Assignment 2 marketing management

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8
Identifying Market Segments and Targets

Chapter Questions

What are the different levels of market segmentation?
How can a company divide a market into segments?
What are the requirements for effective segmentation?
How should business markets be segmented?
How should a company choose the most attractive target markets?

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

What is a Market Segment?

A market segment consists of a group of customers who share a similar set of

needs and wants.

Two broad groups of variables can be used to segment consumer markets:

Descriptive characteristics
Behavioral characteristics

Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

Geographic Segmentation

Demographic Segmentation

Age and life cycle
Life stage
Gender
Income
Generation
Social class
Race and Culture

Geodemographic Segmentation -Claritas’ PRIZM

Education and affluence
Family life cycle
Urbanization
Race and ethnicity
Mobility

Age and Lifecycle Stage

Gender and Income

Generational Influences

Race and Culture

https://www.youtube.com/watch?v=TeBimZRpR2E

Psychographic Segmentation
and The VALS Framework

Behavioral Segmentation: Decision Roles

Initiator

Influencer

Decider

Buyer

User

Behavioral Segmentation: Behavioral Variables

Occasions
Benefits
User Status
Nonusers
Ex-users
Potential users
First-time users
Regular users
Usage Rate
E.g. heavy Coca Cola drinkers only account for a small percentage of the overall market, but account for a large chunk of consumption.

Buyer-Readiness
Loyalty Status
Hard-core loyals
Consumers who only buy one brand
Split loyals
Consumers who are loyal to 2 or 3 brands
Shifting loyals
Consumers who shift loyalty from one brand to another
Switchers
Consumers who show no loyalty to any brand
Attitude

Figure 8.2 Example of a Brand Funnel

Loyalty Status

Hard-core
Split loyals
Shifting loyals
Switchers

Figure 8.3 Behavioral Segmentation Breakdown

Steps in Segmentation Process

Need-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test
Market mix strategy

Effective Segmentation Criteria

Measurable
Substantial
Accessible
Differentiable
Actionable

Porter’s 5 Forces Model

Threat of Rivalry

Threat of Supplier

Bargaining Power

Threat of Buyer Bargaining Power

Threat of

New Entrants

Threat of Substitutes

Figure 8.4 Possible Levels
of Segmentation

For Review

What are the different levels of market segmentation?
How can a company divide a market into segments?
What are the requirements for effective segmentation?
How should business markets be segmented?
How should a company choose the most attractive target markets?