Chapt 6 Targeting Attractive Market Segments

Chapter 6
Targeting
Attractive
Market
Segments
Reporter: Ricca Shaine U. Abeleda

Marvin C. Soriano Jr.
Market Segmentation and Target
Marketing in Today’s Economy
• Market segmentation is the process by

which a market is divided into distinct
subsets of customers with similar
needs and characteristics.
• Target marketing requires evaluating
the relative attractiveness of various
segments.
• Brand positioning
Kotler
“ The act of
designing the
company’s offering
and image to
occupy a distinctive
place in the mind of
the target market”
• Most markets are heterogeneous
- Products with attributes that are

significantly different from each other.
- Computer.You really can’t substitute a PC for a Mac, beacause each

computer platform is too different.
How are Market Segments Best
Defined?
• Segmentation decisions are
best made based on:
– Who the customers
are,
– Where they are, or
– How they behave
relevant to the market
in question.
Defined?
• Segmenting demographically
• (WHO THEY ARE)
– Demographic attributes used to segment
consumer markets are age; sex; income;
occupation; education; race and ethnic origin.
– Industrial markets are segmented in two

stages:
• Macrosegmentation
• Microsegmentation
Defined?
• Segmenting geographically
• (WHERE THEY ARE)
– Particularly important in retailing and
many services businesses.
– One way to segment retail markets is by
distance or driving time from a particular
location.
– The area included within such a
geographically defined region is called a
trade area.
Defined?
• Geodemographic segmentation
– Market segmentation within the
geographic regions.
– Useful in assessing the size and market
potential of a market segment defined by
a particular trade area.
– Attempts to predict consumer behavior by
making demographic.
Defined?
• Behavioral segmentation
• (HOW THEY ARE)
– Behavioral descriptors are based not on
who the target consumers are or where
they live, but based on what they do.
– Behavioral attributes can take many

forms.
How are Market CONSUMER NEEDS
Segments Best
Defined?
___Customer needs are
expressed in benefits
sought from a particular
product or service.
___Consumers evaluate
brand alternatives on the
basis of choice criteria.
How are Market Product usage and
Segments Best purchase influence
Defined?
___Product-related
attributes include product
usage, loyalty, and
purchase influence.
___Product usage is
important because in
many markets a small
proportion of customers
makes a high percentage
of purchases.
How are Market Lifestyle
Segments Best
Defined?
___ Segmentation by
lifestyle, or
psychographics,
segments markets on the
basis of consumers’
activities, interests, and
opinions.
How are Market – Organizational
behavioral
Segments Best attributes
Defined?
__Purchasing structure
and buying situation
segmentation attributes
are unique to
organizational markets.
__Purchasing structure is
the degree to which the
purchasing activity is
centralized.
How are Market • Innovative
Segments Best segmentation
Defined?
Understanding the
demographic profile
of a target market
enables the marketer
to better choose
targeted marketing
communication
vehicles.
Choosing Attractive
Market Segments: A
Five-Step Process
• Within an
established firm it
is often better to
apply a common
analytical
framework across
segments.
Steps in Constructing a Market-
Attractiveness/Competitive-Position Matrix for
Evaluating Potential Target Markets
• Choose criteria to measure market attractiveness
1 and competitive position.
• Weight market attractiveness and competitive
position factors to reflect their relative
2 importance.
• Assess the current position of each potential

3 target market on each factor.
Project the future position of each market based on

4 expected environmental, customer, and competitive
trends.
5 • Evaluate implications of possible future changes

for business strategies and resources
requirements.
Choosing Attractive Market Segments: A
Five-Step Process
• Step 1: Select
market-
attractiveness and
competitive-
position factors
– Market-
attractiveness
factors
– Competitive-
position factors
7-18
Choosing Attractive Market Segments:
A Five-Step Process
Step 2: Weight each

factor
• A numerical weight is
assigned to each factor
to indicate its relative
importance in the
overall assessment
A Five-Step Process
Step 3: Rate segments on
each factor, plot results on
matrices
• Once assessments have
been made, the weighted
results can be plotted on
a market-
attractiveness/competitiv
e-position matrix
Market-Attractiveness/Competitive-
Position Matrix
Choosing Attractive Market
Segments: A Five-Step Process
Step 4: Project future position for each
segment
• Determine how the market’s attractiveness
is likely to change over the next three to
five years.
• For this assessment, start by considering:
-Possible shifts in customer needs and
behavior.
-The entry or exit of competitors
and changes in their strategies.
A Five-Step Process
Step 5: Choose segments to
target, Allocate resources
• Managers should consider
a market segment to be a
desirable target only if it is
strongly positive on
market attractiveness and
potential competitive
position and at least
moderately positive on the
other.
Implications of Alternative Positions within the Market-Attractiveness/
Competitive-Position Matrix for Target Market Selection, Strategic
Objectives, and Resource Allocation
CHOOSING
Example is ATTRACTIVE MARKET
Nike. Choosing SEGMENTS:
attractive A
market
FIVE-STEP PROCESS
segments: A five-step:
Nike shoes 2018
Different Targeting Strategies Suit
Different Opportunities
Niche-market strategy
• Involves serving one or
more segments that, while
not the largest, consist of
a sufficient number of
customers seeking
somewhat-specialized
benefits from a good or
service.
• Designed to avoid direct
competition with larger
firms that pursue bigger
segments.
Mass-market strategy
• A business can pursue a
mass-market strategy in two
ways:
-Ignore any segment
differences and design a single
product-and-marketing program
that will appeal to the largest
number of consumers.
-Design separate products
and marketing programs
for the differing segments
(differentiated marketing).
Growth-market strategy
• Businesses often target one
or more fast-growth
segments, even though
these segments may not
currently be very large.
• Usually requires strong
R&D and marketing
capabilities, plus the
resources to finance rapid
growth.
Global Market Segmentation
• Traditional approach to global
market segmentation is flawed
because it:
– Relies on country variables
rather than consumer
behavior..
– Ignores the possibility of the
existence of homogeneous
groups of consumers across
country segments
Global Market Segmentation
Reasons why companies

expand internationally:
 To defend their home
position against global
competitors and will
bring them profits.
 To service customers
who are also engaging in
global expansion.
 To earn foreign
exchange.
Summarization of our
Report
SUMMARY
• Marketers and entrepreneurs who find new

and insightful ways to segment mature
markets often uncover opportunities for
uncontested market entry and rapid
growth.
• Sharply focused target marketing enables
marketers to differentiate from mass-
market leaders by giving consumers in a
narrowly defined market segment what
they want.
SUMMARY
• The five-step procedure provided in this

chapter identifies segments having the
highest potential.
• The market-attractiveness/competitive-
position matrix is a useful analytical
framework for deciding which markets or
market segments to enter and from which
to withdraw.
Market Segmentation
Advantages Disadvantages
Providing the More expensive,
products customers more difficult to
wants produce
Effective Expensive to set up
Communication Requires strong
Higher response rate marketing research
Repeat and loyal
customers 7-40

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Chapter 6

Reporter: Ricca Shaine U. Abeleda

• Market segmentation is the process by

- Products with attributes that are

- Computer.You really can’t substitute a PC for a Mac, beacause each

– Industrial markets are segmented in two

– Behavioral attributes can take many

• Assess the current position of each potential

Project the future position of each market based on

5 • Evaluate implications of possible future changes

Step 2: Weight each

Reasons why companies

• Marketers and entrepreneurs who find new

• The five-step procedure provided in this

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