1. Chapter 3 Market Segmentation and Strategic Targeting
Consumer Behavior
Chapter 3
Market Segmentation and Strategic Targeting

2. Today’s Learning Objectives
To understand:
Why Market Segmentation Is Essential
The Criteria for Targeting Selected Segments Effectively
Bases for Segmenting Consumers
How Segmentation and Strategic Targeting Are Carried Out

3. Why Segmentation is Necessary
Consumer Research
Segmenting
Targeting
Positioning
Consumer needs differs
e.g. bubble gum for different uses
Differentiation helps products compete
e.g. Coke vs. Pepsi
Segmentation helps identify media

4. segmentations
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.

5. Why Segmentation is Necessary cont’d
Consumer Research
Segmenting
Targeting
Positioning
Criteria for Effective Targeting:
Positioning:
The value proposition, expressed through promotion, stating the product’s or service’s capacity to deliver specific benefits.
Identifiable
Sizeable
Stable
Accessible
Congruent with the company’s objectives and resources

6. Criteria for effective Targeting
Identifiable To divide the market into separate segmentation on the bases of common or shared needs or characteristics that are relevant to product or service , a marketer must be able to identifiable these characteristics.

7. Conti,,
Sizeable In order to be a viable market , a segment must consist of enough consumers to make the targeting it profitable
Stable The segment should be relatively stable in term of lifestyle and consumption patterns and avoid segmention that is unpreditable.

8. Accessible to be target a segmentation must be accessible, which means that marketer must be able to reach that market segment in a economical ways

9. conti
Congruent With The Company’s objectives and Resources Not every company is interested or has the means to reach every market segment, even if that segment meets the four preceding criteria, and company objective should be at front line to segment the market

10. Bases for Segmentation

11. Bases for segmentation
Base representing the core attributes of a group of existing or potential customer
Previous figure divide customers characteristics along two criteria
1.fact which can be determined from direct questioning and categorized by a single objective measure, versus cognitions, which are abstract can be determined only through more complex questioning, and where most of the constructs measures have no single ,universal definition
2. consumer-rooted features stemming from the consumers physical, social(fact), and psychological(cogintion) characteristics versus consumption-specific usage behaviors(fact) or attitudes and preferences toward specific products or buying situations (cognitions)

12. Customer Rooted Segmentation Base
This includes two types of personal attributes:
1. Facts: that are evidence based and can be readily determined and categories along an objective criterion
2. cognition: which can mostly be determined through indirect, psychological test and classified into subjective categories, depending on the researcher

13. Demographic Segmentation
Segmentation on the bases of
Age
• Sex
• Marital Status
Family life cycle
• Income, Education, and Occupation
Explanation
Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, female
Single, married, divorced, living together, widowed
Bachelorhood, honeymooner, parenthood, postparenthood and dissolution
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
Professional, blue-collar, white-collar, agricultural,
military

14. Geographic Segmentation
The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city).
Geographic Segmentation Explanation
Region= Punjab, Sindh, KPK, Baluchistan etc.
City Size=Major cities, small cities, towns
Density of area=Urban, suburban, exurban, rural
Climate=Temperate, hot, humid, rainy

15. Geodemographic Segmentation
A hybrid segmentation scheme based on the premise that people who live closed to another are likely to have similar financial means, tastes, preferences , lifestyle and consumption habits
Combination of demographic and geographic profiles of consumer segments.

16. Personality traits
Segment the market on a persons personality traits . A person may have flowing personality traits Risk averse , open minded or information seeker
Risk Averse= Those who averse the risk and don’t try new and new products
Open Minded = Those who perceive less risk and try new and new products
Information seeker= Are those who seeks information about product or service before buying those products or servicers.
Etc,,,,,,,

17. Lifestyles
Lifestyle, : people’s decisions about how to live their daily lives, including family, job, social, and consumer activities
also known as psychographics, consist of activities, interests, and opinions(AIOs).psychographics explain buyers purchase decision and the choices they make within the buying options available to them
VALS : is the most popular segmentation system combining lifestyle and values.

18. VALS Framework Figure 3-7
Copyright 2007 by Prentice Hall

19. VALS Segmentation VALS explain the consumer purchasing behavior.
This classifies the population into eight distinctive subgroups.
Examining the diagram from lift to right
There are three primary motivations:
1.the ideals motivated=these consumer segment is guided by knowledge and principles
2.The achievement motivated=these consumer segment are looking for products and services that demonstrate success to their peers
3.The self expression motivated=these consumer segment desire social or physical activity, variety and risk

20. Conti…
Each of these three major motivations represents distinct attitude, lifestyle and decision making style.
These diagram reveals a kind of continuum in term of resources and innovations --- that is , higher resources – higher innovation(on the top) to low resources- low innovation(on the bottom)

21. Eight VALS segmentation
Innovators innovators are successful, sophisticated, take charge people with high self esteem. 1.They have abundant resources ,2. they show all three primary motivation in varying degrees. 3.They are change leader and are most receptive to new ideas and techniques.4.thier purchase reflect cultivated tastes for upscale niche products or services.

22. THinkers 1.Motivated by ideals; high resources,
2.Thinkers are mature, satisfied, and comfortable
3.They tend to be well educated and actively seek out information in the decision making process
4.They favor durability, functionality and value in the product.

23. Believers 1. Motivated by ideals; low resources,
2. believers are strongly traditional and respect rules and authority
3. they are fundamentally conservative,
4. they are slow change and technology averse,
5. they choose familiar products and established brands

24. Achievers
1.Motivated by Achievement; High resources, 2. Achievers have goal oriented lifestyle that center on family and career. 3. They avoid situations that encourage a high degree of change 4. They prefer premium products that show success to their peers

25. Strivers 1. Motivated by achievement; low Resources
2.strivers are trendy and fun loving
3. they have little income and tend to have narrow interests
4. they favor stylish products

26. Experiencers
1.Motivated by self expression; High resources, 2. They are active and implusive 3. They spend a comparatively high portion of their income on fashion, socializing and entertainments

27. MAkers
1.Motivated by self expression; low resources 2. Movers value practicality and self sufficiency. 3. They prefer value to luxury 4.They buy basics products

28. Survivors 1. survivors leads narrowly focused lives,
2.they have fewest resource
3. they do not show a primary motivation and often feels powerless
4. they are concerned about safety and security, so they tend to brand loyal and buy discounted merchandise