7 Identifying Market Segments

and

Targets

Chapter Questions

What are the different levels of market segmentation?

How can a company identify the segments that make up a market?

How should a company choose the most attractive target markets?

7-2

7-3

What is Target Marketing?

In Mass Marketing, the seller is engaged in mass production, mass distribution and mass promotion.

What is Mass Marketing?

Identifying distinct groups of buyers who differ in their needs and preferences; Selecting one or more market segments to enter; Establishing and communicating the distinctive benefits of the market offering.

Four levels of Micromarketing

Segments

Local areas Individuals

Niches

7-4

Segment Marketing: Flexible Marketing Offerings

Naked solution: Product and service elements that all segment members value

Discretionary options:Some segment members value options but not all

7-5

Preference Segments

Homogeneous preferences

Diffused preferences

Clustered preferences

7-6

What is Customerization?

Customerization combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.

Segmenting Consumer Markets

GeographicGeographic

DemographicDemographic

PsychographicPsychographic

BehavioralBehavioral

7-8

Geographic Segmentation

7-9

Nations

States

Regions

Countries

Cities

Neighborhoods

Zip codes

7-10

Demographic Segmentation

Age

Lifecycle stage

Gender

Income

Generation

Social class

Race and Culture

Education, occupation

Psychographic Segmentation and the VALS Framework

7-11

The Long TailChris Anderson explains the long tail equation:

The lower the cost of distribution, the more you can economically offer without having to predict demand;

The more you can offer, the greater the chance that you will be able to tap latent demand for minority tastes; and

Aggregate enough minority taste, and you may find a new market.

Behavioral Segmentation

Decision Roles

Initiator

Influencer

Decider

Buyer

User

Behavioral Variables

Occasions

Benefits

User Status

Usage Rate

Buyer-Readiness

Loyalty Status

Attitude

7-13

The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage

Unaware

Aware

Ever tried

Recent trial

Occasional user

Regular user

Most often used

7-14

Behavioral Segmentation Breakdown

7-15

Example of a Brand Funnel

7-16

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Loyalty Status

Hard-core

Split loyals

Shifting loyals

Switchers

Segmenting Business Markets

‘Demographic’‘Demographic’

Operating VariableOperating Variable

Purchasing ApproachesPurchasing Approaches

Situational FactorsSituational Factors

PersonalCharacteristics

PersonalCharacteristics

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Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

The Conversion Model

Convertible Shallow Average Entrenched

Stronglyunavailable

Ambivalent AvailableWeakly

unavailable

Users Nonusers

7-20

Steps in Segmentation Process

Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

Marketing-MixStrategy

7-21

Porter’s 5 Forces Model

7-22

Threat of Rivalry

Threat of SupplierBargaining Power

Threat of Buyer Bargaining

Power

Threat of New Entrants

Threat of Substitutes

7-23

Patterns of Target Market Selection

Patterns of Target Market Selection

7-24

Patterns of Target Market Selection

7-25

Segment-by-Segment Invasion Plan

7-26