1. Segmenting and Targeting Markets
Chapter 6
Segmenting and Targeting Markets
Prepared by
Deborah Baker
Texas Christian University
Chapter 6 Ver 2e
©2000 South-Western College Publishing

2. Chapter 6 Objectives
1. Describe the characteristics of markets and market segments.
2. Explain the importance of market segmentation.
3. Discuss criteria for successful market segmentation.
4. Describe the bases commonly used to segment consumer markets.
(continued)
Chapter 6 Ver 2e
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3. Chapter 6 Objectives
5. Describe the bases for segmenting business markets.
6. List the steps involved in segmenting markets.
7. Discuss alternative strategies for selecting target markets.
(continued)
Chapter 6 Ver 2e
©2000 South-Western College Publishing

4. Chapter 6 Objectives
8. Explain how and why firms implement positioning strategies and how product differentiation plays a role.
9. Discuss global marketing segmentation and targeting issues.
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©2000 South-Western College Publishing

5. Market Segmentation A market is...
Segmenting and Targeting Markets
Market Segmentation
A market is...
(1) people or organizations with (2) needs or wants, and with (3) the ability and (4) the willingness to buy. A group of people that lacks any one of these characteristics is not a market.
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©2000 South-Western College Publishing

6. Competitive Advantage
Importance of Market Segmentation
Markets have a variety of product needs and preferences
Marketers can better respond to increase in competition
Marketers can better define customer needs
Decision makers can define objectives and allocate resources more accurately
Competitive
Advantage
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7. Criteria for Market Segments
Criteria for Successful Segmentation
Criteria for Market Segments
Substantiality
Identifiability
Accessibility
Responsiveness
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8. Characteristics Used to Segment Markets
Bases for Segmenting Consumer Markets
Usage Rate
Benefits Sought
Psychographics
Demographics
Geography
Characteristics Used to Segment Markets
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9. Geographic Segmentation
Bases for Segmenting Consumer Markets
Geographic Segmentation
Region of the country or world
Market size
Market density
Climate
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10. Bases for Segmenting Consumer Markets
Demographics
Age
Gender
Income
Ethnic background
Family Life Cycle
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11. Family Life Cycle Age Marital Status Children Chapter 6 Ver 2e
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12. Psychographic Segmentation
Bases for Segmenting Consumer Markets
Psychographics
Psychographic Segmentation
Personality
Motives
Lifestyles
Geodemographics
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13. VALS 2 Dimensions Abundant Resources Minimal Resources Principle-
oriented
Status-
Fulfillers
Believers
Actualizers
Achievers
Strivers
Strugglers
Minimal Resources
Abundant Resources
Action-
oriented
Experi- encers
Makers
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14. Bases for Segmenting Consumer Markets
Benefit Segmentation
Customers are grouped into market segments according to the benefits they seek from the product.
Usage Rate
Market is divided based on product consumption
80/20 Principle holds that 20% of customers generate 80% of demand
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©2000 South-Western College Publishing

15. Bases for Segmenting Business Markets
Geographic
Customer Type
Customer Size
Product Use
Business
Markets
Purchasing Criteria
Purchasing Strategy
Importance
Personal
Characteristics
Micro-
segmentation
Macro-
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16. Steps in Segmenting a Market
Select a market for study
Choose bases for segmen-tation
Select descrip-tors
Profile and analyze segments
Select target markets
Design, imple- ment, maintain mkting mix
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17. Strategies for Selecting Target Markets
Concentrated
Strategy
Undifferentiated
Multisegment
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18. Undifferentiated Strategy
Advantages:
Potential savings on production and marketing costs
Disadvantages:
Unimaginative product offerings
Company more susceptible to competition
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19. Concentrated Strategy
Advantages:
Concentration of resources
Meet needs of narrowly defined segment
Small firms can compete
Strong positioning
Disadvantages:
Segments too small, or changing
Large competitors may effectively market to niche segment
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20. Multisegment Strategy
Advantages:
Greater financial success
Economies of scale
Disadvantages:
High costs
Cannibalization
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21. Costs of Multisegment Targeting
Product design costs
Production costs
Promotion costs
Inventory costs
Marketing research costs
Management costs
Cannibalization
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22. Perceptual Mapping (General Motors--1989)
Segmenting and Targeting Markets
Positioning
High Price
Cadillac
Oldsmobile
Buick
Conservative
Expressive
Chevrolet
Pontiac
Perceptual Mapping (General Motors--1989)
Low Price
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23. Positioning Bases Positioning Bases Attribute Price and Quality
Use or Application
Product User
Product Class
Competitor
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24. Global Market Segmentation
Trends
Global Market Standardization
Micromarketing
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