Course Structure

Identifying market segments and

targets
Segmenting Consumers Markets

¨ Market Segmentation is dividing the market into

distinct needs, characteristics, or behavior who
might require separate products or marketing
mixes.
¨ Steps for segmentation & targeting:
1. Identify the appropriate basis for market segmentation
2. Choose target markets
3. Identify the appropriate segment approach strategy
Bases for Consumer Market
Segmentation
Geographic Segmentation
Geographic Segmentation

¨ Country
¨ Region
¨ City
¨ Metro size
¨ Population density
¨ Climate
Demographic Segmentation
Demographic Segmentation
¨ Age segmentation
means focusing on the age
range most valuable to your
product or service.
¨ Marketing demographic age
brackets are usually 18-24,
25-34, 35-44, 45-54, 55-64,
and 65 and older.
¨ For example, companies that
sell soft drinks, like Pepsi,
often target young adults
between the age of 15 to 25
by depicting young men or
women in their marketing
campaigns.
Age segmentation
Age segmentation
Age segmentation
Demographic Segmentation
¨ Gender segmentation
¤ Every product that
contains some kind of
differentiation which
caters to the different
needs of the two
genders is divided
based on this type of
market segmentation.
Demographic Segmentation
¨ Occupation
segmentation
¤ Slices up your target
market by job function, job
seniority, and job title.
¤ A lot of B2B brands target
their audience by
occupation because they
need to attract specific
types of professionals who
have the authority to make
buying decisions on their
team or at their company.
Demographic Segmentation
¨ Religion segmentation
¤ This is the parameter
where the target
market is classified
based on their mutual
religious beliefs.
¤ Companies sometimes
offer products that
compliment the religious
and spiritual beliefs of a
particular group of
people.
Demographic Segmentation
¨ Income segmentation
¤ Products offered by a
company, sets its
product price based
not only on the cost of
production but also on
the income level of
its target market
segment.
Demographic Segmentation
¨ Segmenting by
nationality
¤ Whenever a nationality,
country-of-residence,
country-of-origin or
similar variable has been
included in multivariate
statistical modelling,
however, its role has
tended to be that of one
of many control
variables.
Demographic Segmentation
¨ Race and ethnicity
segmentation
¤ Racial and ethnic
segmentation is based on
the assumption that the
preference for specific
content exhibited by
members of one group
differs substantially from
the preferences exhibited
by members of other
groups defined by race or
ethnicity.
Demographic Segmentation
¨ Segmenting by family
size
¤ Family makeup can be
instrumental in
segmentation because
when a family’s
dynamic changes, its
needs and desires
often do too. This
strongly affects their
buying habits and your
sales process.
Demographic Segmentation
¨ Segmenting by
education
¤ When applied to
educational market this is
regarded as the process
of dividing the market
into different groups of
consumers according to
their educational level,
and then selecting one or
more group of the
consumers to serve
Demographic Segmentation
Demographic Segmentation
Few financial commitment. Recreation and
fashion oriented.
Buys cars, entertainment items, and
holidays.

Better off financially.

High purchase rate of consumer
desirables.
Buy cars, white goods and furniture.

House buying is at peak. Liquid assets are

low.
Dissatisfied with level of savings and
financial position.
Buy medicine, toys, school tuition, and
white goods.

Home ownership is at peak.

Financial situation, and savings have
improved.
Interest in travel, recreation, and self-
education.
Not interested in new products.
Buy holidays, luxuries, and home
improvements
Demographic Segmentation
¨ Psychological age
¤ This is how old one feels,
acts, and behaves, and is
thus not necessarily
equal to chronological
age, which is age since
birth.
¤ A person can therefore
have a psychological
age that exceeds their
chronological age if they
are mature or at least
feel older than they
really are.
Psychographic segmentation
Psychographic Segmentation
¨ Social Class ¨ 7 common social classes
¤ Definition of social informally recognized
class: Social class is in many societies are:
a status hierarchy in 1. Upper-upper class
which individuals and 2. Upper class
groups are classified o 3. Upper middle class
n the basis of esteem
4. Middle class
and prestige acquired
mainly through 5. Working class
economic success and a 6. Lower class.
ccumulation of wealth. 7. Lower-lower class
Psychographic Segmentation
¨ Shopping Behavior and Social Classes
¤ Shopping behavior varies by social class. shoppers
generally has some idea of the social-status ranking of
stores.
¤ A very close relation between store choice and social-
class membership has been found.
¤ People realistically match their values and expectations
with a store's status and don't shop in stores where they
feel out of place.
Psychographic Segmentation
¨ Lifestyle
segmentation
¤ Marketers aim
products and
services at
particular lifestyle
groups and
develop lifestyle
profiles based on
their target market
Psychographic Segmentation
Psychographic Segmentation
¨ Lifestyle
segmentation
¨ If we understand the
lifestyle of a
particular group we
can sell them product
and services to
enhance their
lifestyle.
Psychographic segmentation
¨ Personality
Characteristics and
brand personality
¤ Personality
characteristics are
different traits that a
person has that define
who they are as an
individual.
¤ Often marketers try to
develop personalities for
their brands and
products that mimic that
of their target market.
Psychographic segmentation

¨ The self-concept is a
general term used to
refer to how someone
thinks about, evaluates
or perceives
themselves.
Brand Personality
¨ The dominant
personality trait of the
Harley-Davidson brand
is that it is a rebel.
¨ This rebellious attitude is
then therefore fixated
on freedom
¨ Last but not least is the
trait of being
masculine.
Behavioral Segmentation
Behavioral Segmentation
¨ Behavioral ¨ Behavioral
¤ Occasions: special occasions ¤ Occasions: special occasions
¤ Benefits: medicinal ¤ Benefits: social
¤ User status: regular users ¤ User status: light users
¤ Loyalty status: strong ¤ Loyalty status: none
¤ Readiness stage: intending to buy ¤ Readiness stage: slightly aware
¤ Attitude toward product: positive ¤ Attitude toward product: indifferent
Segmenting Consumer Markets

Geographic Demographic Psychographic Behavioral

Age
Occasions
Gender
Benefits
Country
Family life cycle
User status
Region Family size Social Class
User rates
City Income Life style
Loyalty status
Metro size Occupation Personality
Readiness stage
Density Education
Attitude toward
Climate Religion The product
Race
Nationality
Segmenting Consumer Markets
Segmenting Consumer Markets
Segmenting Consumer Markets
Segmenting Business Markets
¨ Firmographic data is
information that can
be used to segment
organizations in terms
of geographic area,
number of clients, type
of organization, size
of organization,
industry, technologies
used and so on.
Targeting Consumer Markets
Targeting Consumers Markets

¨ Target Marketing is the

process of evaluating
each segment’s
attractiveness and
selecting one or more
segments to enter:
1. Evaluate market
attractiveness
2. Select target segments
Evaluating Market Attractiveness

¨ Criterion Weight Rate Value

¤ Segment size ____________________
¤ Segment growth rate ____________________
¤ Competitive intensity ____________________
¤ Customer satisfaction with existing products ____________________
¤ Fit with company image ____________________
¤ Fit with company objectives ____________________
¤ Fit with company resources ____________________
¤ Distribution available ____________________
¤ Investment required ____________________
¤ Stability/predictability ____________________
¤ Cost to serve ____________________
¤ Sustainable advantage available ____________________
¤ Communications channels available ____________________
¤ Power of buyers versus power of suppliers
Total
¨ *Score on a 1 to 10 scale, with 10 being most favorable.
Selecting the Market Segments
M1 M2 M3 M1 M2 M3 M1 M2 M3
P1 P1 P1

P2 P2 P2

P3 P3 P3
Single segment Market Product
concentration specialization specialization

M1 M2 M3 M1 M2 M3
P1 P1

P2 P2

P3 P3
Selective
specialization Full Coverage
Segment Approach Strategies
Segment Approach Strategies
¨ Mass
(Undifferentiated)
Marketing is a market
coverage strategy in
which the company
approaches the target
markets with the same
offer with the
advantage of
economies of scale.
Segment Approach Strategies
¨ Segment
(Differentiated)
Marketing is a market
coverage strategy in
which the company
approaches several
segments with offer for
each.
Segment Approach Strategies
¨ Concentrated (Niche)
Marketing is a market
coverage strategy in
which the company
targets a singles with
a single marketing mix
Segment Approach Strategies
¨ Local Marketing is the
practice of tailoring
products and
marketing programs to
the needs of local
customer groups
Segment Approach Strategies

¨ Customization is the
practice of tailoring
products and
marketing programs to
the needs of small
groups of people.
Segment Approach Strategies
¨ Customerization is the
practice of tailoring
products and marketing
programs to the needs of
specific individuals