Segmentation and

Targeting
 Levels of Market
Segmentation
1. Segment marketing :
– Group of customers who share similar set of
needs and wants
– Flexible market offering (Naked solution and
discretionary options)
– Preference segments
• Homogeneous preferences
• Diffused preferences
• Clustered preferences
2. Niche marketing :
The characteristics of an attractive niche
is as follows –
a) They will pay premium to the firm that
best satisfies their needs.
b) Niche is not likely to attract new
competitors.
c) The nicher gains some economies
through specialization.
d) The niche has size, profit and potential
3. Local marketing :
– Marketing programs tailored to the needs and wants of local
customer groups

– It reflects the growing trend of ‘Grassroot marketing’.

– The large part of it forms experiential marketing (by

connecting the product with the unique and interesting
experiences).

– Idea is not to sell something but to demonstrate how a brand

can enrich a customer’s life.
4. Customerisation:

Operationally driven mass customisation

+
Customised marketing in way that
empowers consumers to design the product
and service offering of their choice.

Neither prior information about the

consumer is required nor firm needs to own
manufacturing.
 Bases of segmentation
• Geographic segmentation
• Demographic segmentation
– Age and life-cycle stages
– Life stage or psychological stages
– Gender
– Income
– Generation (cohorts)
– Social class
• Psychographic segmentation:
– Psychological/ personality traits
– Lifestyle
– Values
• Behavioral segmentation:
– Decision roles
– Behavioral variables
• Occasions
• Benefits
• User status (first time, non user, potential, ex-user)
• Usage rate
• Buyer-readiness stage
• Loyalty status
• Attitude
 Market Targeting
• Needs based market segmentation approach

• Effective segmentation criteria are:

– Measurable
– Substantial
– Accessible
– Differentiable
– Actionable
 Evaluating and selecting the
market segments
• Two factors should be considered:
– Segment’s overall attractiveness
– company’s objective and resources
• And some questions can be asked –
– How well does the potential segment score on the five
criteria?
– Does the segment have characteristics that makes it generally
attractive?
– Do the segment mesh with the company’s objectives?
 Five patterns of Target
selection
• Single – segment concentration (or a supersegment
which is a set of segments sharing some exploitable
similarity)

• Selective specialisation

• Product specialisation

• Market specialisation

• Full market coverage (differentiated or undifferentiated

marketing)