7

Identifying Market Segments

and Targets
 Chapter Questions
 What are the different levels of market
segmentation?
 How can a company identify the segments that
make up a market?
 How should a company choose the most
attractive target markets?

7-2
 What is Mass Marketing?
In Mass Marketing, the seller is engaged in mass
production, mass distribution and mass promotion.

What is Target Marketing?

Identifying distinct groups of buyers who differ in
their needs and preferences; Selecting one or
more market segments to enter; Establishing and
communicating the distinctive benefits of the
market offering. 7-3
Four levels of Micromarketing

Segments Niches

Local areas Individuals

7-4
Segment Marketing:
Flexible Marketing Offerings

Naked solution: Discretionary

Product and service options:
elements that all Some segment
segment members members value options
value but not all

7-5
Preference Segments

 Homogeneous preferences
 Diffused preferences
 Clustered preferences

7-6
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.
Segmenting Consumer Markets

Geographic
Geographic

Demographic
Demographic

Psychographic
Psychographic

Behavioral
Behavioral

7-8
 Geographic Segmentation

 Nations
 States
 Regions
 Countries
 Cities
 Neighborhoods
 Zip codes

7-9
 Demographic Segmentation

 Age
 Lifecycle stage
 Gender
 Income
 Generation
 Social class
 Race and
Culture
 Education,
occupation
7-10
Psychographic Segmentation
and the VALS Framework

7-11
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.

Behavioral Segmentation
Decision Roles Behavioral Variables
 Initiator  Occasions

 Influencer  Benefits

 Decider  User Status

 Buyer  Usage Rate

 User  Buyer-Readiness

 Loyalty Status

 Attitude

7-13
The Brand Funnel Illustrates
Variations in the Buyer-Readiness
Stage
 Unaware
 Aware
 Ever tried
 Recent trial
 Occasional user
 Regular user
 Most often used

7-14
Behavioral Segmentation
Breakdown

7-15
Example of a Brand Funnel

7-16
 Loyalty Status

 Hard-core
 Split loyals
 Shifting loyals
 Switchers

7-17
Segmenting Business Markets
‘Demographic’
‘Demographic’

Operating
Operating Variable
Variable

Purchasing
Purchasing Approaches
Approaches

Situational
Situational Factors
Factors

Personal
Personal
Characteristics
Characteristics
7-18
 Effective Segmentation Criteria

 Measurable
 Substantial
 Accessible
 Differentiable
 Actionable

7-19
 The Conversion Model

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable

7-20
 Steps in Segmentation Process

Needs-based segmentation
Marketing-Mix
Segment identification Strategy
Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

7-21
Porter’s 5 Forces Model

Threat of
Rivalry
Threat of Buyer
Threat of Supplier
Bargaining
Bargaining Power
Power

Threat of Threat of
Substitutes New Entrants

7-22
Patterns of Target Market Selection

7-23
Patterns of Target Market Selection

7-24
Patterns of Target Market Selection

7-25
Segment-by-Segment Invasion
Plan

7-26