8

Identifying Market Segments and

Targets

Marketing Management
Canadian Fourteenth Edition
Copyright  2013 Pearson Canada Inc.
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 Chapter Questions
• What are the different levels of market
segmentation?
• In what ways cab 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?

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 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

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 Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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 What is a Market Segment?
• A market segment consists of a group of
customers who share a similar set of
needs and wants.

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 Geographic Segmentation
• Geographic segmentation divides the
market into geographical units such as
nations, states, regions, counties, cities, or
neighborhoods.

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 Environics Analytics’ PRIZM
• Education and affluence
• Family life cycle
• Urbanization
• Race and ethnicity
• Mobility

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

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 Age & Lifecycle, Life Stage
• Consumer wants and abilities change with age.
• People in the same part of the life cycle may still
differ in their life stage.
• Life stage defines a person’s major concern
– going through a divorce
– going into a second marriage
– taking care of an older parent
– deciding to buy a new home
• These life stages present opportunities for marketers
who can help people cope with their major concerns

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 Gender and Income
• Gender - Men and women have different
attitudes and behave differently, based partly
on genetic makeup and partly on
socialization.
• Income segmentation is a long-standing
practice in such categories as automobiles,
clothing, cosmetics, financial services, and
travel.

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 Generational Influences

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 Race and Culture
• Multicultural marketing is an approach
recognizing that different ethnic and cultural
segments have sufficiently different needs
and wants to require targeted marketing
activities, and that a mass market approach
is not refined enough for the diversity of the
marketplace.

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 Table 8.4 Demographic
Populations

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 Psychographic Segmentation
• Psychographics is the science of using
psychology and demographics to better
understand consumers. In psychographic
segmentation, buyers are divided into
different groups on the basis of
psychological/personality traits, lifestyle, or
values.

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 Psychographic Segmentation
and The VALS Framework

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 Behavioral Segmentation
• Behavioural segmentation - marketers
divide buyers into groups on the basis of
their knowledge of, attitude toward, use of, or
response to a product.

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 Behavioral Segmentation:
Decision Roles

Initiator

Influencer

Decider

Buyer

User

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 Behavioral Segmentation: User
and Usage
• Occasions  Buyer-Readiness
 Loyalty Status
• User Status
 Attitude
• Usage Rate  Multiple Bases

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 Figure 8.2 Brand Funnel

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 Loyalty Status
• Hard-core
• Split loyals
• Shifting loyals
• Switchers

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 Figure 8.3 Behavioral
Segmentation Breakdown

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 Segmenting for Business
Markets
• Demographic
• Operating variable
• Purchasing approaches
• Situational factors
• Personal characteristics

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 Steps in the Segmentation
Process
• Need-based segmentation
• Segment identification
• Segment attractiveness
• Segment profitability
• Segment positioning
• Segment “acid test”
• Market mix strategy

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 Effective Segmentation Criteria
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable

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 Porter’s 5 Forces Model

Threat of Rivalry

Threat of
Threat of Buyer
Supplier
Bargaining Power
Bargaining Power

Threat of Threat of
Substitutes New Entrants

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 Figure 8.4 Possible Levels
of Segmentation

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 Ethical Choice of Market
Targets
• Marketers must target carefully to avoid
consumer backlash.
• Some consumers resist being labelled.
– Singles may reject single-serve food packaging
because they don’t want to be reminded they are
eating alone.
– Elderly consumers who don’t feel their age may
not appreciate products that label them “old.”

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