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8
Identifying
Market Segments
and Targets

Marketing Management
A South Asian Perspective, 13th ed

Chapter Questions

• What are the different levels of market
segmentation?
• How can a company divide a market
into segments?
• How should a company choose the
most attractive target markets?
• What are the requirements for effective
segmentation?

Copyright © 2009 Dorling Kindersley (India) Pvt. Ltd. 8-2

Effective Targeting Requires…

• Identify and profile distinct groups of
buyers who differ in their needs and
preferences
• Select one or more market segments to
enter
• Establish and communicate the
distinctive benefits of the market
offering


Ford’s Model T Followed a Mass
Market Approach


Four levels of Micromarketing

Segments Niches

Local areas Individuals


What is a Market Segment?

A market segment consists of a
group of customers who share a
similar set of needs ad wants.


Gather.com: A Niche
Social Networking Site


Flexible Marketing Offerings

• Naked solution: • Discretionary
Product and service options: Some
elements that all segment members
segment members value options but
value not all


Preference Segments

• Homogeneous preferences exist
when consumers want the same things
• Diffused preferences exist when
consumers want very different things
• Clustered preferences reveal natural
segments from groups with shared
preferences


The Himalaya Drug
Company serves a
growing niche
market by focusing
on ayurvedic
medicines and
health supplements


The Long Tail
• Chris 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.


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.


United Bank
Ltd. of
Pakistan offers
customized
Galleria credit
cards to its
customers


Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral


Demographic Segmentation

Age and Life Cycle
Life Stage
Gender
Income
Generation
Social Class


Bank Al Habib
targets
senior citizens


Dove Targets Women


Figure 8.1
The VALS Segmentation System


Behavioral Segmentation

Decision Roles Behavioral Variables
• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude

The Brand Funnel Illustrates
Variations in the
Buyer-Readiness Stage
• Aware
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used


Loyalty Status

Hard-core

Split loyals

Shifting loyals

Switchers


Figure 8.3 Behavioral
Segmentation Breakdown


The Conversion Model

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable


Segmenting for Business Markets

Demographic

Operating Variable

Purchasing Approaches

Situational Factors
Personal
Characteristics


Steps in Segmentation Process

Needs-based segmentation

Segment identification Marketing-Mix
Segment attractiveness Strategy

Segment profitability

Segment positioning

Segment acid test

Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable


Figure 8.4 Patterns of
Target Market Selection


The Revolution
brand of ready-
made women’s
apparel
successfully
focuses on the
niche segment of
plus-size clothes.


Figure 8.5 Segment-by-Segment
Invasion Plan


Pepsi used Megamarketing in India


Marketing Debate

 Is mass marketing dead?
Take a position:
4. Mass marketing is dead.
or
2. Mass marketing is still a viable way to build
a profitable brand.


Marketing Discussion

 Think of various product categories.
 How would you classify yourself
in terms of the various segmentation
schemes?
 How would marketing be more or less
effective for you depending upon the
segment involved?


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