8 Identifying Market Segments and Targets 1 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? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-2

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 © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-3

What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-4

Segmenting Consumer Markets Geographic Demographic Psychographic Behavioral Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-5

Geographic Segmentation Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-6

Claritas’ Prizm Education and affluence Family life cycle Urbanization Race and ethnicity Mobility Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-7

Demographic Segmentation Age and life cycle Life stage Gender Income Generation Social class Race and Culture Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-8

Age and Lifecycle Stage Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-9

Gender and Income Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-10

Generational Influences Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-11

Race and Culture Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-12

Psychographic Segmentation and The VALS Framework Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-13

Behavioral Segmentation Based on Needs and Benefits Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-14

Behavioral Segmentation: Decision Roles Initiator Influencer Decider Buyer User Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-15

Behavioral Segmentation: Behavioral Variables Buyer-Readiness Loyalty Status Attitude Occasions Benefits User Status Usage Rate Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-16

Figure 8.2 Example of a Brand Funnel Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-17

Loyalty Status Hard-core Split loyals Shifting loyals Switchers Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-18

Figure 8.3 Behavioral Segmentation Breakdown Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-19

Segmenting for Business Markets Demographic Operating variable Purchasing approaches Situational factors Personal characteristics Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-20

Steps in Segmentation Process Need-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment acid test Market mix strategy Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-21

Effective Segmentation Criteria Measurable Substantial Accessible Differentiable Actionable Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-22

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 © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-23

Figure 8.4 Possible Levels of Segmentation Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-24

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? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 8-25