1. Consumer Behavior, Eighth Edition SCHIFFMAN & KANUK
Chapter 3
Market Segmentation

2. 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.

3. Three Phases of Marketing Strategy
Phase 1: Market Segmentation
Phase 2: Target Market and Marketing Mix Selection
Phase 3: Product/Brand Positioning

4. Table 3.1: Sodexho’s Segmentation of College-age Eating Patterns
Star Gazers
Light, healthy foods
Price insensitive
Brand conscious
Employed full-time over summer
Active, out-going
Family income > 100,000
Fun Express
Variety, taste, and nutrition
Price conscious
Work part-time over summer
Value leisure time
Family income $30, ,000

5. “Best” Customer Segmentation
High Current Share Low
High
Low
HiHighs
(stroke)
LowHighs
(chase)
Consumption
HiLows
(tickle)
LoLows
(starve)

6. Segmentation Studies
Designed to discover the needs and wants of specific groups of consumers in order to develop specialized products to satisfy specific group needs (e.g., Centrum)
Designed to guide the repositioning of a product (e.g., Nintendo)
Used to identify the most appropriate media for advertising (e.g., People and Teen People)

7. Bases for Segmentation
Geographic Segmentation
Demographic Segmentation
Psychological Segmentation
Psychographic Segmentation
Sociocultural Segmentation
Use-Related Segmentation
Usage-Situation Segmentation
Benefit Segmentation
Hybrid Segmentation Approaches

8. Table 3.2 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 11, 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

9. Table 3.2, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Learning-involvement
Perception
Personality
Needs-motivation
Shelter, safety, security, affection, sense of self-worth
Extroverts, novelty seeker, aggressives, low dogmatics
Low-risk, moderate-risk, high-risk
Low-involvement, high-involvement
Psychographic
Subcultures (Race/ethnic)
Religion
Cultures
(Lifestyle) Segmentation
Economy-minded, couch potatoes, outdoors enthusiasts, status seekers
American, Italian, Chinese, Mexican, French, Pakistani
Catholic, Protestant, Jewish, Moslem, other
African-American, Caucasian, Asian, Hispanic
Family life cycle
Social class
Lower, middle, upper
Bachelors, young married, full nesters, empty nesters
Attitudes
Positive attitude, negative attitude
Sociocultural Segmentation

10. 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
Geodemographics
“Money and Brains,” “Black Enterprise,” “Old Yankee Rows,” “Downtown Dixie-Style”
Demographic/
Psychographics
Combination of demographic and psychographic profiles of consumer segments profiles
SRI VALSTM
Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler
Hybrid Segmentation

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

12. Demographic Segmentation
Age
Sex
Marital Status
Income, Education, and Occupation

13. Age: Segmentation by Age Effects and Cohort Effects
Seven Life Development Stages (Table 3.3)
Provisional Adulthood
Pulling up roots
First Adulthood
Reaching out, Questions/questions, Mid-life explosion
Second Adulthood
Settling Down, Mellowing, Retirement

14. Marital Status Households as a consuming unit Singles Divorced
Single parents
Dual-income married

15. Psychological Segmentation
Motivations
Personality
Perceptions
Learning
Attitudes

16. AIOs
Psychographic (lifestyle) variables that focus on activities, interests, and opinions.

17. 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 .
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]

18. Table 3.7 A Hypothetical Psychographic Profile of the Techno-Road-Warrior
Sends and/or receives 15 or more messages a week
Regularly visits Web sites to gather information and/or to comparison shop
Often buys personal items via 800 numbers and/or over the Internet
May trade stocks and/or make travel reservations over the Internet
Earns $100,000 or more a year

19. Figure 3.1 Centrum Targets Lifestyle

20. Sociocultural Segmentation
Family Life Cycle
Social Class
Culture, Subculture, and Cross-Culture

21. Family Life Cycle
Phases a family goes through in their formation, growth, and final dissolution
Bachelorhood
Honeymooners
Parenthood
Post-parenthood
Dissolution
Explicit basis: marital status, family status
Implicit basis: age, income, employment

22. Use-Related Segmentation
Rate of Usage
Heavy vs. Light
Awareness Status
Aware vs. Unaware
Brand Loyalty
Brand Loyal vs. Brand Switchers

23. Figure 3.2 Campbell’s Seeks to Create Awareness and Interest

24. 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.

25. Figure 3.3 Ad Designed to Spell Out Rewards of Consumer Loyalty

26. Figure 3.4 Occasion- Specific Ad

27. Benefit Segmentation
Segmenting on the basis of the most important and meaningful benefit
Prudential - financial security
Iomega - data protection
Wheaties - good health
Eclipse - fresh breath

28. Figure 3.5 Ad Offering Combined Benefits

29. Hybrid Segmentation Approaches
Psychographic-Demographic Profiles
Geodemographic Segmentation
SRI Consulting’s Values and Lifestyle System (VALSTM)

30. Table 3.8 Demographic-Psychographic Profile of Newsweek
% Index
Total adult readers 19,593,000
Men
Professionals/ Managers
Age 35-49
Household income >$100,000
Married
Own laptop PC
Spent $3000+ on vacation last year

31. Table 3.9 Demographic-Psychographic Internet Shopping Styles
E-bivalent Newbies
Time-Sensitive Materialists
Clicks & Mortar
Hooked, Online, & Single
Hunter-Gatherers
Brand Loyalists

32. Figure 3.6 Targeting An Active Lifestyle

33. Table 3.10 Sample Claritas Geodemographic Clusters
Blue Blood Estates
.8% of U.S. households
Professional
Elite super-rich
College graduate
35-44, 45-54, 55-64
Country club members, own mutual phones, play golf
Young Influentials
1.1% of U.S. households
Professional
College graduate
Under 24, 25-34
Yuppies, drink imported beer, read fashion magazines

34. Figure 3.8 VALS High Resources Low Resources STRUGGLERS FULFILLEDS
BELIEVERS
ACHIEVERS
EXPERIENCERS
STRIVERS
MAKERS
Low Resources
High Resources
Action Oriented
Status Oriented
Principle Oriented
ACTUALIZERS
Figure 3.8 VALS

35. Figure 3.9 VALS 2 Segments and Participation in Selected Sports

36. Table 3.11 Size of VALS Segment as Percent of U.S. Population
VALSTM SEGMENT
PERCENT OF POPULATION
Actualizer
11.7%
Fulfilled
10.5
Believer
17.0
Achiever
14.7
Striver
11.8
Experiencer
12.9
Maker
12.0
Struggler
9.5

37. Mindbase Segmentation
Monitor Mindbase based on Yankelovich’s Monitor Survey of American Values and Attitudes
Table 3.12

38. Table 3.12 Eight Major Mindbase Segments
Up and Comers
Young Materialists
Stressed by Life
New Traditionalists
Family Limited
Detached Introverts
Renaissance Elders
Retired from Life

39. Criteria For Effective Targeting of Market Segments
Identification
Sufficiency
Stability
Accessibility