8

Identifying
Market Segments
and Targets

Marketing Management, 13th ed

 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?

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-2

 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

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-3

 Four levels of Micromarketing
Segmentssimilar needs and wants
Niches--sub-segments with a distinctive
mix of benefits
Local areasmarketing programs
tailored to the needs and wants of local
customer groups in trading areas,
neighborhoods, even individual stores
Individualssegments of one (i.e.,
one-to-one marketing)
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-4
 What is a Market Segment?

A market segment consists of a

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

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-5

 Fords Model T Followed a Mass Market Approach

8-6
 Niche Marketers

Enterprise Rent-a-Car
targets the insurance-
replacement market

8-7
 Toyota Scion targets Gen Y
consumers

8-8
 Flexible Marketing Offerings

Naked solution: Discretionary

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

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-9

 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

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-10

 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.

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-11

Examples of Market
Customization

8-12
 Segmenting Consumer Markets
Geographicnations, states, regions,
countries, cities, neighborhoods
Demographicage, life-cycle stage,
gender, income, generation, social class
Psychographic--psychological/personality
Behavioral--knowledge of, attitude toward,
use of, or response to a product

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-13

 Demographic Segmentation
Age and Life Cyclecustomer wants and
abilities change with age.
Life stagea persons major concern (e.g.,
divorce, 2nd marriage, buying new home)
Gendermale and female
Incomeupper, middle, lower
Social classoccupation, education, type
and location of housing
Generation

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-14

 Profiling American Generations

GI Generationfinancial Generation Xcynical,

security more alienated and
1901-1924 individualistic
Silent Generation 1965-1977
trusting conformists who Generation Yedgy,
value stability urban style, more
1925-1945 idealistic than Gen X
Baby Boomers 1978-1994
acquisitors, value and Millenialsmulticultural,
cause driven tech savvy, educated,
1946-1964 affluent society, big
spending power
1995-2002
8-15
 Mature
consumers
are a rapidly
growing market

8-16
 Behavioral Segmentation
Decision Roles Behavioral Variables
Occasionstime of day, week,
Initiatorrequest month, year
order Benefitsthe customer seek
Influencerhelp write User Statusnonusers, ex-
specifications users, potential users, 1st time
users, regular users
Deciderpower to Usage Ratelight, medium,
select or approve the heavy
supplier Buyer-Readinessto buy a
Buyerpurchasing product
manger Loyalty Statushard core,
split, shifting, switchers
Userproduction Attitudeenthusiastic, positive,
workers or their indifferent, negative, hostile
supervisors

8-17
 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-corebuy only one brand all of

the time
Split loyalsloyal to two or three
brands
Shifting loyalsshift loyalty from one
brand to another
Switchersshow no loyalty to any
brand
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-19
 Segmenting for Business Markets

Demographicindustry, company size, location

Operating variable--technology, user or non-
user statusheavy, medium, light, customer
capabilities
Purchasing approaches--functions, power
structure, existing relationships, policies, criteria
Situational factors--urgency, specific
applications, order size
Personal characteristicsbuyer-seller
similarity, attitudes toward risk, loyalty
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-20