This document discusses market segmentation and targeting markets. It defines market segmentation as dividing a market into meaningful, relatively similar, identifiable segments. There are various bases for segmentation including demographics, benefits sought, usage rates, and psychographics. The key aspects of segmentation are that segments must be substantial, identifiable, measurable, accessible, and responsive to marketing efforts. The document outlines different segmentation strategies and discusses how market segmentation allows companies to better meet customer needs through tailored marketing mixes.

1. 11
Segmenting andSegmenting and
Targeting MarketsTargeting Markets

2. 22
Market SegmentationMarket Segmentation
MarketMarket
Market
Segment
Market
Segment
Market
Segmentation
Market
Segmentation
People or organizations with
needs or wants and the ability and
willingness to buy
People or organizations with
needs or wants and the ability and
willingness to buy
A subgroup of people or
organizations sharing one or more
characteristics that cause them to
have similar product needs.
A subgroup of people or
organizations sharing one or more
characteristics that cause them to
have similar product needs.
The process of dividing a market
into meaningful, relatively similar,
identifiable segments or groups.
The process of dividing a market
into meaningful, relatively similar,
identifiable segments or groups.

3. 33
A Market is...A Market is...
(1) people or organizations with
(2) needs or wants, and with
(3) the ability and
(4) the willingness to buy.
A group of people that lacks any one of
these characteristics is NOT a market.

4. 44
The Importance ofThe Importance of
Market SegmentationMarket Segmentation
 Markets have a variety of product
needs and preferences
 Marketers can better define
customer needs
 Decision makers can define objectives
and allocate resources more accurately

5. 55
Criteria for SegmentationCriteria for Segmentation
SubstantialitySubstantialitySubstantialitySubstantiality
IdentifiabilityIdentifiability
MeasurabilityMeasurability
IdentifiabilityIdentifiability
MeasurabilityMeasurability
AccessibilityAccessibilityAccessibilityAccessibility
ResponsivenessResponsivenessResponsivenessResponsiveness
Segment must be large
enough to warrant a special
marketing mix.
Segment must be large
enough to warrant a special
marketing mix.
Segments must be identifiable
and their size measurable.
Segments must be identifiable
and their size measurable.
Members of targeted segments
must be reachable with
marketing mix.
Members of targeted segments
must be reachable with
marketing mix.
Unless segment responds to a
marketing mix differently, no
separate treatment is needed.
Unless segment responds to a
marketing mix differently, no
separate treatment is needed.

6. 66
Segmentation BasesSegmentation Bases
Characteristics of individuals,Characteristics of individuals,
groups,groups,
or organizations usedor organizations used
to divide a total marketto divide a total market
into segments.into segments.
(variables)(variables)

7. 77
Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography

8. 88
Geographic SegmentationGeographic Segmentation
Segmenting markets bySegmenting markets by
 region of the country/worldregion of the country/world
 market sizemarket size
 market densitymarket density
 climateclimate

9. 99
Benefits of RegionalBenefits of Regional
SegmentationSegmentation
 New ways to generate sales in sluggishNew ways to generate sales in sluggish
and competitive marketsand competitive markets
 Scanner/POS data allow assessment ofScanner/POS data allow assessment of
best selling brands in regionbest selling brands in region
 Regional brands appeal to localRegional brands appeal to local
preferencespreferences
 React more quickly to competitionReact more quickly to competition

10. 1010
Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography

11. 1111
Demographic SegmentationDemographic Segmentation
Segmenting marketsSegmenting markets
by age, gender, income,by age, gender, income,
ethnic background,ethnic background,
and family life cycleand family life cycle

12. 1212
Bases forBases for
Demographic SegmentationDemographic Segmentation
 AgeAge
 GenderGender
 IncomeIncome
 Ethnic backgroundEthnic background
 Family Life CycleFamily Life Cycle

13. 1313
Family Life CycleFamily Life Cycle
AgeAge
MaritalMarital
StatusStatus
ChildrenChildren

14. 1414
Family Life CycleFamily Life Cycle

15. 1515
Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography

16. 1616
Psychographic SegmentationPsychographic Segmentation
Market segmentation onMarket segmentation on
the basis of personality,the basis of personality,
motives, lifestyles, andmotives, lifestyles, and
geodemographics.geodemographics.

17. 1717
Bases forBases for
Psychographic SegmentationPsychographic Segmentation
PsychographicPsychographic
SegmentationSegmentation
PsychographicPsychographic
SegmentationSegmentation
PersonalityPersonality
MotivesMotives
LifestylesLifestyles
GeodemographicsGeodemographics

18. 1818
Lifestyle SegmentationLifestyle Segmentation
 How time is spentHow time is spent
 Importance of thingsImportance of things
around themaround them
 BeliefsBeliefs
 SocioeconomicSocioeconomic
characteristicscharacteristics

19. 1919
Geodemographic SegmentationGeodemographic Segmentation
Segmenting potentialSegmenting potential
customers into neighborhoodcustomers into neighborhood
lifestyle categories.lifestyle categories.
Combines geographic,Combines geographic,
demographic, and lifestyledemographic, and lifestyle
segmentation.segmentation.

20. 2020
Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography

21. 2121
Benefit SegmentationBenefit Segmentation
The process of groupingThe process of grouping
customers into marketcustomers into market
segments according tosegments according to
thethe benefits they seekbenefits they seek
from the product.from the product.

22. 2222
Bases for SegmentationBases for Segmentation
Usage RateUsage Rate
Benefits SoughtBenefits Sought
PsychographicsPsychographics
DemographicsDemographics
GeographyGeography

23. 2323
Usage-Rate SegmentationUsage-Rate Segmentation
Dividing a market by theDividing a market by the
amountamount of productof product
bought or consumed.bought or consumed.

24. 2424
The 80/20 PrincipleThe 80/20 Principle
A principle holding thatA principle holding that
20 percent of all customers20 percent of all customers
generate 80 percentgenerate 80 percent
of the demand.of the demand.
TargetTarget
customerscustomers
20%20%Share ofShare of
customerscustomers
TargetTarget
customerscustomers
80%80%
Share ofShare of
salessales

25. 2525
Business Marketing SegmentationBusiness Marketing Segmentation
Four segments of business markets:Four segments of business markets:
 Producers / manufacturersProducers / manufacturers
 ResellersResellers
 GovernmentsGovernments
 InstitutionsInstitutions

26. 2626
Steps in Segmenting a MarketSteps in Segmenting a Market
Select
a
market
for
study
Choose
bases
for
segmen
-tation
Select
descri
p-tors
Profile
and
analyze
segment
s
Select
target
markets
Design,
imple-
ment,
maintain
mktging
mix

27. 2727
Target MarketTarget Market
A group of people orA group of people or
organizations for which anorganizations for which an
organization designs,organization designs,
implements, and maintains aimplements, and maintains a
marketing mix intended tomarketing mix intended to
meet the needs of that group,meet the needs of that group,
resulting in mutually satisfyingresulting in mutually satisfying
exchanges.exchanges.

28. 2828
UndifferentiatedUndifferentiated
Targeting StrategyTargeting Strategy
Marketing approach thatMarketing approach that
views the market as one bigviews the market as one big
market with no individualmarket with no individual
segments and thus requires asegments and thus requires a
single marketing mix.single marketing mix.

29. 2929
UndifferentiatedUndifferentiated
Targeting StrategyTargeting Strategy
AdvantagesAdvantages:
 Potential savings on
production and marketing
costs
DisadvantagesDisadvantages:
 Unimaginative product
offerings
 Company more
susceptible to competition

30. 3030
Concentrated Targeting StrategyConcentrated Targeting Strategy
A strategy used to select oneA strategy used to select one
segment of a market (asegment of a market (a
nicheniche) for targeting marketing) for targeting marketing
efforts.efforts.

31. 3131
Concentrated Targeting StrategyConcentrated Targeting Strategy
AdvantagesAdvantages:
 Concentration of resources
 Meets narrowly defined
segment
 Small firms can compete
 Strong positioning
DisadvantagesDisadvantages:
 Segments too small, or
changing
 Large competitors may
market to niche segment

32. 3232
CannibalizationCannibalization
Situation that occurs whenSituation that occurs when
sales of a new productsales of a new product
cut into sales of acut into sales of a
firm’s existing products.firm’s existing products.

33. 3333
PositionPosition
The place a product, brand,The place a product, brand,
or group of products occupiesor group of products occupies
in consumers’ minds relativein consumers’ minds relative
to competing offerings.to competing offerings.

34. 3434
PositioningPositioning
Developing a specificDeveloping a specific
marketing mix to influencemarketing mix to influence
potential customers’ overallpotential customers’ overall
perception of a brand, productperception of a brand, product
line, or organization inline, or organization in
general.general.

35. 3535
Product DifferentiationProduct Differentiation
A positioning strategy thatA positioning strategy that
some firms use to distinguishsome firms use to distinguish
their products from those oftheir products from those of
competitors.competitors.

36. 3636
Perceptual MappingPerceptual Mapping
A means of displaying orA means of displaying or
graphing, in two or moregraphing, in two or more
dimensions, the location ofdimensions, the location of
products, brands, or groups ofproducts, brands, or groups of
products in customers’ minds.products in customers’ minds.

37. 3737
Perceptual Map and PositioningPerceptual Map and Positioning
Strategy for Levi Strauss ProductsStrategy for Levi Strauss Products

38. 3838
RepositioningRepositioning
Changing consumers’Changing consumers’
perceptions of a brandperceptions of a brand
in relation toin relation to
competing brands.competing brands.