1. Fundamental Of
Marketing
MKT243
Chapter 4
Market Segmentation and
Targeting Market
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2. Segmenting and Targeting Market
Topic Outline
 Definition of segmenting
 Reasons for segmenting
 Criteria for Successful segmentation
 Market Targeting
 Differentiation and Positioning
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3. Market Segmentation
Market segmentation is the process that
companies use to divide large heterogeneous
markets into small markets that can be
reached more efficiently and effectively with
products and services that match their unique
needs (Kotler and Gary)
Market segmentation is the process of
dividing a market into meaningful, relatively
similar, and identifiable segments or groups
(McDaniel, Lamb, Hair)
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4. Market Segmentation
People or organizations with
People or organizations with
Market
Market needs or wants and the ability and
needs or wants and the ability and
willingness to buy
willingness to buy
A subgroup of people or organizations
A subgroup of people or organizations
Market
Market sharing one or more characteristics that
sharing one or more characteristics that
Segment
Segment cause them to have similar product
cause them to have similar product
needs.
needs.
The process of dividing a market into
The process of dividing a market into
Market
Market meaningful, relatively similar, identifiable
meaningful, relatively similar, identifiable
Segmentation
Segmentation segments or groups.
segments or groups.
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5. 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.
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6. The Importance of Market
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.
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7. Criteria for Successful
Segmentation
 Substantiality
 Identifiablyand measurability
 Accessibility
 Responsiveness
 Actionable
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8. Bases for segmenting Consumer Markets
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9. Market Segmentation
Segmenting Consumer Markets
 Geographic segmentation divides the market
into different geographical units such as
nations, regions, states, counties, or cities
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10. Market Segmentation
Segmenting Consumer Markets
Demographic segmentation
divides the market into
groups based on variables
such as age, gender, family
size, family life cycle,
income, occupation,
education, religion, race,
generation, and nationality
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11. Market Segmentation
(Demographic Segmentation)
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
Gender segmentation divides
the market based on sex
(male or female)
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12. Market Segmentation
(Demographic Segmentation)
Income segmentation divides the
market into affluent or low-income
consumers
Ethnic Segmentation divides the
market into races or ethnicity
Family Life-Cycle Segmentation
divides market based on stages
determined by a combination of age,
marital status, and the presence or
absence of children.
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13. Family Life Cycle
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14. Market Segmentation
Psychographic segmentation divides buyers into
different groups based on social class, lifestyle, or
personality traits
 The basis for Psychographic segmentation are as
follow:
1. Personality
-Reflects a person’s traits, attitudes and habits. According
to national survey by Roper, almost half of Americans
believe their cars match their personality.
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15. Cont…
2. Motives
-Marketers of baby products and life insurance appeal to consumers’
emotional motives-namely, to care for their loved ones
3. Lifestyles
-Divides people into groups according to the way they spend their time,
the importance of the things around them, their beliefs, and
socioeconomic characteristics such as income and education.
4. Geodemographic
-Segmenting potential customers into neighborhood lifestyles
categories
-It combines geographic and demographic and lifestyles
segmentations.
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16. 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
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17. Steps in Segmenting a Market
1 2 3 4 5 6
Select a Choose a Design,
Market basis or implement
Select Profile Select
or product bases for and maintain
segmentation and analyze target
Category segmenting appropriate
description segments market
For study the market marketing
mixes
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18. Market Targeting
Selecting Target Market Segments
 Target market consists of a set of buyers who
share common needs or characteristics that
the company decides to serve
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19. Strategies for Selecting Target
Markets
Undifferentiated Concentrated Multisegment
Strategy Strategy Strategy
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20. Undifferentiated Targeting
Strategy
Undifferentiated A marketing approach that
Undifferentiated
Targeting
Targeting views the market as one big
Strategy
Strategy market with no individual
segments and thus
requires a single
marketing mix.
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21. Concentrated Targeting Strategy
Concentrated A strategy used to select one
Concentrated
Targeting Strategy segment of a market for
Targeting Strategy
targeting marketing efforts.
Niche
One segment of a
market.
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22. Multisegment Targeting Strategy
Multisegment A strategy that chooses two or
Multisegment
Targeting
Targeting more well-defined market
Strategy
Strategy segments and develops a
distinct marketing
mix for each.
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23. Advantages and Disadvantages of
Target Marketing Strategies
Targeting Strategy Advantages Disadvantages
Undifferentiated Potential savings on Unimaginative product
production/ marketing offerings
costs
Company more
susceptible to
competition
Concentrated Concentration of Segments too small, or
resources changing
Can better meet the Large competitors may
needs of a narrowly more effectively market
defined segment to niche segment
Allows some small
firms to better compete
with large firms
Strong positioning
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24. Cont…
Targeting Strategy Advantages Disadvantages
Multisegment Greater financial Highcosts
success Cannibalization
Economies of scale in
producing/ marketing
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25. Marketing Targeting
Target Market Strategies
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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26. Market Targeting
Target Market Strategies
Local marketing involves tailoring brands
and promotion to the needs and wants of
local customer groups
 Cities
 Neighborhoods
 Stores
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27. Market Targeting
Target Market Strategies
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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28. Forces Influencing One-to-One
Marketing
More diverse society
More diverse society
More demanding,
More demanding,
time-poor consumers
time-poor consumers
Declining brand loyalty
Declining brand loyalty
Emergence of new
Emergence of new
media alternatives
media alternatives
Demand for
Demand for
marketing accountability
marketing accountability
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29. Positioning
 Def: Developing specific marketing mix to influence
potential customer’s over all perception of a brand,
product line, or organization in general
 Product position
The way the product is defined by consumers on
important attributes-the place the product occupies
in consumers’ minds relative to competing products
 Product differentiation
A positioning strategy that some firms use to
distinguish their products from those of competitors.
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30. Effective Positioning
1. Assess the positions occupied by
competing products
2. Determine the dimensions of these
positions
3. Choose an effective market position
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31. Perceptual Mapping
 A means of displaying or graphing in two or
more dimensions the location of products,
brands or groups of products in customers’
minds
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32. Perceptual Mapping
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33. Perceptual Mapping
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34. Positioning Bases
 Product Attributes/benefit
 Price and quality
 Use or application
 Product user
 Product class
 Competitor
 Emotion
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