7 Identifying Market Segments and Targets 1 7 Identifying Market Segments and Targets

Chapter Questions In what ways can a company divide a consumer or business market into segments? How should a company choose the most attractive target markets? What are the different levels of market segmentation? Copyright © 2012 Pearson Education 7-2

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 Copyright © 2012 Pearson Education 7-3

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants. Copyright © 2012 Pearson Education 7-4

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral Copyright © 2012 Pearson Education 7-5

Geographic Segmentation Copyright © 2012 Pearson Education 7-6

Demographic Segmentation Age and life cycle Life stage Gender Income Generation Social class Race and Culture Copyright © 2012 Pearson Education 7-7

Age and Lifecycle Stage Copyright © 2012 Pearson Education 7-8

Gender and Income Copyright © 2012 Pearson Education 7-9

Generational Influences Copyright © 2012 Pearson Education 7-10

Race and Culture Copyright © 2012 Pearson Education 7-11

Psychographic Segmentation and The VALS Framework Copyright © 2012 Pearson Education 7-12

Behavioral Segmentation Based on Needs and Benefits Copyright © 2012 Pearson Education 7-13

Behavioral Segmentation: Decision Roles Initiator Influencer Decider Buyer User Copyright © 2012 Pearson Education 7-14

Behavioral Segmentation: Behavioral Variables Buyer-Readiness Loyalty Status Attitude Occasions Benefits User Status Usage Rate Copyright © 2012 Pearson Education 7-15

Figure 7.2 Example of a Brand Funnel Copyright © 2012 Pearson Education 7-16

Segmenting for Business Markets Demographic Operating variable Purchasing approaches Situational factors Personal characteristics Copyright © 2012 Pearson Education 7-17

Steps in Segmentation Process Need-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment acid test Market mix strategy Copyright © 2012 Pearson Education 7-18

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable Copyright © 2012 Pearson Education 7-19

Threat of Buyer Bargaining Power Porter’s 5 Forces Model Threat of Rivalry Threat of Buyer Bargaining Power Threat of Supplier Bargaining Power Threat of Substitutes Threat of New Entrants Copyright © 2012 Pearson Education 7-20

Figure 7.3 Possible Levels of Segmentation Copyright © 2012 Pearson Education 7-21

For Review In what ways can a company divide a consumer or business market into segments? How should a company choose the most attractive target markets? What are the different levels of market segmentation? Copyright © 2012 Pearson Education 7-22