7

Identifying
Market Segments
and Targets

Chapter Questions

What are the different levels of market

segmentation?
How can a company divide a market into
segments?
What are the requirements for effective
segmentation?
How should business markets be segmented?
How should a company choose the most
attractive target markets?
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United States edition of Marketing Management, 14e.

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Effective Targeting Requires

Marketers to:

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

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What Is a Market Segment?

A market segment consists of a
group of customers who share a
similar set of needs and wants.

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Segmenting Consumer Markets

Geographic
Demographic
Psychographic
Behavioral

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Geographic Segmentation
Geographic segmentation divides the market
into geographical units such as nations,
states, regions, counties, cities, or
neighborhoods. The company can operate in
one or a few areas, or it can operate in all
but pay attention to local variations.

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7-6

SEC Rural Consumers

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United States edition of Marketing Management, 14e.

7-7

Demographic Segmentation

Age and life cycle

Life stage
Gender
Income
Generation
Social class
Race and Culture

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7-8

Age and Lifecycle Stage

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United States edition of Marketing Management, 14e.

7-9

Gender and Income

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SEC Classification: Urban Markets

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United States edition of Marketing Management, 14e.

7-11

Psychographic Segmentation
and The VALS Framework

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7-12

Behavioral Segmentation Based

on Needs and Benefits
Needs

and Benefits
Decision Roles
User and Usage

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the
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7-13

Behavioral Segmentation:
Decision Roles
Initiator
Influencer
Decider
Buyer
User
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7-14

Behavioral Segmentation:
Behavioral Variables

Occasions
Benefits
User Status
Usage Rate

Buyer-Readiness
Loyalty Status
Attitude

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United States edition of Marketing Management, 14e.

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Figure 7.2 Example of a Brand Funnel

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United States edition of Marketing Management, 14e.

7-16

Loyalty Status

Hard-core
Split loyals
Shifting loyals
Switchers

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the
United States edition of Marketing Management, 14e.

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Figure 7.3 Behavioral

Segmentation Breakdown

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United States edition of Marketing Management, 14e.

7-18

Segmenting for Business Markets

Demographic
Operating variable
Purchasing approaches
Situational factors
Personal characteristics

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7-19

Steps in Segmentation Process

Need-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test
Market mix strategy

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7-20

Effective Segmentation Criteria

Measurable
Substantial
Accessible
Differentiable
Actionable

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Porters Five Forces Model

Threat of Rivalry
Threat of Buyer
Bargaining Power

Threat of Supplier
Bargaining Power

Threat of
Substitutes

Threat of
New Entrants

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the
United States edition of Marketing Management, 14e.

7-22

Figure 7.4 Possible Levels

of Segmentation

Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the
United States edition of Marketing Management, 14e.

7-23

For Review

What are the different levels of market

segmentation?
How can a company divide a market into
segments?
What are the requirements for effective
segmentation?
How should business markets be segmented?
How should a company choose the most
attractive target markets?
Copyright 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the
United States edition of Marketing Management, 14e.

7-24