This document discusses market segmentation strategies. It defines market segmentation as dividing a potential market into distinct subsets of consumers. There are three phases to marketing strategy: 1) market segmentation, 2) target market and marketing mix selection, and 3) product/brand positioning. The document outlines various bases for segmentation including geographic, demographic, psychographic, and usage-related factors. It provides examples of how companies implement segmentation strategies to target specific consumer segments.

1. Chapter 3 Market Segmentation Consumer Behavior, Ninth Edition

2. Chapter Outline What Is Market Segmentation? Bases for Segmentation Criteria for Effective Targeting of Segments Implementing Segmentation Strategies

3. 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.

4. Three Phases of Marketing Strategy Phase 2 Target Market and Marketing Mix Selection Phase 3 Product/Brand Positioning Phase 1 Market Segmentation

5. 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

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

7. Discussion Question Considering the largest bank in your college’s city or town: How might consumers’ needs differ? What types of products might meet their needs? What advertising media makes sense for the different segments of consumers?

8. Bases for Segmentation Geographic Demographic Psychological Psychographic Sociocultural Use-Related Usage-Situation Benefit Sought Hybrid

9. Table 3.1 Market Segmentation Occupation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size Region Southwest, Mountain States, Alaska, Hawaii Major metropolitan areas, small cities, towns Urban, suburban, exurban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Sex Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, 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 Professional, blue-collar, white-collar, agricultural, military

10. Table 3.1, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Learning-involvement Perception Personality Needs-motivation Shelter, safety, security, affection, sense of self-worth Extroverts, novelty seeker, aggressives, innovators Low-risk, moderate-risk, high-risk Low-involvement, high-involvement 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 Attitudes Positive attitude, negative attitude Sociocultural Segmentation

11. Table 3.1, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rate Heavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective Time Leisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money PRIZM NE Geodemographics “ Movers & Shakers,” “New Empty Nests,” “Boomtown Singles,” “Bedrock America” Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles SRI VALS TM Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors Hybrid Segmentation

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

13. Demographic Segmentation Age Sex Marital Status Income, Education, and Occupation

14. Web sites for Singles Looking for a Match Match.com targets all singles The Right Stuff targets only Ivy League graduates weblink weblink

15. Psychological Segmentation Motivations Personality Perceptions Learning Attitudes Harley-Davidson Video

16. Two High-End Watches for Different Psychological Segments

17. Psychographic Segmentation Also known as Lifestyle Analysis Psychographic variables include attitudes, interests, and opinions (AIOs)

18. Table 3.6 Excerpts from AIO Inventory 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

19. weblink Opinions and Attitudes ADBUSTERS Web site is targeted to consumers with a certain attitude toward advertisers

20. Sociocultural Segmentation Family Life Cycle Social Class Culture, Subculture, and Cross-Culture

21. Family Life Cycle Advertising Video cameras are often purchased by young couples with children.

22. Target reaches out to the Latino market.

23. Discussion Questions What types of marketers might segment according to social class? What ethical issues might marketers have when marketing to different social classes?

24. Use-Related Segmentation Rate of Usage Heavy vs. Light Awareness Status Aware vs. Unaware Brand Loyalty Brand Loyal vs. Brand Switchers

25. Segmenting Customers by Usage Table 3-8 High Low Consumption High Low LoLows (starve) HiHighs (stroke) LowHighs (chase) HiLows (tickle) Current Share

26. Usage-Situation Segmentation Segmenting on the basis of special occasions or situations Example Statements: Whenever our daughter Jamie gets a raise, we always take her out to dinner. When I’m away on business, I try to stay at a suites hotel. I always buy my wife flowers on Valentine’s Day.

27. Benefit Segmentation Segmenting on the basis of the most important and meaningful benefit

28. Band-aid offers “flex” as a benefit to consumers.

29. Hybrid Segmentation Approaches Psychographic-Demographic Profiles Geodemographic Segmentation SRI Consulting’s VALS

30. Selected Demographic Profile of USA Today Excerpt from Table 3-10 56% 65% 55% College graduate or beyond 77% 83% 77% Attended college or beyond 45 43 45 Average Age 25% 18% 27% Age 55+ 67% 78% 65% Age 25-54 64% 73% 62% Age 18-49 34% 30% 34% Women 66% 70% 66% Men USA TODAY NETWORK USA TODAY.COM USA TODAY

31. Selected Lifestyle Profile of USA Today Excerpt from Table 3-11 120 45% Book reading 123 48% Entertain friends or relatives at home in last 12 months 112 69% Household subscribes to cable 126 46% Bought music CD/tapes in last 12 months 120 73% Attended movies in last 6 months Leisure Activities 130 22% Owns digital camera 119 84% Household owns a PC 182 40% Online purchase for business or personal use in past 30 days 128 79% Internet access at home 174 32% Use Internet more than once a day Tech Savvy Readers Index % Comp

32. VALS Framework Figure 3-7

33. Discussion Question How would you classify yourself according to VALS? Your parents? Do you think this represents you as a consumer? If so, for what products does this fit you as a consumer? Copy down the URL below to take the VALS survey tonight. See if you were right in your classification… http://www.sric-bi.com/VALS/presurvey.shtml weblink

34. Criteria for Effective Targeting of Market Segments Identification Sufficiency Stability Accessibility

35. Implementing Segmentation Strategies Concentrated Marketing One segment Differentiated Several segments with individual marketing mizes