1. IDENTIFYING MARKET SEGMENTS AND SELECTING TARGET MARKETS
CHAPTER 9
IDENTIFYING MARKET SEGMENTS AND SELECTING TARGET MARKETS

2. IMPORTANT TOPICS OF THIS CHAPTER
Elements of market segmentations
Different levels of market segmentation
Segmentation procedure
Segmentation in consumer market
Segmentation in business market
Requirements for effective segmentation
Market targetting

3. MARKET SEGMENTATION Identify segment Evaluate Positioning
Develop profiles Select Communicate
Market Segmentation
Market Targeting
Market Positioning

4. MARKET SEGMENTATION Levels of Segmentation: Mass Marketing:
Mass production, mass distribution and mass promotion
Segment Marketing:
Identifiable segment
Niche Marketing:
Narrowly defined market
Local Marketing:
Satisfy needs of local customers
Individual Marketing:
Customized or one-to-one marketing

5. MARKET SEGMENTATION (CONT.)
Patterns of Segmentation:
Homogeneous:
Similar preferences:no clear segment
Diffused:
No clear preferences :scattered around
Clustered:
Distinct preferences:concentrated market

6. MARKET SEGMENTATION (CONT.)
Segmentation Procedures:
Survey stage:
Exploratory:
Focus group interviews.
Analysis stage:
Multivariate techniques:
Cluster Analysis, Factor analysis.
Profiling stage:
Description of the segment by age, income, education, hobbies, etc.

7. BASES FOR SEGMENTATION IN CONSUMER MARKETS
Segmentation by consumer characteristics:
Geographic:
East, West, North, Europe, Asia
Demographic:
Age and life cycle, gender, income, generation(baby boomers) and social class.
Psychographics:
Life style and personality
Behavioral:
Occasions, benefits, usage rate and status, loyalty
Multi-Attribute Segmentation (Geoclustering):
PRIZM cluster ( clustering by zip codes)

8. BASES OF SEGMENTING IN BUSINESS MARKETS
Micro Segmentation-firm bases:
Purchasing process/decision style
Decision making style-participative/nonparticipative
Macro Segmentation-market bases:
Location, size and number of employees
Total market share in the industry
Purchasing Process-first-time buyers, novice and sophisticates buyers.

9. SEGMENTATION IN BUSINESS MARKETS
Programmed buyers:
Routine purchase
Relationship buyers:
Knowledgeable about competition
Transaction buyers:
Price and service sensitive buyers
Bargain hunters:
Ready to switch to competition

10. SEGMENTATION IN BUSINESS MARKET (CONT.)
First-time prospects:
Customers who have not purchased yet.
Novices:
Customers who are starting their relationships
Sophisticates:
Established customers

11. REQUIREMENTS FOR EFFECTIVE SEGMENTATION
Measurable:
Size and power must be measured.
Substantial:
Large enough to make profit.
Accessible:
Easily reached and served.
Differentiable:
Distinguishable and respond differently to different marketing mix.
Actionable:
Open to service.

12. MARKET TARGETING Evaluating the Segments: Selecting the Segments:
Overall attractiveness:
Size, growth and risk factor
Suitable for company’s objectives and resources
Selecting the Segments:
Single segment concentration
Selective specialization:
Number of segments
Product specialization:
Consumer Vs government
Market specialization:

13. MARKET TARGETING (CONT.)
Full market coverage (IBM, Coca Cola, GM, GE)
Undifferentiated marketing:
standardization and mass production
Differentiated marketing:
cost factor- production, manufacturing, administrative, inventory and promotion

14. ADDITIONAL CONSIDERATION
Ethical Choices of Market Target:
Cigarettes, beer
Segment Interrelationships and Super-segments:
Toothpaste
Segment-by-Segment Invasion:
Toyota and Nissan
Inter-segment Cooperation:
cooperation within the company