Consumer Behavior, Eighth Edition SCHIFFMAN & KANUK

Chapter 3
Market Segmentation

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Market Segmentation

The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

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Three Phases of Marketing Strategy

Phase 1: Market Segmentation Phase 2: Target Market and Marketing Mix Selection Phase 3: Product/Brand Positioning

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Table 3.1: Sodexhos Segmentation of College-age Eating Patterns

Star Gazers Light, healthy foods Price insensitive Brand conscious Employed full-time over summer Active, out-going Family income > 100,000
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Fun Express Variety, taste, and nutrition Price conscious Work part-time over summer Value leisure time Family income $30,000 - 60,000

Best Customer Segmentation

High High Consumption Current Share Low

HiHighs (stroke) HiLows (tickle)

LowHighs (chase) LoLows (starve)

Low

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Segmentation Studies
Designed to discover the needs and wants of specific groups of consumers in order to develop specialized products to satisfy specific group needs (e.g., Centrum) Designed to guide the repositioning of a product (e.g., Nintendo) Used to identify the most appropriate media for advertising (e.g., People and Teen People)
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Bases for Segmentation

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Geographic Segmentation Demographic Segmentation Psychological Segmentation Psychographic Segmentation Sociocultural Segmentation Use-Related Segmentation Usage-Situation Segmentation Benefit Segmentation Hybrid Segmentation Approaches

Table 3.2 Market Segmentation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Region Southwest, Mountain States, Alaska, Hawaii City Size Major metropolitan areas, small cities, towns Density of area Urban, suburban, exurban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Occupation Professional, blue-collar, white-collar, agricultural, military
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Table 3.2, continued

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, low dogmatics Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude Psychographic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers Sociocultural Segmentation Cultures American, Italian, Chinese, Mexican, French, Pakistani Religion Catholic, Protestant, Jewish, Moslem, other Subcultures (Race/ethnic) African-American, Caucasian, Asian, Hispanic Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters
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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Usage rate Heavy users, medium users, light users, non users Awareness status Unaware, aware, interested, enthusiastic Brand loyalty None, some, strong Use-Situation Segmentation Time Leisure, work, rush, morning, night Objective Personal, gift, snack, fun, achievement Location Home, work, friends home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money Hybrid Segmentation Demographic/ Combination of demographic and psychographic profiles Psychographics of consumer segments profiles Geodemographics Money and Brains, Black Enterprise, Old Yankee Rows, Downtown Dixie-Style SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler
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Geographic Segmentation

The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city).

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Demographic Segmentation
Age Sex Marital Status Income, Education, and Occupation

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Age: Segmentation by Age Effects and Cohort Effects

Seven Life Development Stages (Table 3.3)
Provisional Adulthood
Pulling up roots

First Adulthood
Reaching out, Questions/questions, Mid-life explosion

Second Adulthood
Settling Down, Mellowing, Retirement

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Marital Status
Households as a consuming unit
Singles Divorced Single parents Dual-income married

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Psychological Segmentation
Motivations Personality Perceptions Learning Attitudes

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AIOs

Psychographic (lifestyle) variables that focus on activities, interests, and opinions.

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Table 3.7 A Hypothetical Psychographic Profile of the Techno-Road-Warrior

Sends and/or receives 15 or more e-mail messages a week Regularly visits Web sites to gather information and/or to comparison shop Often buys personal items via 800 numbers and/or over the Internet May trade stocks and/or make travel reservations over the Internet Earns $100,000 or more a year
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Sociocultural Segmentation
Family Life Cycle Social Class Culture, Subculture, and Cross-Culture

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Family Life Cycle

Phases a family goes through in their formation, growth, and final dissolution
Bachelorhood Honeymooners Parenthood Post-parenthood Dissolution

Explicit basis: marital status, family status Implicit basis: age, income, employment
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Use-Related Segmentation
Rate of Usage
Heavy vs. Light

Awareness Status
Aware vs. Unaware

Brand Loyalty
Brand Loyal vs. Brand Switchers

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Usage-Situation Segmentation
Segmenting on the basis of special occasions or situations Example Statements:
Whenever our daughter, Jamie, gets a raise, we always take her out to dinner. When Im away on business, I try to stay at a suites hotel. I always buy my wife flowers on Valentines Day.
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Benefit Segmentation
Segmenting on the basis of the most important and meaningful benefit Prudential - financial security Iomega - data protection Wheaties - good health Eclipse - fresh breath

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Hybrid Segmentation Approaches

Psychographic-Demographic Profiles Geodemographic Segmentation SRI Consultings Values and Lifestyle System (VALSTM)

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Table 3.8 Demographic-Psychographic Profile of Newsweek

Total adult readers 19,593,000 Men Professionals/ Managers Age 35-49 Household income >$100,000 Married Own laptop PC Spent $3000+ on vacation last year % Index

100.0 55.9 35.3 36.5 25.1 62.4 12.0 12.3

100 117 174 114 172 109 150 164

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Table 3.9 Demographic-Psychographic Internet Shopping Styles

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E-bivalent Newbies Time-Sensitive Materialists Clicks & Mortar Hooked, Online, & Single Hunter-Gatherers Brand Loyalists

Table 3.10 Sample Claritas Geodemographic Clusters

Blue Blood Estates Young Influentials .8% of U.S. households 1.1% of U.S. households Professional Professional Elite super-rich College graduate College graduate Under 24, 25-34 35-44, 45-54, 55-64 Country club members, Yuppies, drink imported beer, read own mutual phones, fashion magazines play golf
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Figure 3.8 VALS

ACTUALIZERS

High Resources

Principle Oriented Status Oriented Action Oriented

FULFILLEDS

ACHIEVERS EXPERIENCERS

BELIEVERS

STRIVERS

MAKERS

STRUGGLERS 3-27

Low Resources

Figure 3.9 VALS 2 Segments and Participation in Selected Sports

Percent of adults in each VALS 2 type who participated in selected sports in 1995.

Actualizers Experiencers Achievers Makers Fulfilleds Strivers Believers Strugglers

0 2 4 6 8 10 12 14

Mountain/rock climbing

Jet skiing/wave running/water biking

Inline skating

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Table 3.11 Size of VALS Segment as Percent of U.S. Population

VALSTM SEGMENT Actualizer Fulfilled Believer Achiever Striver Experiencer Maker Struggler
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PERCENT OF POPULATION 11.7% 10.5 17.0 14.7 11.8 12.9 12.0 9.5

Mindbase Segmentation
Monitor Mindbase based on Yankelovichs Monitor Survey of American Values and Attitudes Table 3.12

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Table 3.12 Eight Major Mindbase Segments

Up and Comers Young Materialists Stressed by Life New Traditionalists Family Limited Detached Introverts Renaissance Elders Retired from Life

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Criteria For Effective Targeting of Market Segments

Identification Sufficiency Stability Accessibility

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