex-user. heavy Nonuser. home. time of use. check None. Usage (Quantity. Life. vacation. Visa. MasterCard. current user.14 . Cosmopolitan Cash.

Heavy-Half Segmentation Percentage of Population Non Light Heavy Users Half Half Cola Bourbon Beer Dog Food RTE Cereal Shampoo 22% 59% 67% 67% 4% 18% 39% 20% 16% 16% 48% 41% 39% 21% 17% 17% 48% 41% Volume Non Light Heavy Users Half Half 0% 0% 0% 0% 0% 0% 10% 11% 12% 13% 13% 19% 90% 89% 88% 87% 87% 81% 6 .15 .

16 .Male Beer Drinkers I like to play poker I would rather spend a quiet evening at home than go out to a party I smoke too much I would like to be a pro football player I would do better than average in a fist fight I go to church regularly Beer is a real man’s drink Playboy is one of my favorite magazines I am a girl watcher Men are smarter than women Percentage of Agreement Non Light Heavy Users Users Users 18 37 41 67 29 10 17 57 9 11 33 22 53 40 15 26 37 16 21 47 27 44 41 21 32 31 44 28 54 31 6 .

8 Frozen Orange Juice Candy Bars Beer Under 35 or over 65.0 than 2 hours 6 .5 hours 21. not college grad. TV more than 3. 3 or more children Consumption Multiple 7. 3 or more children Between 25 & 50.9 Under 25 or over 50.0 35 or over. TV less 40. 2 or fewer children Under 35. no children College grads. between 35 and 65 8. not college grads. nonprofessional.Usage Rates Product Catsup Light Buyers Unmarried or married over age 50 without children Heavy Buyers Under 50. college educated.17 .

Forces that Shape Business Market Needs Firmographic Forces  Number of employees  Sales volume  Number of locations  Years in business  Financial situation Business Culture  Business sophistication  Growth orientation  Innovativeness  Technology  Decision making Usage Behaviors  Application  Quantity  Time of purchase  Frequency of purchase  Users 6 .18 .

but different from others • Size and purchasing power can be measured. 6 .Targeting: Evaluating Market Segments Similar. • Large Enough? Reachable? Serve the Needs? Marketing communications can reach the segment. but Different? Able to be Measured? • Members are similar.19 . • Marketer can serve the needs of the segment. • Segments are large enough to be profitable.