2. Chapter Questions
In what way can a company divide the consumer market
into segments?
How should business markets be segmented?
How should a company choose the most attractive target
markets?
What are the requirements for effective segmentation?
What are the different levels of market segmentation?
1
3. Levels of Market Segmentation
Effective target
marketing requires
that marketers:
2
• Identify and profile distinct
groups of buyers who differ in
their needs and preferences
Segment
• Select one or more market
segments to enter
Target
• Establish and communicate the
distinctive benefits of the
market offering
Position
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
4. What’s a Market Segment
3
A market segment
• consists of a group of
customers who share a similar
set of needs and wants.
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
5. Bases for Segmenting Consumer
Markets
4
GEOGRAPHIC DEMOGRAPHIC PSYCHOGRAPHIC BEHAVIORAL
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
7. Demographic Segmentation
6
Age and Life Cycle
Life Stage
Gender
Family size
Income
Generation
Social Class
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
8. Age and Lifecycle Stage
7
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
11. Psychographic Segmentation
One of the most popular
classification systems
based on psychographic
measurements is VALS
10
The VALS Segmentation System
Resourcefulness
Motivation
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
12. Behavioural Segmentation
In behavioural
segmentation, marketers
divide buyers into groups
on the basis of their
knowledge of, attitude
toward, use of, or
response to a product.
(Behavioral Variables)
11
Occasions
User Status
Usage Rate
Buyer-Readiness
Attitude
Loyalty Status
Chapter Question 1:
In what way can a company
divide the consumer market
into segments?
15. Segmenting for Business Markets
14
•Specialty
•Potentiality (size)
•Location
Demographic
•Technology used by the customer
•Heavy users, medium users, light users, or nonusers
•Prescribing attitudes / patterns
Operating Variable
•Purchasing function organization: Highly centralized or decentralized
purchasing organization
•Nature of existing relationships: customers with which we have strong
relations or go after the most desirable?
•General purchasing policies: bids, direct order…etc.
•Purchasing criteria: customers seeking quality, service? Price sensitivity?
Original? Generic loyalty?
Purchasing Approaches
•Urgency: Quick or sudden requests
•Loyalty status to suppliers
Situational Factors
Chapter Question 2:
How should business
markets be segmented?
16. Market Segmentation to Targeting
Best practices in customer identification and
segmentation include the following:
15
Create and maintain
a customer
information
system.
Use
SWOT analysis.
Use
customer and
market surveys
to evaluate
customer and
market
perceptions of
the
organization.
Choose
a segmentation
strategy that
fits the
strategic intent
in the context
of opportunity.
Chapter Question 3:
How should a company
choose the most attractive
target markets?
17. Market Targeting
Once the firm has identified its market-segment opportunities,
it must decide how many and which ones to target.
Table 8.2: Steps in the Segmentation
Process
16
Chapter Question 3:
How should a company
choose the most attractive
target markets?
18. Market Targeting
Evaluating Market Segments:
17
Company objectives & Resources:
Company skills & resources relative
to the segment(s).
Look for competitive advantages
Segment Structural Attractiveness:
Consider effects of competitors, availability of substitute products and the
power of buyers and suppliers.
Segment Size & Growth:
Analyze sales, growth rates and expected profitability
Chapter Question 3:
How should a company
choose the most attractive
target markets?
19. Levels of Market Segmentation & Targeting
Possible Strategies
•Create a
marketing mix for
only one or a few
segments.
•Create a separate
marketing mix for
EACH customer
•Create different
marketing mixes
for each segment
•Mass marketing
Undifferentiated
Marketing (no
segmentation)
Differentiated
Marketing (some
segmentation)
Concentrated
(Niche)
Marketing (more
segmentation)
Customized
(Micro)
Marketing
(complete
segmentation)
18
Chapter Question 3:
How should a company
choose the most attractive
target markets?
22. C. Concentrated (Niche) Marketing
21
Chapter Question 3:
How should a company
choose the most attractive
target markets?
23. Effective Segmentation Criteria
22
Chapter Question 4:
What are the requirements
for effective segmentation?
Measurable Substantial Accessible Differentiable
Actionable
24. Porter’s 5 Forces Model
23
Threat of
Rivalry
Threat of
Buyer
Bargaining
Power
Threat of
Supplier
Bargaining
Power
Threat of
Substitutes
Threat of
New
Entrants
Chapter Question 5:
What are the different
levels of market
segmentation?
25. Possible Levels of Segmentation
24
Chapter Question 5:
What are the different
levels of market
segmentation?
26. Patterns of Target Market Selection
After evaluating different segments, the company can
consider five patterns of target market selection:
25
Chapter Question 5:
What are the different
levels of market
segmentation?
Single-segment concentration
Selective specialization
Product specialization
Market specialization
Full market coverage
