Market segmentation What Is Market Segmentation? Bases for Segmentation Geographic Demographic Psychological Psychographic Sociocultural Criteria for Effective Targeting of Segments Implementing Segmentation Strategies Family Life Cycle Advertising Use-Related Segmentation Criteria for Effective Targeting of Market Segments Implementing Segmentation Strategies Targeting Psychographic Segmentation

1. Consumer Behavior,
Ninth Edition
Schiffman & Kanuk
Market Segmentation
Consumer Behavior,
Prepared By,
Mr. Nishant Agrawal
METAS Adventist College
(NEHU)

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Outline
• What Is Market Segmentation?
• Bases for Segmentation
• Criteria for Effective Targeting of
Segments
• Implementing Segmentation Strategies

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Market Segmentation
The process of dividing a
potential market into
different subsets of
consumers and selecting
one or more segments as
a target market to be
reach.

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Three Phases of Marketing
Strategy
Phase 2
Target Market
Phase 3
Product/Brand Positioning
Phase 1
Market Segmentation

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Segmentation Studies
• Discover the needs and wants of groups of
consumers to develop specialized products to
satisfy group needs
• Used to identify the most appropriate media for
advertising
•

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Discussion Question
• Considering the largest bank in your
college’s city or town:
– How might consumers’ needs differ?
– What types of products might meet their
needs?
– What advertising media makes sense for
the different segments of consumers?

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Bases for Segmentation
• Geographic
• Demographic
• Psychological
• Psychographic
• Sociocultural
• Use-Related
• Usage-Situation
• Benefit Sought

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Market Segmentation
Occupation
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Climate
Density of area
City Size
Region Southwest, Mountain States, Alaska, Hawaii
Major metropolitan areas, small cities, towns
Urban, suburban, exurban, rural
Temperate, hot, humid, rainy
Demographic Segmentation
Income
Marital status
Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Single, married, divorced, living together, widowed
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
Professional, blue-collar, white-collar, agricultural,
military

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Table 3.1, continued
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Learning-involvement
Perception
Personality
Needs-motivation Safety, security, affection, sense of self-worth
Extroverts, novelty seeker, aggressive, innovators
Low-risk, moderate-risk, high-risk
Low-involvement, high-involvement
Psychographic
Subcultures (Race/ethnic)
Religion
Cultures
(Lifestyle) Segmentation Economy-minded outdoors enthusiasts, status seekers
American, Italian, Chinese, Mexican, French, Pakistani
Catholic, Hindu, Moslem, other
African American, Asian
Family life cycle
Social class Lower, middle, upper
Bachelors, young married, full nesters, empty nesters
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation

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SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED 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 Free time, 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
Continue…

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Geographic Segmentation
• The division of A total potential market into smaller
subgroups on the basis of geographic variables
• Region
• State
• City

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Demographic Segmentation
• Segmentation according to demography is based
on variables such as age, generation, religion,
occupation and education level

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Psychological Segmentation
• Motivations
• Personality
• Perceptions
• Learning
• Attitudes

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Psychographic Segmentation
• Psychographic segmentation which is sometimes
called lifestyle is measured by studying the activities,
interests, and opinions of customers. It considers how
people spend their spare time.
• Lifestyle products may pertain to high involvement products
and purchase decisions, to speciality or luxury products and
purchase decisions.

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Sociocultural Segmentation
• Family Life Cycle
• Social Class (Lower , middle and Upper )
• Culture, Subculture

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Family Life Cycle Advertising
Video cameras are
often purchased
by young couples
with children.

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Discussion Questions
• What types of marketers might
segment according to social class?
• What ethical issues might marketers
have when marketing to different social
classes?

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Use-Related Segmentation
• Consumers are grouped in different segments based on
consumption of certain products and services and usage
rate, brand loyalty, adoption of innovative product, time,
location, person etc.
• The objective of this segmentation is to penetrate in others
market.
• For example, Coca-Cola and Pepsi target the same
customers, it has to be surveyed why consumption of one
brand is more than the other.

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Usage-Situation Segmentation
• Segmenting on the basis of special occasions or
situations
• Example Statements:
– When I’m away on business, I try to stay at a suites hotel.
– When there is holiday we spend time with family / friends.

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Benefit Segmentation
• Benefit segmentation requires marketers to divide the
market based on the perceived benefit of the product or
service.
• This type of segmentation may be used in clothing,
appliance, consumer, cosmetic, and several other industries.
• The segmentation of the consumers based on what
particular benefit of the product appeals to them.
• Different consumers look for different benefits and the
marketer needs to understand each segment and
accordingly develop his communication for each group.

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Criteria for Effective Targeting of Market
Segments
• Identification
• Sufficiency
• Stability
• Accessibility
• Measurable and Obtainable
• Relevant
• Valid

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Implementing Segmentation Strategies
• Concentrated Marketing
– One segment
• Differentiated
– Several segments with individual marketing sizes

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Targeting
• First you decide which segments to target by finding the
most attractive ones. There are several factors to consider
here.
• First, look at the profitability of each segment. Which
customer groups contribute most to your bottom line?
• Next, analyze the size and potential growth of each
customer group. Is it large enough to be worth addressing?
Is steady growth possible? And how does it compare with
the other segments?

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Thank You