Market Segmentation & Targeting

In this chapter, you will learn about

1. What is a Market? 2. Market Segmentation 1. Benefits of Market Segmentation 2. Bases for Market Segmentation 3. Requirements for Effective Segmentation 4. Market Targeting 5. Targeting Patterns

A Market Consists of.

Prospective buyers willing and able to purchase the existing or potential offering of an organization

Meaning of Market Segmentation

Dividing a diverse/hetrogenous market into a number of smaller but more similar sub markets called Market Segments

Benefits of Market segmentation

Effective use of resources Gain a focus Create Value for a target market Better Customer satisfaction level.

Market Segmentation
Bases of Market segmentation
Geographic
Nations, states, regions or cities

Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioural
Occasions, benefits sought, user status, usage rate, loyalty

Geographic Segmentation
Divide markets into different geographic units. Examples:
World Region or Country: North America, Western Europe, European Union, Pacific Rim, Mexico, etc. Country Region: Pacific, Mountain, East Coast, etc. City or Metro Size: New York, San Francisco Population Density: rural, suburban, urban Climate: northern, southern, tropical, semitropical

Demographic Segmentation
Dividing the market into groups based on variables such as: Age Gender Family size or life cycle Income Occupation Education Religion Race Generation Nationality
2003 Pearson Education, 8 Upper Saddle River, NJ 07458

Marketing for Hospitality and Tourism, 3e Inc. Philip Kotler, John Bowen, James Makens

Examples: No segmentation

Example 1: Segmented by Gender

Example 2:Segmented by age

Behavioral Segmentation
Dividing the market into groups based on variables such as: Occasions Benefits User status Usage rate Loyalty status Readiness stage Attitude toward product
Marketing for Hospitality and Tourism, 3e Inc. Philip Kotler, John Bowen, James Makens 2003 Pearson Education, 12 Upper Saddle River, NJ 07458

Psychographic Segmentation
Psychographic segmentation divides a market into different groups based on social class, lifestyle, or personality characteristics.
People in the same demographic classification often have very different lifestyles and

Requirements of effective segmentation

Measurable Measurable Accessible Accessible
Size, purchasing power, profiles of segments can be measured. Segments can be effectively reached and served.

Substantial Substantial

Segments are large or profitable enough to serve.

Differential Differential

Segments must respond differently to different marketing mix elements & programs. Effective programs can be designed to attract and serve the segments.

Actionable Actionable

Evaluating Market Segments

Segment size and growth Segment structural attractiveness Company objectives and resources

Marketing for Hospitality and Tourism, 3e 2003 Pearson Education, Inc. Philip Kotler, John Bowen,

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Meaning of Target Market

A Market segment that a company chooses to serve by designing a specific marketing-mix is called Target Market

Targeting Segments - Overview

Step 1. Market Segmentation

Levels of Market Segmentation
Same product to all consumers Same product to all consumers (no segmentation) (no segmentation) Different products to one or more segments Different products to one or more segments (some segmentation) (some segmentation) Different products to subgroups within segments Different products to subgroups within segments (more segmentation) (more segmentation) Products to suit the tastes of individuals and locations Products to suit the tastes of individuals and locations (complete segmentation) (complete segmentation)

Mass Marketing Mass Marketing

Segment Marketing Segment Marketing Niche Marketing Niche Marketing Micromarketing Micromarketing

Local Marketing
Tailoring brands/ promotions to local customer groups

Individual Marketing
Tailoring products/ programs to individual customers

Company Company Marketing Marketing Mix Mix

A. Undifferentiated Marketing

Market Market

Company Company Marketing Mix 1 Marketing Mix 1 Company Company Marketing Mix 2 Marketing Mix 2 Company Company Marketing Mix 3 Marketing Mix 3

Segment 1 Segment 1 Segment 2 Segment 2 Segment 3 Segment 3

B. Differentiated Marketing

Company Company Marketing Marketing Mix Mix

C. Concentrated Marketing

Segment 1 Segment 1 Segment 2 Segment 2 Segment 3 Segment 3

Patterns of Target Market Selection: Product x Market Matrices