MKT 530

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Chapter9IdentifyingMarketSegmentsTargets-2e87d94b7c83e43be93636d3cde9f719.pptx

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Chapter 9

Identifying

Market Segments and Targets

Learning Objectives

In what ways can a company divide the consumer market into segments?

How should business markets be segmented?

How should a company choose the most attractive target markets?

What are the requirements for effective segmentation?

What are the different levels of market segmentation?

Bases for Segmenting Consumer Markets

Market segment

A group of customers who share a similar set of needs and wants

Geographic segmentation

Psychographic segmentation

Demographic segmentation

Behavioral segmentation

Geographic Segmentation

Geographical units

Nations, states, regions, counties, cities, or neighborhoods

Nielsen Claritas’ PRIZM

Education and affluence

Family life cycle

Urbanization

Race and ethnicity

Mobility

Geographic Segmentation

Demographic Segmentation

Age & life-cycle stage

Life stage

Gender

Income

Generation

Race & culture

Demographic Segmentation

Age and life-cycle stage

Our wants and abilities change with age

Life stage

A person’s major concern (e.g., divorce)

Demographic Segmentation

Gender

Men and women have different attitudes and behave differently

Income

Income segmentation is a long-standing practice

Demographic Segmentation

Generation

Millennials (Gen Y)

Baby Boomers

Gen X

Silent Generation

Demographic Segmentation

Race and culture

Hispanic Americans

African Americans

Asian Americans

LGBT

Psychographic Segmentation

Buyers are divided into groups on the basis of psychological/personality traits, lifestyle, or values

Figure 9.1: VALS Segmentation System

Behavioral Segmentation

Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product

Behavioral Segmentation

Needs and benefits

Decision roles

Initiator

Influencer

Decider

Buyer

User

User and usage-related variables

Occasions

User status

Usage rate

Buyer-readiness stage

Loyalty status

Attitude

Figure 9.2 Marketing Funnel

Figure 9.3 Behavioral Segmentation Breakdown

How Should Business Markets Be Segmented?

Demographic

Operating variables

Purchasing approaches

Situational factors

Personal characteristics

Market targeting

Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

Porter’s five forces

Threat of Rivalry

Threat of Supplier

Bargaining Power

Threat of Buyer Bargaining Power

Threat of

New Entrants

Threat of Substitutes

Evaluating & Selecting the Market Segments

Figure 9.4: Possible Levels of Segmentation

One-to-one marketing

Identify your prospects and customers

Differentiate customers in terms of their needs and value to your company

Interact to improve your knowledge about customers’ needs and to build relationships

Customize products, services,

and messages to each customer

Legal and Ethical Issues

Marketers must avoid consumer backlash

Labeling consumers

Vulnerable groups

Disadvantaged groups

Potentially harmful products