Chapter 3Market SegmentationMKT 344 Faculty NNA

Three Phases of Marketing Strategy

Phase 1Market Segmentation

Phase 2Target Market and Marketing Mix Selection

Phase 3Product/Brand Positioning

Chapter 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 distinct subsets of consumers and

selecting one or more segments as a target market to be reached

with a distinct marketing mix.

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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Ryka produces sneakers that meet the special needs of women’s feet.

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Bases for Segmentation

GeographicDemographicPsychographicSociocultural

Use-RelatedUsage-

SituationBenefit SoughtHybrid

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Table 3.1 Market Segmentation

Occupation

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Southwest, Mountain States, Alaska, Hawaii

Major metropolitan areas, small cities, towns

Urban, suburban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusSexAge Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, 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

blue-collar, white-collar, agricultural, military

Table 3.1, continued

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers

American, Italian, Chinese, Mexican, French, Pakistani

Catholic, Protestant, Jewish, Moslem, other

African American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Sociocultural Segmentation

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyaltyAwareness statusUsage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiasticNone, some, strong

Use-Situation Segmentation

LocationObjectiveTime Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievementHome, work, friend’s home, in-store

Person Self, family members, friends, boss, peersBenefit Segmentation Convenience, social acceptance, long lasting, economy,

value-for-the-money

Table 3.1, continued

Geographic Segmentation

The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city)

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Southwest, Mountain States, Alaska, Hawaii

Major metropolitan areas, small cities, towns

Urban, suburban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Age Sex (gradually disappearing) Marital Status Income, Education, and Occupation

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Occupation

Demographic Segmentation

Income

Marital statusSexAge Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, 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

blue-collar, white-collar, agricultural, military

Web sites for SinglesLooking for a Match

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weblink

Psychographic Segmentation

Also known as Lifestyle Analysis Psychographic variables include

Activities, Interests, and Opinions(AIOs)

Marketers can understand customers’ psychographic profile by understanding their activities, interest and opinions

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

Psychographic(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts,

status seekers

Table 3.6 Excerpts from AIO Inventory

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Instructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement.

I feel that my life is moving faster and faster, sometimes just too fast.

If I could consider the “pluses” and “minuses,” technology has been good for me.

I find that I have to pull myself away from e-mail.

Given my lifestyle, I have more of a shortage of time than money.

I like the benefits of the Internet, but I often don’t have the time to take advantage of them.

[1] [2] [3] [4][5] [6] [7]

[1] [2] [3] [4][5] [6] [7]

[1] [2] [3][4] [5] [6]

[7][1] [2] [3][4] [5] [6]

[7][1] [2] [3]

[4] [5][6] [7]

Agree Completely

Disagree Completely

Psychographic segmentation usually is calculated by likert scale

VALS (Values and Lifestyle) Framework Figure 3.4

• Ideals: Guided by Knowledge and Principle

• Achievers: Look for product or service that demonstrate success to their peers

• Self expression: Desire social and physical activity, variety and risk

Innovator

Innovators are successful, sophisticated, take-charge people with high self-esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services.

Image is important to Innovators, not as evidence of status or power but as an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges. Their lives are characterized by variety. Their possessions and recreation reflect a cultivated taste for the finer things in life.

Thinker

Thinkers are motivated by ideals. They are mature, satisfied, comfortable, and reflective people who value order, knowledge, and responsibility. They tend to be well educated and actively seek out information in the decision-making process. They are well-informed about world and national events and are alert to opportunities to broaden their knowledge.

Thinkers have a moderate respect for institutions of authority and social decorum but are open to consider new ideas. Although their incomes allow them many choices, Thinkers are conservative, practical consumers; they look for durability, functionality, and value in the products that they buy.

Believer

Like Thinkers, Believers are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. Many Believers express moral codes that have deep roots and literal interpretation. They follow established routines, organized in large part around home, family, community, and social or religious organizations to which they belong.

As consumers, Believers are predictable; they choose familiar products and established brands. They favor U.S. products and are generally loyal customers.

Achiever

Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and self-discovery.

With many wants and needs, Achievers are active in the consumer marketplace. Image is important to Achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of time-saving devices.

Striver

Strivers are trendy and fun loving. Because they are motivated by achievement, Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't have enough of it to meet their desires. They favor stylish products that emulate the purchases of people with greater material wealth. Many Strivers see themselves as having a job rather than a career, and a lack of skills and focus often prevents them from moving ahead.

Strivers are active consumers because shopping is both a social activity and an opportunity to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their financial circumstance will allow.

Experiencer

Experiencers are motivated by self-expression. Young, enthusiastic, and impulsive consumers, Experiencers quickly become enthusiastic about new possibilities but are equally quick to cool. They seek variety and excitement. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities.

Experiencers are passionate consumers and spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reflect the emphasis that they place on looking good and having "cool" stuff.

Makers

Like Experiencers, Makers are motivated by self-expression. They express themselves and experience the world by working on it—building a house, raising children, fixing a car, or canning vegetables—and have enough skill and energy to carry out their projects successfully. Makers are practical people who have constructive skills and value self-sufficiency. They live within a traditional context of family, practical work, and physical recreation and have little interest in what lies outside that context.

Makers are suspicious of new ideas and large institutions such as big business. They are respectful of government authority and organized labor but resentful of government intrusion on individual rights. They are unimpressed by material possessions other than those with a practical or functional purpose. Because they prefer value to luxury, they buy basic products.

Survivors

Survivors live narrowly focused lives. Because they have few resources with which to cope, they often believe that the world is changing too quickly. They are comfortable with the familiar and are primarily concerned with safety and security. Because they must focus on meeting needs rather than fulfilling desires, Survivors do not show a strong primary motivation.

Survivors are cautious consumers. They represent a very modest market for most products and services. They are loyal to favorite brands, especially if they can purchase them at a discount.

Sociocultural Segmentation

Family Life Cycle Social Class Culture, Subculture,

and Cross-Culture

SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES

Subcultures (Race/ethnic)

Religion

Cultures American, Italian, Chinese, Mexican, French, Pakistani

Catholic, Protestant, Jewish, Moslem, other

African American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Sociocultural Segmentation

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Family Life Cycle Advertising

Video cameras are often

purchased by young couples with children.

Use-Related Segmentation Rate of Usage

Heavy vs. Light Awareness Status

Aware vs. Unaware Brand Loyalty

Brand Loyal vs. Brand Switchers

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyaltyAwareness statusUsage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiasticNone, some, strong

Use-Situation Segmentation

LocationObjectiveTime Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievementHome, work, friend’s home, in-store

Person Self, family members, friends, boss, peersBenefit Segmentation Convenience, social acceptance, long lasting, economy,

value-for-the-money

Usage-Situation Segmentation

Segmenting on the basis of special occasions or situations

Example Statements: Candies on Valentine’s Day Flowers on Pahela Baishakh Sending more sms on the day before Eid

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Benefit Segmentation

Segmenting on the basis of the most important and meaningful benefit

Ex: LG G4

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Band-aid offers “flex”

as a

benefit to consumers.

Criteria for Effective Targeting of Market Segments

Identifiable Sizable Stable Accessible

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Implementing Segmentation Strategies

Behavioral targeting: Provide personalized advertising message

based on individual usage behavior Through Web browsing

Microtargeting Aggregating individual consumers into

relatively small groups based on data available about them from many different databases and targeting them with tailor made messages

Messages transmitted via narrowcasting Through e-mail, mobile, door to door

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Implementing Segmentation Strategies

Concentrated Marketing Target one segment with unique marketing mix Primarily for small or new companies Also appropriate for final stage PLC products when

the products are fading out from the market Differentiated

Targeting several segments with individual marketing mix

Mainly for companies having better financial condition/stability

Soft drinks, detergents

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