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Identifying
Market Segments
and Targets
Marketing Management, 13th
ed
8
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-2
Chapter Questions
• What are the different levels of market
segmentation?
• How can a company divide a market
into segments?
• How should a company choose the
most attractive target markets?
• What are the requirements for effective
segmentation?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-3
Effective Targeting Requires…
• Identify and profile distinct groups of
buyers who differ in their needs and
preferences
• Select one or more market segments to
enter
• Establish and communicate the
distinctive benefits of the market
offering
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-4
Four levels of Micromarketing
• Segments
• Niches
• Local areas
• Individuals
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-5
What is a Market Segment?
A market segment consists of a
group of customers who share a
similar set of needs and wants.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-6
Flexible Marketing Offerings
• Naked solution:
Product and service
elements that all
segment members
value
• Discretionary
options: Some
segment members
value options but
not all
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-7
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
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-8
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.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-9
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.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-10
Segmenting Consumer Markets
• Geographic
• Demographic
• Psychographic
• Behavioral
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-11
Claritas’ Prizm
• Education and affluence
• Family life cycle
• Urbanization
• Race and ethnicity
• Mobility
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-12
Demographic Segmentation
• Age and life cycle
• Life stage
• Gender
• Income
• Generation
• Social class
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-13
Behavioral Segmentation
Decision Roles
• Initiator
• Influencer
• Decider
• Buyer
• User
Behavioral Variables
• Occasions
• Benefits
• User Status
• Usage Rate
• Buyer-Readiness
• Loyalty Status
• Attitude
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-14
The Brand Funnel Illustrates
Variations in the
Buyer-Readiness Stage
• Aware
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-15
Loyalty Status
• Hard-core
• Split loyals
• Shifting loyals
• Switchers
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-16
Segmenting for Business Markets
• Demographic
• Operating variable
• Purchasing approaches
• Situational factors
• Personal characteristics
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-17
Steps in Segmentation Process
• Need-based segmentation
• Segment identification
• Segment attractiveness
• Segment profitability
• Segment positioning
• Segment acid test
• Market mix strategy
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-18
Effective Segmentation Criteria
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable

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Kotler mm 13e_basic_08

  • 2. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-2 Chapter Questions • What are the different levels of market segmentation? • How can a company divide a market into segments? • How should a company choose the most attractive target markets? • What are the requirements for effective segmentation?
  • 3. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-3 Effective Targeting Requires… • Identify and profile distinct groups of buyers who differ in their needs and preferences • Select one or more market segments to enter • Establish and communicate the distinctive benefits of the market offering
  • 4. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-4 Four levels of Micromarketing • Segments • Niches • Local areas • Individuals
  • 5. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-5 What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants.
  • 6. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-6 Flexible Marketing Offerings • Naked solution: Product and service elements that all segment members value • Discretionary options: Some segment members value options but not all
  • 7. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-7 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
  • 8. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-8 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.
  • 9. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-9 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.
  • 10. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-10 Segmenting Consumer Markets • Geographic • Demographic • Psychographic • Behavioral
  • 11. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-11 Claritas’ Prizm • Education and affluence • Family life cycle • Urbanization • Race and ethnicity • Mobility
  • 12. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-12 Demographic Segmentation • Age and life cycle • Life stage • Gender • Income • Generation • Social class
  • 13. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-13 Behavioral Segmentation Decision Roles • Initiator • Influencer • Decider • Buyer • User Behavioral Variables • Occasions • Benefits • User Status • Usage Rate • Buyer-Readiness • Loyalty Status • Attitude
  • 14. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-14 The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage • Aware • Ever tried • Recent trial • Occasional user • Regular user • Most often used
  • 15. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-15 Loyalty Status • Hard-core • Split loyals • Shifting loyals • Switchers
  • 16. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-16 Segmenting for Business Markets • Demographic • Operating variable • Purchasing approaches • Situational factors • Personal characteristics
  • 17. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-17 Steps in Segmentation Process • Need-based segmentation • Segment identification • Segment attractiveness • Segment profitability • Segment positioning • Segment acid test • Market mix strategy
  • 18. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 8-18 Effective Segmentation Criteria • Measurable • Substantial • Accessible • Differentiable • Actionable