1. Market Segmentation
and Target Markets
chapter 7
Harcourt, Inc.

2. Objectives
s Understand the concepts: market,
segmentation, and target markets
s Learn the advantages and
disadvantages of target marketing
s Explain the steps in target market
selection
Dr. Rosenbloom

3. Objectives
s Discuss segmentation criteria,
strategies, bases, and information
sources
s Understand market profiling and
positioning strategies
s Discuss differences for business and
international marketing
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4. What is a market?
s Individuals or organizations
who:
s Are willing, able, and capable of
purchasing a firm’s product
s Segmentation is critical because
demand is often heterogeneous
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5. What is market segmentation?
s Market Segmentation
s Process of dividing a large
market into smaller target
markets, or customer groups
with similar needs and/or
desires
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6. Market Segmentation
Mass
Market
Niche Micro-
marketing The
Individual
entation Size
f Market Segm
Continuum o Personal-
Micro- ization
Standardized Niche marketing
Marketing
Mix Dr. Rosenbloom

7. Target Marketing
s Advantages
s Easier analysis of potential and actual
consumers
s Tailoring of products to market
s Assessment of demand potential
s Identify competing products
s Increased sales effectiveness and cost
efficiencies
s Product positioning and easy identification
of opportunities
Dr. Rosenbloom

8. Target Marketing
s Disadvantages
s Increased marketing costs
s Personalization can become
burdensome to manage
s Faux segmentation may be viewed
cynically
s Narrow segmentation can impact
brand loyalty
s Ethics and stereotyping issues
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9. Target Market Selection
Identify Total Market
Determine Need for
Segmentation
Determine Bases for
Segmentation
Assess Potential Profitability
Profile Each Selected of Segment and Select
Segment Target Segment
Select Positioning
Strategy
Develop and Implement
Appropriate Marketing Mix
Monitor, Evaluate and
Dr. Rosenbloom Control

10. Market Criteria
s Segmentable markets are:
s Heterogeneous
s Measurable
s Substantial
s Actionable
• Companies must be able to respond to
preferences with an appropriate marketing mix
s Accessible
• Market must be efficiently reachable
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11. External Factors
s Stage in product life cycle
s Competition
s Product specific issues
s Market for the product
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12. Segmentation Variables
Demographic Benefits-Sought
Segmentation Segmentation
Geographic Situation
Segmentation Segmentation
Psychographic Behavior/Usage
Segmentation Segmentation
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13. Demographic Segmentation
Age Income Level
Family
Education Ethnicity
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14. Demographic Segmentation
s Age
s Some products
are marketed to
specific age
groups
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15. Demographic Segmentation
s Age
s Some products
are marketed to
specific age
groups
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16. Demographic Segmentation
s Income Level
s Some products
are marketed to
consumers with
different income
levels
Dr. Rosenbloom

17. Demographic Segmentation
s Income Level
s Some products
are marketed to
consumers with
different income
levels
Dr. Rosenbloom

18. Demographic Segmentation
Bartles and James
Dr. Rosenbloom Hal Riney and Partners

19. Demographic Segmentation
s Family
s Some products are
marketed to
consumers with
special family
consideration
• Family Life Cycle
• Bachelor, marriage,
married with children,
retired, etc.
Dr. Rosenbloom

20. Functions Of Advertising
KinderCare
Dr. Rosenbloom The Martin Agency

21. Demographic Segmentation
s Family
s Some products are
marketed to
consumers with
special family
consideration
• Family Life Cycle
• Bachelor, marriage,
married with children,
retired, etc.
Dr. Rosenbloom

22. Demographic Segmentation
s Education
s Some products are
marketed to
consumers with
certain educational
levels
Dr. Rosenbloom

23. Demographic Segmentation
s Ethnicity
s Some products are
marketed to
consumers from
specific ethnic
backgrounds
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24. Demographic Segmentation
s Ethnicity
s Some products are
marketed to
consumers from
specific ethnic
backgrounds
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25. Segmentation Variables
Demographic Benefits-Sought
Segmentation Segmentation
Geographic Situation
Segmentation Segmentation
Psychographic Behavior/Usage
Segmentation Segmentation
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26. Geographic Segmentation
s When an organization localizes its
marketing efforts to accommodate the
unique needs of specific geographic
regions
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27. Geographic Segmentation
s When an organization localizes its
marketing efforts to accommodate the
unique needs of specific geographic
regions
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28. Geographic Segmentation
s Metropolitan Statistical Areas
s An urbanized area of 50,000 and a total
metropolitan area population of at least
100,000
• Charlottesville, Virginia
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29. Geographic Segmentation
s Primary Metropolitan Statistical
Areas
s An urbanized county or cluster of
counties with a population of more
than 1 million
• Gary/Hammond, Indiana
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30. Geographic Segmentation
s Consolidated Metropolitan
Statistical Area
s A metropolitan area that includes at
least two PMSAs
• Baltimore, Maryland and Washington,
D.C.
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31. Segmenting Consumer Markets
Demographic Benefits-Sought
Segmentation Segmentation
Geographic Situation
Segmentation Segmentation
Psychographic Behavior/Usage
Segmentation Segmentation
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32. Psychographic Segmentation
s Grouping customers together
based on social class,
lifestyles and psychological
characteristics (attitudes,
interests and opinions)
s PRIZM analysis from Claritas
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33. Segmenting Consumer Markets
Demographic Benefits-Sought
Segmentation Segmentation
Geographic Situation
Segmentation Segmentation
Psychographic Behavior/Usage
Segmentation Segmentation
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34. Benefits-Sought Segmentation
s Markets can be
segmented based
on the benefits that
consumers desire
from using a
specific product
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35. Benefits-Sought Segmentation
American Pork Council
Dr. Rosenbloom Bozell, Incorporated

36. Segmenting Consumer Markets
Demographic Benefits-Sought
Segmentation Segmentation
Geographic Situation
Segmentation Segmentation
Psychographic Behavior/Usage
Segmentation Segmentation
Dr. Rosenbloom

37. Situation Segmentation
s Purchase situation or occasion
s Physical surroundings
s Social surroundings
s Temporal perspective
• How much time to make a purchase?
s Task definition
s Pre-purchase attitude
Dr. Rosenbloom

38. Segmenting Consumer Markets
Demographic Benefits-Sought
Segmentation Segmentation
Geographic Situation
Segmentation Segmentation
Psychographic Behavior/Usage
Segmentation Segmentation
Dr. Rosenbloom

39. Behavior/Usage Segmentation
s Markets can be segmented by how often or how
heavily consumers use a specific product
s 80/20 Principle - 80% of revenue generated by 20%
of customers
Light Users
80%
Heavy Users
20%
Dr. Rosenbloom

40. Segmentation Data
s Internal sources
s In-house customer and marketing databases
s Data mine to explore patterns and
relationships in collected data
s External sources
s Lists of catalog/magazine subscribers
s U.S. Census information
s Mediamark, CACI Marketing Systems, etc.
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41. Positioning Strategy
s Differentiation
through:
s Price/quality -
emphasize value
in terms of
quality, price, or
both
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42. Positioning Strategy
s Differentiation s Differentiation
through: through:
s Product attributes - s Symbol - use of a
characteristics as a symbol or icon to
positioning base position a product
s Product usage - in the consumer
positioning based consciousness
on a products
typical use
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43. Positioning Strategy
s Differentiation
through:
s Product user - the
typical user of a
product
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44. Positioning Strategy
s Differentiation
through:
s Product class -
positioning against
another type of
product or product
class
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45. Positioning Strategy
s Differentiation
through:
s Competition -
comparisons to a
product’s
competition
(directly or
indirectly)
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46. Segmenting Business Markets
s Demographics
s Industry size, growth potential, etc.
s Operating Characteristics
s Technology, brand-user status, etc.
s Purchasing Approaches
s Purchasing policies, size of orders,
etc.
Dr. Rosenbloom

47. Segmenting Business Markets
s Product Use or Usage Situation
s The way the product will be used
and customer service levels
required
s Situational Factors
s Urgency, special product uses
s Buyer’s Personal Characteristics
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48. Segmenting Global Markets
s Economic
s Stage of development in a host
country
s Political/Legal
s Regulations and laws
s Cultural
s Language barriers, differences in
consumer customs
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49. Segmenting Global Markets
s Some segments transcend
national borders
s Rich around the world
s Older and comfortable
s Indulged kids
s Emerging middle class
s Women employed outside the
house
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50. Market Segmentation
s Differentiated
s Concentrated
s Undifferentiated
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51. Differentiated Marketing
s Differentiated
Marketing
s An organization
targets multiple
market
segments and
develops
segment
specific mixes
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52. Concentrated Marketing
s Concentrated
Marketing
s When an
organization
concentrates its
marketing
efforts on a
smaller
segment of a
larger market
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53. Undifferentiated Marketing
s Undifferentiated
Marketing
s An organization
develops one
strategy
appropriate for
all members of
the total market
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