Chapter 8 IDENTIFYING MARKET SEGMENTS AND TARGET

IDENTIFYING MARKET SEGMENTS AND TARGETS
Market Segmentation
 Is a method of “dividing a market (Large) into smaller groupings of

consumers or organizations in which each segment has a common
characteristic such as needs or behavior.”
LEVELS OF MARKET SEGMENTATION:
 Segment Marketing:Consists of a group of customers who share a

similar set of needs and wants.
 Niche Marketing: A niche is a more closely defined group, it is
dividing the segment in to sub segment and it can be divided by
identifying the distinct trait of consumer which might need special
combination of benefits this sub segments are made for those
consumers whose needs and wants are not satisfied.
 Local Marketing:Local marketing focus on brands and promotion to
the needs and wants of local consumer and design marketing
program according to the need of local consumer groups cities,
neighborhoods and even specific stores.
 Individual marketing: focus on satisfying the needs and wants of
individual customer it’s also known as one-to-one marketing and
customized marketing it’s the segmentation level where seller offer
customized product to the consumer in other words a product
according to the needs and preference of consumer.
BASES FOR SEGMENTING CONSUMER MARKETS:
 Geographic Segmentation: Geographic segmentation refers to

dividing a market into different geographical units such as nations,
states, regions, cities, or neighborhoods.
 Demographic Segmentation:Demographic segmentation divides
the markets into groups based on variables such as age, gender,
family size, income, occupation, education, religion, race and
nationality. Demographic factors are the most popular bases for
segmenting the consumer group. One reason is that consumer
needs, wants, and usage rates often vary closely with the
demographic variables. Moreover, demographic factors are easier to
measure than most other type of variables.
 AGE
Consumer needs and wants change with age. The
marketing mix may therefore need to be adapted
depending on which age segment or segments are being
targeted.
 GENDER
Dividing a market into different groups based on sex, has
long been common for many products
including cosmetics, clothing and magazines.
 INCOME
Markets are also segmented on the basis of income.
Income is used to divide the markets because it
influences the people’s product purchase.
 FAMILY SIZE
Product needs vary according to age, number of persons
in the household, marital status, and number and age of
children.
 Psychographic Segmentation: Psychographic segmentation

pertains to lifestyle and personality traits. In the case of certain
products, buying behavior predominantly depends on lifestyle and
personality characteristics.
• Personality characteristics:
 It refers to a person’s individual character traits,
attitudes and habits. Here markets are segmented
according to competitiveness, introvert, extrovert,
ambitious, aggressiveness, etc.
• Lifestyle:
 It is the manner in which people live and spend their
time and money. Lifestyle analysis provides
marketers with a broad view of consumers because
it segments the markets into groups on the basis of
activities, interests, beliefs and opinions.
 Behavioural Segmentation: In behavioural segmentation, buyers
are divided into groups on the basis of their knowledge of, attitude
towards, use of, or response to a product. Behavioural segmentation
includes segmentation on the basis of occasions, user status, usage
rate loyalty status, buyer-readiness stage and attitude.
Behavioral Variables:
• OCCASIONS
 Buyers can be distinguished according to the occasions when they
purchase a product, use a product, or develop a need to use a
product. It helps the firm expand the product usage.
• BENEFITS
 Buyers can be segmented according to the benefits they seek.
• USAGE RATE
 Markets can be distinguished on the basis of usage rate, that is, on
the basis of light, medium and heavy users.
• BUYER READINESS STAGE
 The six psychological stages through which a person passes when
deciding to purchase a product. The six stages are awareness of the
product, knowledge of what it does, interest in the product,
preference over competing products, conviction of the product’s
suitability, and purchase.
• LOYALTY STATUS
 Buyers can be divided on the basis of their loyalty status:
o hardcore loyal (consumer who buy one brand all the
time),
o split loyal (consumers who are loyal to two or three
brands),
o shifting loyal (consumers who shift from one brand to
another),
o switchers (consumers who show no loyalty to any brand).
The Conversion Model
 It measures the strength of consumers’ psychological

commitment to brands and their opened to change. Users are
grouped as convertible, shallow, average and entrenched. Non-
users are grouped as strongly unavailable, weakly unavailable,
ambivalent, and available.
Bases for Segmenting Business Markets:

o Demographic
 Industry: Which industries should we serve?
 Company size: What size company should we
serve?
 Location: What geographical areas should we
serve?
o Operating Variables
 Technology: What customer technologist should we
focus on?
 User or Non-user status: Should we serve heavy
users, medium users, light users, or
nonusers?
 Customer capabilities: Should we serve customers
needing many of few services?
o Purchasing Approaches
 Purchasing-function organization: Should we serve
companies with highly centralized or decentralized
purchasing organization?
 Power structure: Should we serve companies that
are engineering dominated, financially dominated,
and so on?
 Nature of existing relationship: Should we serve
companies with which have strong relationship or
simply go after the most desirable companies?
 General purchasing policies: Should we serve
companies that prefer leasing? Service contract?
Systems purchases? Seated bidding?
 Purchasing criteria: Should we serve companies
that are seeking quality? Service? Price?
o Situational Factors
 Urgency: Should we serve companies that need
quick and sudden delivery or service?
 Specific application: Should we focus on certain
application of our product rather than all
application?
 Size or order: Should we focus on large or small
orders?
o Personal Characteristics
 Buyer-seller similarity: Should we serve companies
whose people and values are similar to ours?
 Attitude toward risk: Should we serve risk-taking or
risk-avoiding customers?
 Loyalty: Should we serve companies that show high
loyalty to their suppliers?
Market Targeting
 This process is the selection of a particular market after identifying

segment opportunities.
Effective Segmentation Criteria:
There are many ways to segment the market, but not all
segmentation are effective.
 Measurable
 Refers to the fact that the market size, purchasing
power and profiles of the segments needs to be
measured. Certain segmentation variables are
something difficult to measure.
 Substantial
 Refers to the fact that market segments are large or
profitable enough to serve.
 Accessible
 Refers to the fact that the market segments needs
to be effectively reached and serve.
 Differentiable
 Refers to the fact that the segments are
conceptually distinguishable (separable from each
other) and respond differently to different marketing
mix elements and programs.
 Actionable
 Refer to the fact that effective programs can be
designed and implemented for attracting and
serving the segments.
EVALUATING AND SELECTING THE MARKET SEGMENTS:

• Single-segment concentration.
 Your business is focused on one segment of the market.
• Selective specialization.
 Your business focuses on a number of segments in the market -
there is not necessarily any relationship between the segments
however each segment has a high degree of value for your
business objectives and resources.
• Product specialization.
 Your business focuses on one product that it sells to a number

of segments.
• Market specialization.
 Your business focuses on supplying many products to one

market segment.
• Total market coverage.
 Your business has many products and services many markets.

This by definition means your business must be large to be
capable of providing this type of coverage into the market.

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IDENTIFYING MARKET SEGMENTS AND TARGETS

 Is a method of “dividing a market (Large) into smaller groupings of

LEVELS OF MARKET SEGMENTATION:

 Segment Marketing:Consists of a group of customers who share a

BASES FOR SEGMENTING CONSUMER MARKETS:

 Geographic Segmentation: Geographic segmentation refers to

 Psychographic Segmentation: Psychographic segmentation

The Conversion Model

 It measures the strength of consumers’ psychological

Bases for Segmenting Business Markets:

 This process is the selection of a particular market after identifying

Effective Segmentation Criteria:

EVALUATING AND SELECTING THE MARKET SEGMENTS:

 Your business focuses on one product that it sells to a number

 Your business focuses on supplying many products to one

 Your business has many products and services many markets.

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