1. Chapter 7 Identifying Market Segments and Selecting Target Markets by
Lecturer: Ung Veasna

2. Kotler on Marketing
“Don’t buy market share. Figure out how to earn it.”

3. Segmentation Works Because ...
Subgroups may be identified
Subgroups smaller and more homogeneous
Not all buyers alike
Easier to satisfy smaller groups

4. Major Steps in Segmentation & Targeting1.
Break market down 2.
Group into segments
TARGET MARKET 3.
Choose
target market

5. Segmentation Rule
Organizations cannot be “all things” to “all people.” They must choose the customers they wish to serve.

6. Market Segmentation
The process of dividing a market into distinct groups of buyers who might require separate products or marketing mixes.

7. Target Marketing
Target marketing requires marketers to take three major steps:
Identify and profile distinct groups of buyers who differ in their needs and preferences (market segmentation).
Select one or more market segments to enter (market targeting).
For each target segment, establish and communicate the key distinctive benefit(s) of the company’s market offering (market positioning).

8. 1. Market Segmentation Mass Marketing Segment Marketing
Same product to all consumers
1. Market Segmentation
Dividing Markets into Smaller Segments that Can be Reached More Efficiently And Effectively With Products and Services That Match Their Unique Needs.
Segment Marketing
Different products to one or more segments

9. Table 7-1: Steps in Segmentation Process
Description
1. Needs-Based Segmentation
Group customers into segments based on similar needs and benefits sought by customer in solving a particular consumption problem.
2. Segment Identification
For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable).
3. Segment Attractiveness
Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.
4. Segment Profitability
Determine segment profitability.
5. Segment Positioning
For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics.

10. Bases for Segmenting Consumer Markets
Geographic
Region, City or Metro
Size, Density, Climate
Demographic
Age, Gender, Family size and Fife cycle, Race,
Occupation, or income ...
Lifestyle or Personality
Psychographic
Occasions, Benefits, Uses, or Attitudes
Behavioral

11. Dividing the market into groups based on variables such as:
Demographic Segmentation
Dividing the market into groups based on variables such as:
- Age
- Life-cycle stage, size
- Gender
- Income
- Occupation
- Education
- Religion
- Race
- Nationality
Most Popular Bases & Easier to Measure

12. Table 7-2: Major Segmentation Variables for Geographic
Region
Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England
City or metro size
Under 5,000; 5,000-20,000; 20,000-50,000; 50, ,000; 100, ,000; 250, ,000; 500,000-1,000,000; 1,000,000-4,000,000; 4,000,000 or over
Density
Urban, suburban, rural
Climate
Northern southern

13. Divides Buyers Into Different Groups Based on:
Psychographic Segmentation
Divides Buyers Into Different Groups Based on:
Social Class
Lifestyle
Personality

14. Behavioral Segmentation
Dividing the market into groups based on variables such as:
Occasions
Benefits sought
User status
Usage rate
Loyalty status

15. Requirements for Effective Segmentation
Measurable
Requirements for Effective Segmentation
Accessible
Substantial
Size, purchasing power, profiles of segments can be measured.
Differential
Segments can be effectively
reached and served.
Actionable
Segments are large or profitable enough to serve.
Segments must respond differently to different marketing mix elements & programs.
Effective programs can be designed to attract and serve the segments.

16. 2- Market Targeting Evaluating and Selecting the Market Segments
Single-Segment Concentration
Selective Specialization
Product Specialization
Market Specialization
Full Market Coverage
Undifferentiated marketing
Differentiated marketing

17. Market Targeting Higher costs using differentiated marketing include:
Product modification cost
Manufacturing cost
Administrative cost
Inventory cost
Promotion cost

18. Market Targeting Evaluating Market Segments
1-Segment Size and Growth
- Analyze current segment sales, growth rates, and expected profitability for various segments.
2- Segment Structural Attractiveness
- Consider effects of: competitors, availability of substitute products, and the power of buyers & suppliers.
3- Company Objectives and Resources
- Examine company skills & resources needed to succeed in that segment(s).
- Offer superior value & gain advantages over competitors.

19. Product’s Life-Cycle Stage Competitors’ Marketing Strategies
Base for Selecting Market Segments
Company Resources
Product Variability
Product’s Life-Cycle Stage
Market Variability
Competitors’ Marketing Strategies

20. Target Market Approaches (Coverage Strategies)
Undifferentiated (mass marketing)
One mix to the whole market
Differentiated
Multiple mixes to multiple segments
Concentrated
One mix to one market segment
Custom
One mix to one customer

21. Market Company Marketing Mix Company A. Undifferentiated Marketing
Segment 1
Segment 2
Segment 3
Company
Marketing Mix 1
Marketing Mix 2
Marketing Mix 3
Marketing
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing

22. Possible Strategies for Target Marketing
Differentiated marketing
Multiple market segmentation

23. Matching the Marketing Mix to Target Market
Our target market:
Women aged living in the United States
The right…
Product?
Price?
Promotion?
Place?