Strategic Marketing

marufrashid@gmail.com
 Chapter 3

Strategic
Market
Segmentation
Strategic market segmentation (1)

▪ Levels and types of market segmentation

Levels and types of market segmentation
Vision
Strategic Strategic intent
Segmentation Product benefits
Resource allocation
Alignment
Managerial Planning
Segmentation
Marketing programs
Operational - Advertising
Segmentation - Sales
- Distribution
Best Buy segmentation strategy

▪ Jill’s - “soccer moms”

▪ Barry’s - wealthy professionals
▪ Buzz’s - “tech enthusiasts”
▪ Ray’s - the family man
▪ Mr Storefront - the small business customer
▪ Carrie’s - young, single females
▪ Helen and Charlie’s - older couples whose children have left home
▪ Gov. Palin’s “_________________” moms
 From Mass Markets to Micro Markets

OLD NEW

CONSUMERS Passively receive Empowered media users

whatever TV control and shape content
networks thanks to TiVo, iPod and
broadcast Internet
ASPIRATIONS To keep up with To standout from the
the crowd crowd
TV CHOICE Three networks Hundreds of channels
plus maybe a plus video on demand
PBS station
MAGAZINES Age of the big Age of the special interest
glossies: Time, magazine for every age
Life, Newsweek and affinity group
ADS Everyone hums Talking to a group of
the Alka-Seltzer one, ads go ever
jingle narrower
BRANDS Rise of the big,Niche brands, product
ubiquitous brands extensions and mass
from Coca-Colacustomization mean many
to Tide product variations
Strategic market segmentation (2)

▪ Market-driven strategy and segmentation

– Market segmentation, value opportunities and new market space
– Market targeting and strategic positioning
Segmentation and Market-Driven Strategy
SEGMENTS

VALUE
OPPORTUNITIES

CAPABILITIES/
SEGMENT
MATCH

TARGET(S)

POSITIONING
STRATEGY
 Strategic market segmentation (3)

▪ Market-driven strategy and segmentation

– Market segmentation, value opportunities and new market space
– Market targeting and strategic positioning

▪ Activities and decisions in market segmentation

Market Segmentation Activities and Decisions
Market to be
Segmented
Strategic
Analysis Decide How
of Segments to Segment

Finer Form
Segmentation Segments
Strategies
Strategic market segmentation (4)

▪ Market-driven strategy and segmentation

– Market segmentation, value opportunities and new market space
– Market targeting and strategic positioning

▪ Activities and decisions in market segmentation

▪ Defining the market to be segmented
 Strategic market segmentation (5)

▪ Identifying market segments

– Segmentation variables
– Characteristics of people and organizations
▪ Consumer markets
▪ Organizational markets
▪ Product use situation segmentation
▪ Buyers’ needs and preferences
– Consumer needs
– Attitudes
– Perceptions
▪ Purchase behaviour
Segmentation Variables

Purchase
Behavior

Buyers’ Needs/ Characteristics

Preferences of People/
Organizations

Use
Situation
Illustrative Segmentation Variables
Consumer Industrial/
Markets Organizational Markets
Characteristics Age, gender, income, Type of industry, size, geographic
of people/ family size, lifecycle stage, location, corporate culture, stage of
organizations geographic development, producer/
location, intermediary
lifestyle
Use situation Occasion, importance of Application, purchasing
purchase, prior experience with Procedure (new task, modified rebuy,
product, user status straight
rebuy
Buyers’ needs/ Brand loyalty status, brand Performance requirements, brand
preferences preference, benefits sought, preferences, desired
quality, proneness to make a deal features, service
requirements
Purchase Size of purchase, Volume, frequency
behavior frequency of purchase of purchase
Strategic market segmentation (6)

▪ Forming market segments

– Requirements for segmentation
▪ Response differences
▪ Identifiable segments
▪ Actionable segments
▪ Cost/benefits
▪ Stability
– Approaches to segment identification
– Customer group identification
– Forming groups based on response differences
Miller Brewing’s beer brand targets

▪ Miller Genuine Draft - “mainstream sophisticates”

▪ Milwaukee’s Best Light - “hardworking men”
▪ Pilsner Urquell - “beer afficionados”
▪ Miller Icehouse - for “drinking buddies”
Requirements for Segmentation

Identifiable
segments
Response Actionable
differences segments
Segmentation
Requirements

Stability Favorable
over time cost/benefit
Approaches to Segment Identification
CUSTOMER
IDENTIFIERS
RESPONSE
OF CUSTOMER
PROFILE
GROUPS

E Characteristics
E Use Situation

of People and
Organizations
E Buyers Needs
and Preferences

E Purchase
Behavior and
Loyalty
Segment Dimensions for Hotel Lodging Services
Illustrative Example: Gasoline Buyers

Higher-income, middle-aged men, drive 25-50000 miles a

Road year… buy premium with a credit card … purchase sandwiches 16% of
Warriors and drinks from the convenience store… will sometimes use buyers
carwash
Men and women with moderate to
True high incomes, loyal to a brand and
Blues 16% of
sometimes a particular station …
buyers
frequently buy premium, pay in cash
Generation Upwardly mobile men and women -
F3 (Fuel, half under 25 years of age -
27% of
Food & Fast) constantly on the go … drive a lot
buyers
snack heavily from the convenience store
Usually housewives who shuttle
Homebodies children around during the day and
21% of
use whatever gas station is based on
buyers
town or on route of travel

Price Not loyal to brand or station and 20% of

Shoppers rarely buy premium … frequently on buyers
tight budgets.
 Strategic market segmentation (8)

▪ Selecting the segmentation strategy

– Deciding how to segment
– Strategic analysis of market segments
▪ Customer analysis
▪ Competitor analysis
▪ Positioning analysis
▪ Estimating segment attractiveness
▪ Segmentation “fit” and implementation
Strategic Analysis of Market Segments

Customer
Analysis
Financial and Competitor
Market Analysis
Attractiveness

Positioning
Analysis
 Segmentation “Fit” for Implementation
Segment Attractiveness
and Internal Compatibility
Internal Compatibility
High Low

Attractive segments Attractive segments

High that match with but with poor match
company with company
capabilities capabilities
Market Segment
Attractiveness
Unattractive segments Unattractive segments
Low but with match to that do not match with
company company capabilities
capabilities
Thank You!