8

Identifying Market
Segments and Targets
 Chapter Questions
▪ What are the different levels of market
segmentation?
▪
How can a company divide a market into
segments?
▪ What are the requirements for effective
segmentation?
▪
How should business markets be
▪ segmented?
How should a company choose the most
attractive target markets?
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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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 What is a Market Segment?

A market segment consists of a group

of customers who share a similar set of
needs and
wants.

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 Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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 Geographic Segmentation

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 Claritas’
Prizm
▪ Education and affluence
▪ Family life cycle
▪ Urbanization
▪ Race and ethnicity
▪ Mobility

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 Demographic Segmentation
▪ Age and life cycle
▪ Life stage
▪ Gender
▪ Income
▪ Generation
▪ Social class
▪ Race and Culture

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 Age and Lifecycle Stage

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 Gender and Income

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 Generational Influences

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 Race and Culture

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 Psychographic Segmentation
and The VALS Framework

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 Behavioral Segmentation Based
on Needs and Benefits

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 Behavioral Segmentation:
Decision Roles

Initiator

Influencer

Decider

Buyer

User

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 Behavioral Segmentation:
Behavioral Variables
▪ Occasions
▪ Buyer-Readiness
▪ Loyalty Status
▪ Benefits
▪ Attitude
▪ User Status
▪ Usage
Rate

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 Figure 8.2 Example of a Brand Funnel

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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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 Segmenting for Business Markets

▪ Demographic
▪ Operating variable
▪ Purchasing approaches
▪ Situational factors
▪ Personal
characteristics

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 Steps in Segmentation Process
▪ Need-based segmentation
▪ Segment identification
▪ Segment attractiveness
▪ Segment profitability
▪ Segment positioning
▪ Segment acid test
▪ Market mix strategy

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 Effective Segmentation Criteria

▪ Measurable
▪ Substantial
▪ Accessible
▪ Differentiabl
▪ e Actionable

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 Porter’s 5 Forces Model

Threat of Rivalry

Threat of Buyer Threat of Supplier

Bargaining Power Bargaining
Power

Threat of Threat of
Substitutes New Entrants

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 Figure 8.4 Possible Levels
of Segmentation

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 For Review
▪ What are the different levels of market
segmentation?
▪
How can a company divide a market into
segments?
▪ What are the requirements for effective
segmentation?
▪
How should business markets be
▪ segmented?
How should a company choose the most
attractive target markets?
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 8-25