Chapter 3 segmentation

Market segmentation targeting and
positioning

 Selecting customer to serve
The company must first
decide who it will serve, by
dividing the market into
segments of customers
(market segmentation) and
selecting which it will go
after (target marketing).
Selecting customer to serve

Dividing a market into
smaller group with
similar needs,
characteristics, or
behaviors who might
require separate
products or marketing
mixes.
Market segmentation

1-4
Market Segmentation
customer categories
Target Marketing
Selecting a category of customers with
similar wants and needs who are likely to
respond to the same products

1-5
Market Segmentation:
Divide the market into
segments of customers
Target Marketing:
Select the segment to
cultivate
#1 #2

1)Consumer Market Segmentation
2)Business Market Segmentation
3)International Market Segmentation

 There is no single way to segment a market. A
marketer has to try different segmentation variables,
alone and in combination to find the best way to view
the market structure.
Consumer market can be segmented through the
following variables
A. Geographic segmentation
B. Demographic segmentation
C. Psychographic segmentation
D. Behavioral segmentation

A. Dividing a market
into different
geographical units-
such as nations,
states, region, cities
or countries.
Geographic segmentation

 Dividing a market into groups
based on variables such as
 Age
 Gender
 Family life cycle
 Income
 Occupation
 Education
 Religion
 Nationality
Demographic segmentation

1. Age and Life cycle stage. Dividing
a market into different age and life
cycle groups.

2.Gender Segmentation-
different groups based
on gender
(male/female).
 For example- NIKE has
recently stepped up its
efforts to capture the
women sports apparel
market. Nike made
women’s shoes.

3.Income segmentation.
different income groups.
(high, medium and low
income groups)
 For example Honda
presenting Motor cycle
for low income and car
for high income groups.

Dividing a market
into different
groups based on
social class,
lifestyle and
personality
characteristics.

1. Dividing a market into groups
based on consumer knowledge,
use or response to a product.

2: Occasion segmentation-
when the buyers get the
idea to buy. (occasional
buyers)
Occasional buyers

3.Benefit segmentation-
dividing a market into
groups according to the
different benefits that
consumers seek from the
product.
 For example- free bag
with a laptop. Or
discount on software or
free delivery.
Benefits

4.Usage rate. Markets can also be
segmented into light, medium and
heavy usage.
5.Loyalty status. A market can also
be segmented by consumer
loyalty. Consumer can be loyal to
brand (surf excel), stores (Jans
Arcade) and companies (Toyota).
Use and loyalty

Table 3.1 Market Segmentation
Occupation
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Climate
Density of area
City Size
Region Kabul; Jalalabad; Ghazni; Khandhar
Major metropolitan areas, small cities, towns
Urban, suburban, rural
Temperate, hot, humid, rainy
Demographic Segmentation
Income
Marital status
Gender
Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, female
Single, married, divorced, 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, white-collar, agricultural, military

Table 3.1, continued
Psychological Segmentation
Learning-involvement
Perception
Personality
Needs-motivation Shelter, safety, security, social
Socializers, novelty seeker, aggressive, innovators
Low-risk, moderate-risk, high-risk
Low-involvement, high-involvement
Subcultures (Race/ethnic)
Religion
Cultures American, Italian, Chinese, Mexican, French, Pakistani
Islam; Catholic, Protestant, Jewish; other
African American, Caucasian, Asian, Hispanic
Family life cycle
Social class Lower, middle, upper
Bachelors, young married,
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation

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, value-for-the-money
Demographic/
Psychographics
Combination of demographic and psychographic profiles
of consumer segments profiles
Hybrid Segmentation
Table 3.1, continued

 Business markets can be segmented by Geographically and
Demographically.
 Customer operating characteristics
 Customer purchasing approaches
 For example: American Express focuses on convincing new merchants,
building relationships with old customers, and offering benefits to
corporate such as insurance plan, travel discounts etc.

 Forming segments of consumers who have similar needs and
buying behavior even though they are located in different
countries.
 World market can be segmented by geographic location,
grouping countries by region such as Western Europe, Middle
East, South Asia etc.
 World market can also be segmented on the basis of economic
factors. For example-countries might be grouped by population
income level or by their overall level of economic
development.
 World market can also be segmented by political and legal
factors, such as the type and stability of the Govt.

 Target market: A set of buyers sharing common needs or characteristics that
the company decides to serve.
 After successfully segmented the market the firm now must evaluate the
various segments and decide how many and which segment it can serve
best.

 In evaluating different market segments, a firm
must look at three factors:
 Segment size and growth (sales, growth rate and expected
profitability)
 Segment structural attractiveness (a segment is less
attractive if it already contain strong and aggressive competitors-substitute
products)
 Company’s objectives and resources.(even if a
segment has the right size and growth and is structurally attractive,
the company must consider its own objectives and resources)

 After evaluating different segments, the company must decide which and
how many segments it will target.
 A target market consists of a set of buyers who share common needs or
characteristics that the company decides to serve.
 Buyers have unique needs and wants, a seller could potentially view each
buyer as a separate target market. Then a seller might design a separate
marketing program for each buyer.
 Companies can target very broadly , very narrowly or some where in
between.

 Targeting broadly targeting narrowly

1. Undifferentiated Marketing
 A firm might decide to ignore
market segments and target the
whole market with one offer. This
mass marketing focuses on what is
common in the needs of
consumers rather than on what is
different.
Undifferentiated Marketing

2.Differentiated
Marketing
 A firm decides to target
several market segments
and design separate
offers for each.
Differentiated Marketing

3.Concentrated market
A third market coverage
strategy is specially
appealing when company
resources are limited.
Instead of going after a
small share of a large
market, the firm goes after a
large share of one or few
smaller segments.
Concentrated Marketing

4.Micromarketing
 The practice of tailoring products
and marketing program to the
needs and wants of specific
individuals.
5.Individual marketing- has also
labeled one to one marketing. For
example. Dell is doing individual
marketing, by taking the order of
every individual and prepare the
computer accordingly.
Micro & Individual Marketing

Chapter 3 segmentation

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