Identifying

Market Segments
and Targets
 Chapter Questions

• What are the different levels of market

segmentation?
• How can a company divide a market
into segments?
• How should a company choose the
most attractive target markets?
• What are the requirements for effective
segmentation?

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 Effective Targeting Requires…

• Identify and profile distinct groups of

buyers who differ in their needs and
preferences
• Select one or more market segments to
enter
• Establish and communicate the
distinctive benefits of the market
offering

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 Ford’s Model T Followed a Mass
Market Approach

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 Four levels of Micromarketing

Segments Niches

Local areas Individuals

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 What is a Market Segment?

A market segment consists of a

group of customers who share a
similar set of needs ad wants.

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 Flexible Marketing Offerings

• Naked solution: • Discretionary

Product and service options: Some
elements that all segment members
segment members value options but
value not all

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 Preference Segments

• Homogeneous preferences exist

when consumers want the same things
• Diffused preferences exist when
consumers want very different things
• Clustered preferences reveal natural
segments from groups with shared
preferences

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The Himalaya Drug
Company serves a
growing niche
market by focusing
on ayurvedic
medicines and
health supplements

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 The Long Tail
• Chris Anderson explains the long tail
equation:
• The lower the cost of distribution, the more
you can economically offer without having
to predict demand;
• The more you can offer, the greater the
chance that you will be able to tap latent
demand for minority tastes; and
• Aggregate enough minority taste, and you
may find a new market.

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 What is Customerization?

Customerization combines operationally

driven mass customization with customized
marketing in a way that empowers
consumers to design the product and service
offering of their choice.

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 United Bank
Ltd. of
Pakistan offers
customized
Galleria credit
cards to its
customers

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 Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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 Demographic Segmentation

Age and Life Cycle

Life Stage
Gender
Income
Generation
Social Class

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 A common classification that is used by
marketers to describe the Indian population is
the Socio Economic Classification ( SEC). SEC
is the classification of Indian consumers on the
basis of two parameters : Occupation and
Education of the chief wage earner (Head) of
the households.
The SEC classification,created in 1988 ,was
ratified by Market Research Society of India
(MRSI) ,is used by most media researchers and
brand managers to understand the Indian
consuming class.
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 SECA1,A2,B1,B2,C,D,E1,E2

In urban households, SEC A1 include those with

graduation/post graduate holding senior positions
like CEO’s and Middle level managers and also
those entrepreneurs having some college
education and employs more than 10 staffs.
While the Rural Indian Households are classified
into SEC R1,R2,R3,R4.
In the rural classification, the parameters are
Education of the Chief wage earner and the type of
the house.

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 Bank Al Habib
targets
senior citizens

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 Dove Targets Women

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 Figure 8.1
The VALS Segmentation System

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 For the first time in this
segment, a brand is exploring
the possibility of creating a new
market - lifestyle scooter. The
target segment is youth who
wants to be different, make a
style statement. Essentially a
psychographic segmentation.

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 Behavioral Segmentation

Decision Roles Behavioral Variables

• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude
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 The Brand Funnel Illustrates
Variations in the
Buyer-Readiness Stage
• Aware
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used

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 Loyalty Status

Hard-core

Split loyals

Shifting loyals

Switchers

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 Figure 8.3 Behavioral
Segmentation Breakdown

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 The Conversion Model

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable

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IHCL operates in the luxury, upper upscale, upscale and
value segments of the market through the following:

Taj is the flagship brand for the world’s most discerning

travelers seeking authentic experiences in luxury.
Besides luxurious living and fine dining, Taj Hotels also
promise a whole new experience of tranquility and total
‘wellness’ through Jiva Spas, a unique concept that
brings together the wisdom and heritage of the Asian
and Indian philosophy of wellness and well-being.

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Taj Safaris is India's first and only wildlife lodges circuit that
allows travelers to experience the unparalleled beauty of the
Indian jungle amidst luxurious surroundings
Vivanta by Taj provides the new generation of travelers a
contemporary and creative hospitality experience that matches
their work-hard, play-hard lifestyles.
The Gateway Hotel chain is a pan-India network of hotels and
resorts that offers business and leisure travelers a
contemporary hotel experience.
Ginger is IHCL’s revolutionary concept in hospitality for the
value segment.
Taj Trade and Transport operates the chain of Taj Salon and Taj
Khazana lifestyle boutiques across selected properties of the
Taj group.

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 Titan
The first consisted of the high income/ elite consumers who
were buying a watch as a fashion accessory. They were
also willing to buy a watch on impulse. The price tag did not
matter to this segment. The price range between Rs.20, 000
and Rs.1 lakh.
The next segmented consisted of consumers who preferred
some fashion in their watches but to them price did matter.
The price range between Rs.500 and 700.
The third segment consisted of the lower income
consumers who saw a watch mainly as a time keeping
device and bought mainly on the basis of price. The price
range between Rs.350 and 500.

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 FasTrack, Raga, Sonata, Xylys, Nebula and
Flip are sub-brands within Titan that are aimed
at the youth, men, women and children Sonata
is the value for money watch brand from Titan
industries. It is targeted at consumers seeking
durability and value with a clear positioning of
“No compromise watch

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 Titan targeted its Raga watches at women in the
premium segment which gave them the feeling
of intimacy. The company realized that more
women were wearing watches for functions. It
offered slimmed down and sleeker watches for
women. The Raga range remained for more
special reasons, like marriages or parties

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 Xylys comes from the House of Titan, is targeting a new
generation of achievers who are looking for symbols to reflect
their lifestyle, attitude, moods and beliefs.

Nebula-precious jewellery watches from Titan. It is a

collection of intricately carved designs for women inspired by
floral patterns and these watches are engraved with beautiful
patterns in gold and precious stones. This is for the premium
segment.

Titan Edge and Titan Steel are the mainstream Titan

products which enhance the brands image of leadership,
innovation and pride. Titan is considered to have one of the
successful segmentation and targeting.
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 Segmenting for Business Markets

Demographic

Operating Variable

Purchasing Approaches

Situational Factors
Personal
Characteristics

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 Steps in Segmentation Process

Needs-based segmentation

Segment identification Marketing-Mix

Segment attractiveness Strategy

Segment profitability

Segment positioning

Segment acid test

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 Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

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 Figure 8.4 Patterns of
Target Market Selection

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 Figure 8.4 Patterns of
Target Market Selection

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 Figure 8.4 Patterns of
Target Market Selection

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 The Revolution
brand of ready-
made women’s
apparel
successfully
focuses on the
niche segment of
plus-size clothes.

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 Figure 8.5 Segment-by-Segment
Invasion Plan

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 Pepsi used Megamarketing in India

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