Chapter 3 Market Segmentation Consumer Behavior, Ninth Edition Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Chapter Outline What Is Market Segmentation? Bases for Segmentation Criteria for Effective Targeting of Segments Implementing Segmentation Strategies Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Market Segmentation The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix. Copyright 2007 by Prentice Hall

Three Phases of Marketing Strategy Product/Brand Positioning Phase 2 Target Market and Marketing Mix Selection Phase 1 Market Segmentation Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Segmentation Studies Discover the needs and wants of groups of consumers to develop specialized products to satisfy group needs Used to identify the most appropriate media for advertising Copyright 2007 by Prentice Hall

Ryka produces sneakers that meet the special needs of women’s feet. Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Discussion Question Considering the largest bank in your college’s city or town: How might consumers’ needs differ? What types of products might meet their needs? What advertising media makes sense for the different segments of consumers? Copyright 2007 by Prentice Hall

Bases for Segmentation Geographic Demographic Psychological Psychographic Sociocultural Use-Related Usage-Situation Benefit Sought Hybrid Copyright 2007 by Prentice Hall

Table 3.1 Market Segmentation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Region Southwest, Mountain States, Alaska, Hawaii City Size Major metropolitan areas, small cities, towns Density of area Urban, suburban, exurban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Occupation Professional, blue-collar, white-collar, agricultural, military Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Table 3.1, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, innovators Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude Psychographic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers Sociocultural Segmentation Cultures American, Italian, Chinese, Mexican, French, Pakistani Religion Catholic, Protestant, Jewish, Moslem, other Subcultures (Race/ethnic) African American, Caucasian, Asian, Hispanic Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Table 3.1, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rate Heavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective Time Leisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money PRIZM NE Geodemographics “Movers & Shakers,” “New Empty Nests,” “Boomtown Singles,” “Bedrock America” Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles SRI VALSTM Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors Hybrid Segmentation Copyright 2007 by Prentice Hall

Geographic Segmentation The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city) Copyright 2007 by Prentice Hall

Demographic Segmentation Age Sex Marital Status Income, Education, and Occupation Copyright 2007 by Prentice Hall

Web sites for Singles Looking for a Match weblink weblink Match.com targets all singles The Right Stuff targets only Ivy League graduates Copyright 2007 by Prentice Hall

Psychological Segmentation Motivations Personality Perceptions Learning Attitudes Harley-Davidson Video Copyright 2007 by Prentice Hall

Two High-End Watches for Different Psychological Segments Copyright 2007 by Prentice Hall

Psychographic Segmentation Also known as Lifestyle Analysis Psychographic variables include attitudes, interests, and opinions (AIOs) Copyright 2007 by Prentice Hall

Table 3.6 Excerpts from AIO Inventory Instructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement. I feel that my life is moving faster and faster, sometimes just too fast. If I could consider the “pluses” and “minuses,” technology has been good for me. I find that I have to pull myself away from e-mail. Given my lifestyle, I have more of a shortage of time than money. I like the benefits of the Internet, but I often don’t have the time to take advantage of them. Agree Completely Disagree Completely [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] Copyright 2007 by Prentice Hall

Opinions and Attitudes ADBUSTERS Web site is targeted to consumers with a certain attitude toward advertisers weblink Copyright 2007 by Prentice Hall

Sociocultural Segmentation Family Life Cycle Social Class Culture, Subculture, and Cross-Culture Copyright 2007 by Prentice Hall

Family Life Cycle Advertising Video cameras are often purchased by young couples with children. Copyright 2007 by Prentice Hall

Target reaches out to the Latino market. Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Discussion Questions What types of marketers might segment according to social class? What ethical issues might marketers have when marketing to different social classes? Copyright 2007 by Prentice Hall

Use-Related Segmentation Rate of Usage Heavy vs. Light Awareness Status Aware vs. Unaware Brand Loyalty Brand Loyal vs. Brand Switchers Copyright 2007 by Prentice Hall

Segmenting Customers by Usage Table 3-8 Current Share High Low High Low HiHighs (stroke) LowHighs (chase) Consumption HiLows (tickle) LoLows (starve) Copyright 2007 by Prentice Hall

Usage-Situation Segmentation Segmenting on the basis of special occasions or situations Example Statements: Whenever our daughter Jamie gets a raise, we always take her out to dinner. When I’m away on business, I try to stay at a suites hotel. I always buy my wife flowers on Valentine’s Day. Copyright 2007 by Prentice Hall

Segmenting on the basis of the most important and meaningful benefit Benefit Segmentation Segmenting on the basis of the most important and meaningful benefit Copyright 2007 by Prentice Hall

Band-aid offers “flex” as a benefit to consumers. Copyright 2007 by Prentice Hall

Hybrid Segmentation Approaches Psychographic-Demographic Profiles Geodemographic Segmentation SRI Consulting’s VALS Copyright 2007 by Prentice Hall

Selected Demographic Profile of USA Today Excerpt from Table 3-10 USA TODAY.COM USA TODAY NETWORK Men 66% 70% Women 34% 30% Age 18-49 62% 73% 64% Age 25-54 65% 78% 67% Age 55+ 27% 18% 25% Average Age 45 43 Attended college or beyond 77% 83% College graduate or beyond 55% 56% Copyright 2007 by Prentice Hall

Selected Lifestyle Profile of USA Today Excerpt from Table 3-11 % Comp Index Tech Savvy Readers Use Internet more than once a day 32% 174 Internet access at home 79% 128 Online purchase for business or personal use in past 30 days 40% 182 Household owns a PC 84% 119 Owns digital camera 22% 130 Leisure Activities Attended movies in last 6 months 73% 120 Bought music CD/tapes in last 12 months 46% 126 Book reading 45% Entertain friends or relatives at home in last 12 months 48% 123 Household subscribes to cable 69% 112 Copyright 2007 by Prentice Hall

VALS Framework Figure 3-7 Copyright 2007 by Prentice Hall

Copyright 2007 by Prentice Hall Discussion Question How would you classify yourself according to VALS? Your parents? Do you think this represents you as a consumer? If so, for what products does this fit you as a consumer? Copy down the URL below to take the VALS survey tonight. See if you were right in your classification… http://www.sric-bi.com/VALS/presurvey.shtml weblink Copyright 2007 by Prentice Hall

Criteria for Effective Targeting of Market Segments Identification Sufficiency Stability Accessibility Copyright 2007 by Prentice Hall

Implementing Segmentation Strategies Concentrated Marketing One segment Differentiated Several segments with individual marketing mixes Copyright 2007 by Prentice Hall