8

Identifying
Market Segments
and Targets

Marketing Management, 13th ed

 Topic Outline

A. Market Segmentation

B. Market Targeting

C. Differentiation and Positioning

 A. Market Segmentation

Market segmentation is the process that

companies use to divide large heterogeneous
markets into small markets that can be reached
more efficiently and effectively with products
and services that match their unique needs
Market Segmentation
 Market Segmentation

• Segmenting consumer markets

• Segmenting business markets
• Segmenting international markets
• Requirements for effective
segmentation
 Market Segmentation
Segmenting Consumer Markets

1. Geographic 2. Demographic
segmentation segmentation

3. Psychographic 4. Behavioral
segmentation segmentation
 1. Geographic segmentation

• Geographic segmentation divides the market

into different geographical units such as
nations, regions, states, counties, or cities
 2. Demographic segmentation

Demographic segmentation divides the market

into groups based on variables such as age,
gender, family size, family life cycle, income,
occupation, education, religion, race, generation,
and nationality

a. Age and life-cycle stage segmentation

b. Gender segmentation
c. Income segmentation
a. Age and life-cycle stage segmentation is the
process of offering different products or using
different marketing approaches for different
age and life-cycle groups

b. Gender segmentation divides the market based

on sex (male or female)

c. Income segmentation divides the market into

affluent or low-income consumers
 3. Psychographic segmentation

Psychographic segmentation divides buyers into

different groups based on social class, lifestyle,
or personality traits
 4. Behavioral segmentation
Behavioral segmentation divides buyers into
groups based on their knowledge, attitudes,
uses, or responses to a product

a. Occasions
b. Benefits sought
c. User status
d. Usage rate
e. Loyalty status
 Behavioral Variables
a. Occasions — time of day, week, month, year

b. Benefits sought — the customer seek

c. User Status — nonusers, ex-users, potential users, 1st

time users, regular users

d. Usage Rate — light, medium, heavy

e. Loyalty Status — hard core, split, shifting, switchers

8-12
 Loyalty Status

• Hard-core —buy only one brand all of the

time
• Split loyals —loyal to two or three brands
• Shifting loyals — shift loyalty from one
brand to another
• Switchers — show no loyalty to any brand
 Segmenting Business Markets

Intermarket segmentation divides consumers

into groups with similar needs and buying
behaviors even though they are located in
different countries
Basic Market Preference Patterns

8-15
 Effective Segmentation Criteria

Measurable—purchasing power, size

Substantial—large enough to be
profitable
Accessible—can be effectively
reached
Differentiable—distinguishable
with MarkMix
Actionable—attracting and
serving the segment

8-16
 Market Segmentation
Requirements for Effective Segmentation

Measurable • Size,
purchasing power, profiles
of segments can be measured.

Accessible • Segments must be effectively

reached and served.

Substantial • Segments must be large or profitable

enough to serve.

• Segments must respond differently to

Differential different marketing mix elements &
actions.

Actionable • Must be able to attract and serve the

segments.
 Market Segmentation
Requirements for Effective Segmentation

Measurable e.g. Targeting left handed people is not

measurable

Accessible e.g. A company targets …………………………

Substantial e.g. An automobile company develops cars for

people whose height is only 4 feet

e.g. Perfume company targets married &

Differential unmarried women

Actionable e.g. One small airline company targets 7 large

markets
 Patterns of Target Market Selection

8-19
 Patterns of Target Market Selection

8-20
 Patterns of Target Market Selection

8-21
 Differentiation and Positioning

Product position is the way the product is

defined by consumers on important
attributes—the place the product occupies in
consumers’ minds relative to competing
products

• Perceptions
• Impressions
• Feelings
 Differentiation and Positioning
Selecting an Overall Positioning Strategy

Value proposition
is the full mix of
benefits upon
which a brand is
positioned