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Identifying Market
Segments and
Targets
Four levels of Micromarketing
Segments
Local areas Individuals
Niches
Steps in Market Segmentation, Targeting
and Positioning
• Identify and profile distinct groups of buyers who differ
in their needs and preferences(market segmentation).
• Select one or more market segments to enter(market
targeting).
• Establish and communicate the distinctive benefits of
the market offering(market positioning).
What is a Market Segment?
A market segment consists of a group of
customers who share a similar set of needs and
wants.
Segment Marketing
Marketer must identify the markets and decide which
one to target
Examples:
•Siemens Electrical Apparatus
•Cebu Pacific Airlines
Flexible Marketing Offerings
• Naked solution: Product
and service elements that
all segment members
value
• Discretionary options:
Some segment members
value options but not all
Segment Marketing
• 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
Preference Patterns
Segment Marketing
Preference Patterns(ice cream buyers)
Niche Marketing
A Niche is a narrowly defined customer group looking for
a distinct mix of benefits. Has a distinct set of needs, willing to
pay a premium, is fairly small, gains economies through
specialization
Examples:
•Luxury cars ,designer clothes, etc
•Specializing in a certain field of medicine
Local marketing
Tailoring to needs and wants of local groups. Emphasis on
local marketing initiatives.
Examples:
•Citibank
•McDonald’s
•Private practice of doctors in different areas
Customerization
Examples:
•Specialty bakeshops making
custom designed cakes, etc.
•Patient care is individualized
Combines operationally driven mass customization with
customized marketing in a way that empowers consumers
(individuals)to design the product and service offering of their
choice.
Segmenting Consumer Markets
Geographic
Region, City or Town
Size, Density, Climate
Demographic
Age, Gender, Family size
and Life cycle, Race,
Occupation, or Income
Lifestyle or Personality
Psychographic
Occasions, Benefits,
Uses, or Attitudes
Behavioral
Geographic Segmentation
Dividing market into geographical units .Can be
divided into nations, states, regions, countries, cities
or neighborhoods
Demographic Segmentation
Age and Life CycleAge and Life Cycle
Life StageLife Stage
GenderGender
IncomeIncome
GenerationGeneration
Social ClassSocial Class
Demographic Segmentation
Market divided into groups based on variables such as age,
family size, family life cycle, gender, income, occupation,
education, religion, etc.
Examples:
•Dove’s Campaign for Real Beauty
•Pond’s Age Defying Serum
•Age-specific specialization (Pediatrics, Geriatrics,etc.)
Gender specific specialization (OB-Gynae, Urology, etc.)
Psychographic Segmentation
Psychographics is the science of using psychology and
demographics to better understand consumers. Market is
divided into different groups on the basis of
psychological/personal traits, lifestyle, or values
Psychographic Segmentation:
The VALS Segmentation System
Behavioral Segmentation
Divide market into groups on the basis of their knowledge of,
attitude toward, use of, or response to a product ,i.e based
on decision roles and behavioral variables
Behavioral Segmentation
Decision Roles
• Initiator
• Influencer
• Decider
• Buyer
• User
Behavioral Variables
• Occasions
• Benefits
• User Status
• Usage Rate
• Buyer-Readiness
• Loyalty Status
• Attitude
Behavioral
Segmentation
Breakdown
Segmenting for Business Markets
DemographicDemographic
Operating VariableOperating Variable
Purchasing ApproachesPurchasing Approaches
Situational FactorsSituational Factors
Personal
Characteristics
Personal
Characteristics
Major Segmentation Variables for
Business Markets
Demographic
1. Industry: Which industries should we serve?
2. Company size: What size companies should we serve?
3. Location: What geographical areas should we serve?
Operating Variables
4. Technology: What customer technologies should we focus on?
5. User or nonuser status: Should we serve heavy users, medium
users, light users, or nonusers?
6. Customer capabilities: Should we serve customers needing many
or few services?
Major Segmentation Variables for
Business Markets
Purchasing Approaches
7. Purchasing-function organization: Should we serve companies with
a highly centralized or decentralized purchasing organization?
8. Power structure: Should we serve companies that are engineering
dominated, financially dominated, and so on?
9. Nature of existing relationship: Should we serve companies with
which we have strong relationships or simply go after the most
desirable companies?
10.General purchasing policies: Should we serve companies that
prefer leasing? Service contract? Systems purchases? Sealed
bidding?
11.Purchasing criteria: Should we serve companies that are seeking
quality? Service? Price?
Major Segmentation Variables for
Business Markets
Situational Factors
12. Urgency: Should we serve companies that need quick and sudden
delivery or service?
13. Specific application: Should we focus on a certain application of
our product rather than all applications?
14. Size or order: Should we focus on large or small orders?
Personal Characteristics
15. Buyer-seller similarity: Should we serve companies whose people
and values are similar to ours?
16. Attitude toward risk: Should we serve risk-taking or risk-avoiding
customers?
17. Loyalty: Should we serve companies that show high loyalty to their
suppliers?
Market Targeting
• Size, purchasing power, profiles
of segments can be measured.
• Segments can be effectively
reached and served.
• Segments are large or profitable
enough to serve.
MeasurableMeasurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
ActionableActionable
• Segments must respond
differently to different marketing
mix elements & programs.
• Effective programs can be
designed to attract and serve the
segments.
Effective Segmentation Criteria
Steps in Segmentation Process
• Need-based segmentation. Group customers into segments
based on similar needs and benefits sought by customers in
solving a particular consumption problem.
• Segment identification. For each needs-based segment,
determine which demographics, lifestyles, and usage behaviors
make the segment distinct and identifiable (actionable).
• Segment attractiveness. Using predetermined segment
attractiveness criteria (such as market growth, competitive
intensity, and market access), determine the overall
attractiveness of each segment.
Steps in Segmentation Process
• Segment profitability. Determine segment profitability.
• Segment positioning. For each segment, create a “value
proposition” and product-price positioning strategy based on that
segment’s unique customer needs and characteristics
• Segment acid test. Create “segment storyboard” to test the
attractiveness of each segment’s positioning strategy.
• Market mix strategy. Expand segment positioning strategy to
include all aspects of the marketing mix: product, price,
promotion, and place.
Evaluating Market Segments
• Segment Size and Growth
– Analyze current sales, growth rates and expected profitability
for various segments.
• Segment Structural Attractiveness
– Consider effects of: competitors, availability of substitute
products and, the power of buyers & suppliers.
• Company Objectives and Resources
– Company skills & resources needed to succeed in that
segment(s).
– Look for Competitive Advantages.
Patterns of Target Market Selection
Patterns of Target Market Selection
Patterns of Target Market Selection
Any Queries ?

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Identifying Market Segments and Targets / Marketing Management By Kotler Keller

  • 2. Four levels of Micromarketing Segments Local areas Individuals Niches
  • 3. Steps in Market Segmentation, Targeting and Positioning • Identify and profile distinct groups of buyers who differ in their needs and preferences(market segmentation). • Select one or more market segments to enter(market targeting). • Establish and communicate the distinctive benefits of the market offering(market positioning).
  • 4. What is a Market Segment? A market segment consists of a group of customers who share a similar set of needs and wants.
  • 5. Segment Marketing Marketer must identify the markets and decide which one to target Examples: •Siemens Electrical Apparatus •Cebu Pacific Airlines
  • 6. Flexible Marketing Offerings • Naked solution: Product and service elements that all segment members value • Discretionary options: Some segment members value options but not all Segment Marketing
  • 7. • 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 Preference Patterns Segment Marketing
  • 9. Niche Marketing A Niche is a narrowly defined customer group looking for a distinct mix of benefits. Has a distinct set of needs, willing to pay a premium, is fairly small, gains economies through specialization Examples: •Luxury cars ,designer clothes, etc •Specializing in a certain field of medicine
  • 10. Local marketing Tailoring to needs and wants of local groups. Emphasis on local marketing initiatives. Examples: •Citibank •McDonald’s •Private practice of doctors in different areas
  • 11. Customerization Examples: •Specialty bakeshops making custom designed cakes, etc. •Patient care is individualized Combines operationally driven mass customization with customized marketing in a way that empowers consumers (individuals)to design the product and service offering of their choice.
  • 12. Segmenting Consumer Markets Geographic Region, City or Town Size, Density, Climate Demographic Age, Gender, Family size and Life cycle, Race, Occupation, or Income Lifestyle or Personality Psychographic Occasions, Benefits, Uses, or Attitudes Behavioral
  • 13. Geographic Segmentation Dividing market into geographical units .Can be divided into nations, states, regions, countries, cities or neighborhoods
  • 14. Demographic Segmentation Age and Life CycleAge and Life Cycle Life StageLife Stage GenderGender IncomeIncome GenerationGeneration Social ClassSocial Class
  • 15. Demographic Segmentation Market divided into groups based on variables such as age, family size, family life cycle, gender, income, occupation, education, religion, etc. Examples: •Dove’s Campaign for Real Beauty •Pond’s Age Defying Serum •Age-specific specialization (Pediatrics, Geriatrics,etc.) Gender specific specialization (OB-Gynae, Urology, etc.)
  • 16. Psychographic Segmentation Psychographics is the science of using psychology and demographics to better understand consumers. Market is divided into different groups on the basis of psychological/personal traits, lifestyle, or values
  • 18. Behavioral Segmentation Divide market into groups on the basis of their knowledge of, attitude toward, use of, or response to a product ,i.e based on decision roles and behavioral variables
  • 19. Behavioral Segmentation Decision Roles • Initiator • Influencer • Decider • Buyer • User Behavioral Variables • Occasions • Benefits • User Status • Usage Rate • Buyer-Readiness • Loyalty Status • Attitude
  • 21. Segmenting for Business Markets DemographicDemographic Operating VariableOperating Variable Purchasing ApproachesPurchasing Approaches Situational FactorsSituational Factors Personal Characteristics Personal Characteristics
  • 22. Major Segmentation Variables for Business Markets Demographic 1. Industry: Which industries should we serve? 2. Company size: What size companies should we serve? 3. Location: What geographical areas should we serve? Operating Variables 4. Technology: What customer technologies should we focus on? 5. User or nonuser status: Should we serve heavy users, medium users, light users, or nonusers? 6. Customer capabilities: Should we serve customers needing many or few services?
  • 23. Major Segmentation Variables for Business Markets Purchasing Approaches 7. Purchasing-function organization: Should we serve companies with a highly centralized or decentralized purchasing organization? 8. Power structure: Should we serve companies that are engineering dominated, financially dominated, and so on? 9. Nature of existing relationship: Should we serve companies with which we have strong relationships or simply go after the most desirable companies? 10.General purchasing policies: Should we serve companies that prefer leasing? Service contract? Systems purchases? Sealed bidding? 11.Purchasing criteria: Should we serve companies that are seeking quality? Service? Price?
  • 24. Major Segmentation Variables for Business Markets Situational Factors 12. Urgency: Should we serve companies that need quick and sudden delivery or service? 13. Specific application: Should we focus on a certain application of our product rather than all applications? 14. Size or order: Should we focus on large or small orders? Personal Characteristics 15. Buyer-seller similarity: Should we serve companies whose people and values are similar to ours? 16. Attitude toward risk: Should we serve risk-taking or risk-avoiding customers? 17. Loyalty: Should we serve companies that show high loyalty to their suppliers?
  • 26. • Size, purchasing power, profiles of segments can be measured. • Segments can be effectively reached and served. • Segments are large or profitable enough to serve. MeasurableMeasurable AccessibleAccessible SubstantialSubstantial DifferentialDifferential ActionableActionable • Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments. Effective Segmentation Criteria
  • 27. Steps in Segmentation Process • Need-based segmentation. Group customers into segments based on similar needs and benefits sought by customers in solving a particular consumption problem. • Segment identification. For each needs-based segment, determine which demographics, lifestyles, and usage behaviors make the segment distinct and identifiable (actionable). • Segment attractiveness. Using predetermined segment attractiveness criteria (such as market growth, competitive intensity, and market access), determine the overall attractiveness of each segment.
  • 28. Steps in Segmentation Process • Segment profitability. Determine segment profitability. • Segment positioning. For each segment, create a “value proposition” and product-price positioning strategy based on that segment’s unique customer needs and characteristics • Segment acid test. Create “segment storyboard” to test the attractiveness of each segment’s positioning strategy. • Market mix strategy. Expand segment positioning strategy to include all aspects of the marketing mix: product, price, promotion, and place.
  • 29. Evaluating Market Segments • Segment Size and Growth – Analyze current sales, growth rates and expected profitability for various segments. • Segment Structural Attractiveness – Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers. • Company Objectives and Resources – Company skills & resources needed to succeed in that segment(s). – Look for Competitive Advantages.
  • 30. Patterns of Target Market Selection
  • 31. Patterns of Target Market Selection
  • 32. Patterns of Target Market Selection