Phillip Kevin Lane

Kotler Keller
Marketing Management
Identifying Market
Segments and Targets
Discussion Questions
1. What are the different levels of market
segmentation?
2. In what ways can a company divide a market
into segments?
3. What are the requirements for effective
segmentation?
4. How should business markets be segmented?
5. How should a company choose the most
attractive target markets?
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 Target Marketing Requirements
1. Identify and profile distinct groups of
buyers who differ in their needs and
preferences (market segmentation).

2. Select one or more market segments to

enter (market targeting).

3. Establish and communicate the

distinctive benefits of the market
offering (market positioning).

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Four levels of Micromarketing

Segments Niches

Local areas Individuals

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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 ad wants.

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 Micromarketing is the practice of tailoring
products and marketing programs to suit the
tastes of specific individuals and locations
Local marketing
Individual marketing

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 Local marketing involves tailoring brands and
promotion to the needs and wants of local
customer groups
Cities
Neighborhoods
Stores

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 Individual marketing involves tailoring products and
marketing programs to the needs and preferences of
individual customers
Also known as:
One-to-one marketing
Mass customization
Markets-of-one marketing

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Flexible Marketing Offerings

Naked solution: Discretionary options:

Product and service Some segment
elements that all members value options
segment members but not all
value

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Preference Segments

Homogeneous preferences exist when

consumers want the same things
Diffused preferences exist when consumers
want very different things
Clustered preferences reveal natural
segments from groups with shared
preferences

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The Long Tail

Chris Anderson explains the long tail

equation:
The lower the cost of distribution, the more
you can economically offer without having to
predict demand;
The more you can offer, the greater the chance
that you will be able to tap latent demand for
minority tastes; and
Aggregate enough minority taste, and you may
find a new market.

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What is Customerization?

Customerization combines operationally driven

mass customization with customized marketing
in a way that empowers consumers to design the
product and service offering of their choice.
Bases for Segmenting Consumers

Geographic

Demographic

Psychographic Behavioral
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Geographic Segmentation

Geographic segmentation
divides the market into
different geographical units
such as nations, regions,
states, counties, or cities

Geoclustering

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Demographic Segmentation

Age and life cycle

Life stage
Gender
Income
Generation
Race and culture
Social class

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Age and Life-Cycle Stage

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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

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 LIFE STAGE

Life stage defines a persons major concern, such as going

through a divorce, going into a second marriage, taking
care of an older parent, deciding to live together with
another person, deciding to buy a new home, and so on.
These life stages present opportunities for marketers who
can help people cope with their major concerns..

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Life Stage

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Gender
Gender segmentation divides the
market based on sex (male or
female)
Women:
Influence 80% of consumer purchases
Make 75% of new home decisions
Purchase 60% of cars

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Income

Income segmentation divides the market

into affluent or low-income consumers

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Generation

Gen X (1965-1976)
Baby Boomers (1946-1964)

Millennials (Gen Y) (1977-2000

-78 Million people
-$187 annual spending power

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The Companys Macroenvironment
Demographic Environment
Changing age structure of the population
Baby boomers include people born between
1946 and 1964
Most affluent Americans
The Companys Macroenvironment
Demographic Environment
Generation X includes people born
between 1965 and 1976
High parental divorce rates
Cautious economic outlook
Less materialistic
Family comes first
The Companys Macroenvironment
Demographic Environment
Millennials (gen Y or echo boomers) include
those born between 1977 and 2000
Comfortable with technology
Includes
Tweens (ages 812)
Teens (1319)
Young adults (20s)
Race and Culture

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 Psychographic Segmentation
Psychographic segmentation divides
buyers into different groups based on
social class, lifestyle, or personality
traits

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Personality traits
Lifestyle
Values

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Behavioral Segmentation
Usage occasions
Initiator
User status
User Influencer
Usage rate

Buyer-readiness
Buyer Decider Loyalty status
Decision Roles User and Usage

Needs and Benefits

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 Market Segmentation

Segmenting Consumer Markets

Behavioral segmentation
divides buyers into groups
based on their knowledge,
attitudes, uses, or responses
to a product
Occasions
Benefits sought
User status
Usage rate
Loyalty status
Consumer Attitudes

Enthusiastic Positive Indifferent Negative Hostile

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Claritas Prizm

Education and affluence

Family life cycle
Urbanization
Race and ethnicity

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The Brand Funnel Illustrates Variations in the
Buyer-Readiness Stage

Aware
Ever tried
Recent trial
Occasional user
Regular user
Most often used

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Loyalty Status

Hard-core

Split loyals

Shifting loyals

Switchers

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Hard-core loyals Consumers who buy only one
brand all the time
Split loyals Consumers who are loyal to two or
three brands
Shifting loyals Consumers who shift loyalty from
one brand to another
Switchers Consumers who show no loyalty to
any brand

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Segmenting for Business Markets

Geographic
Type of Industry
Size
Purchasing approaches
Organization Structure
Personal characteristics

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