Chapter 10

Identifying Market Segments and Selecting Target Markets

2003 Prentice Hall, Inc.

Target Marketing
Target marketing requires marketers to

take three major steps:

Market segmentation: Identifying and profiling distinct groups of buyers who differ in their needs and preferences. Market targeting: Selecting one or more market segments to enter. Market positioning: Establishing and communicating the key distinctive benefit(s) of the companys market offering to each target.
2003 Prentice Hall, Inc.

Using Market Segmentation

Mass marketing is losing popularity Micro marketing can be undertaken at four

levels:
Segment marketing group share similar wants Niche marketing-dividing a segment into sub segment Local marketing-tailored to the needs of local customers Individual marketing-one to one marketing
2003 Prentice Hall, Inc.

Using Market Segmentation

Three patterns of preference segments are

typically identified:

Homogeneous preferences Diffused preferences Clustered preferences

2003 Prentice Hall, Inc.

Steps in Segmentation Process

1. Needs-based

4. Segment

segmentation 2. Segment identification 3. Segment attractiveness

profitability 5. Segment positioning 6. Segment acid test

7. Marketing-mix strategy
2003 Prentice Hall, Inc.

Using Market Segmentation

Useful market segments share certain

characteristics:
Measurable Substantial Accessible Differentiable Actionable

2003 Prentice Hall, Inc.

Segmenting Consumer Markets

Bases for Segmentation
Geographic
Demographic Psychographics

Nation or country
State or region City or metro size

Density
Climate

Behavioral

2003 Prentice Hall, Inc.

Segmenting Consumer Markets

Bases for Segmentation
Geographic
Demographic Psychographics
Age, race, gender
Income, education Family size Family life cycle Occupation Religion, nationality Generation Social class

Behavioral

2003 Prentice Hall, Inc.

Segmenting Consumer Markets

Bases for Segmentation
Geographic
Demographic Psychographics

Lifestyle Activities Interests Opinions

Personality Core values

Behavioral

2003 Prentice Hall, Inc.

Segmenting Consumer Markets

Bases for Segmentation
Geographic
Demographic Psychographics

Occasions
Benefits User status

Usage rate
Loyalty status Buyer-readiness

Behavioral

Attitude

2003 Prentice Hall, Inc.

Segmenting Consumer Markets

Multi-attribute segmentation (Geoclustering)

combines multiple variables to identify smaller, better-defined target groups Geoclustering system uses
demographic, geographic, lifestyle, and behavioral characteristics

2003 Prentice Hall, Inc.

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Segmenting Business Markets

Bases for Segmentation
Operating variables- technology,user/nonuser status Purchasing

Situational factorsurgency,size of order

Demographic variableindustry,company size

approachescriteria,policies

Personal

characteristicsloyalty,attitude towards risk

2003 Prentice Hall, Inc.

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Segmenting Business Markets

Rackman and Vincentis proposed a

segmentation scheme that classifies business buyers into three groups:

Price-oriented customers: best served via transactional selling Solution-oriented customers: best served by means of consultative selling Strategic-value customers: best served by means of enterprise selling
2003 Prentice Hall, Inc.

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Market Targeting Strategies

Five patterns of target market selection can then be considered.
Single-segment Product

concentration Selective specialization

specialization Market specialization Full market coverage

2003 Prentice Hall, Inc.

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