1. Marketing Quality Circle8
Identifying Market Segments and Targets
Marketing Quality Circle

2. LEARNING OBJECTIVES After reading this chapter, students should:
Know what are the different levels of market segmentation
Know how a company can divide a market into segments
Know how a company should choose the most attractive target markets
Know what are the requirements for effective segmentation

3. What is Segmentation

4. Why Segmentation?
© Malcolm McDonald

5. Market Segmentation Continuum of Market Segmentation Size Mass Market
Segment Marketing
Micro-marketing
Niche
The Individual
Continuum of Market Segmentation Size
Personalization
Micro-marketing
Niche
Segmentation
Standardized Marketing Mix

6. Flexible Marketing Offerings
Naked solution: Product and service elements that all segment members value
Discretionary options: Some segment members value options but not all

7. Preference Segments
Homogeneous preferences exist when consumers want the same things
Diffused preferences exist when consumers want very different things
Clustered preferences reveal natural segments from groups with shared preferences

8. The Long Tail Chris Anderson explains the long tail equation:
The lower the cost of distribution, the more you can economically offer without having to predict demand;
The more you can offer, the greater the chance that you will be able to tap latent demand for minority tastes; and
Aggregate enough minority taste, and you may find a new market.

9. What is Customerization?
Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

10. Segmenting Consumer Markets
Geographic
Demographic
Psychographic
Behavioral

11. Geographic Segmentation

12. Demographic Segmentation
Age and life cycle
Life stage
Gender
Income
Generation
Social class

13. Psychographic Segmentation

14. Behavioral Segmentation
Decision Roles
Initiator
Influencer
Decider
Buyer
User
Behavioral Variables
Occasions
Benefits
User Status
Usage Rate
Buyer-Readiness
Loyalty Status
Attitude

15. Conversion Model Convertible Strongly Unavailable Low Low
Strength of commitment
Balance of Disposition
Shallow
Weakly Unavailable
Users
Average
Ambivalent
Non Users
Entrenched
Available
High
High

16. Segmenting for Business Markets
Demographic
Operating variable
Purchasing approaches
Situational factors
Personal characteristics

17. Steps in Segmentation Process
Need-based segmentation
Segment identification
Segment attractiveness
Segment profitability
Segment positioning
Segment acid test
Market mix strategy

18. Effective Segmentation Criteria
Measurable
Substantial
Accessible
Differentiable
Actionable

19. What is Targeting?

20. Effective Targeting Requires…
Identify and profile distinct groups of buyers who differ in their needs and preferences
Select one or more market segments to enter
Establish and communicate the distinctive benefits of the market offering

21. Evaluating and Selecting the Marketing Segments
Single Segment Concentration
Selective Specialization
Product Specialization
Market Specialization
Full Market Coverage

22. Additional Considerations
Segment by Segment Invasion Plans

23. What is Positioning?

24. Identifies the target market
Niches
Adam Smith
Segments
Naked Solutions
Discretionary options
Distinct set of needs
Willingness to pay premium.
Less likely to attract competitors
Micro marketing
Why Segmentation?
BASES FOR SEGMENTING
Buyer Readiness
Aware
Ever tried
Recent trial
Occasional user
Regular user
Most often used
Identifies the target market
Competition related
Demographic
Enduse
Operating Variable
Situational Factors
Purchasing Approaches
Personal
Characteristics
Segmenting Industrial
Business Markets
Location
Size
Effective Segmentation Criteria
Local areas
Individuals
Scientific Management
Customer based
Geographic location
Demographics of Customers
Psychographic Variables
Product related
Product Use situations
Benefits Segmentation
Quantity consumed
Hard core
Split
Shifting
Switchers
Behavioral
Decision Roles
Initiator
Influencer
Decider
Buyer
User
Behavioural Variables
Occasions
Benefits
User Status
Usage Rate
Buyer-Readiness
Loyalty Status
Attitude
SESSION 5
CHAPTER 8