Identifying Market Segments
&
Targets
Shift from Mass Marketing to
Individual Marketing
• Mass Marketing
• Any color as long as it is “BLACK”
• Segment Marketing
• Flexible market offering
– Naked Solution
– Discretionary options
• Niche Marketing
• Dividing segment into sub-segment
• Profits are not made on the basis of numbers but
on the basis of expertise in a very specific field.
• Smaller companies compete with larger companies
at niche level.
• Larger companies turning to niche marketing
• Local Marketing
• Individual Marketing
• Segment of one
• One-to-one marketing
• Pre-requisite to CRM
• But!!
– Might not be for every company
– Can be costly
– Order cancellation is not possible once the product is
made or company has started working on it.
How to segment a market?
• Geographic
• Demographic
• Psychographic
• Behavioral
Geographic Segmentation
• Company can operate in all areas but
focus on the local need of each market
(Kotler & Keller, 2009)
• But geographic segmentation ignores the
differences existing within the same
geographical location.
• Is more useful when combined with other
types of segmentation.
Demographic Segmentation
• Age & life cycle stage
• Can be tricky variables
• Many Gen Ys are living with their Baby boomer & Gen X parents
and have strong influence on their purchases.
Demographic Segmentation
• Gender
• Usually applied in clothing, hairstyling, cosmetics & magazines.
• But many gender specific products are now being used by opposite
gender (e.g. beauty products)
Demographic Segmentation
• Gender
• Gender targeting has become easier since
emergence of multiple tv channels.
• Women love shopping in outlets with colored
exterior and interior. Men on the other hand like
more simple and subtle environment.
Demographic Segmentation
• Income
• Used mostly in automobiles, clothing, cosmetics,
financial services and travel.
• Some marketers are deliberately focusing on
lower-income group.
» Low competition
» Greater consumer loyalty (But is it long term??)
• Similarly some marketers are focusing on high-
income group
• But this at times leaves a gap in the middle!
Demographic Segmentation
• Social Class
• It is applied mostly on products like cars, clothing,
home furnishing, leisure activities etc.
• But the taste of any social class changes with time
Psychographic Segmentation
• Segmentation based on personality traits, lifestyle or
values.
• People within the same geo-demographic group can
exhibit very different psychographic profiles.
• Most famously used Psychographic segmentation is
VALS (VALues & LifeStyles).
• Four groups with higher resources (Innovators, Thinkers, Achievers,
Experiencer)
• Four groups with low resources (Believers, Strivers, Makers,
Survivors)
• Culture has a strong impact on psychographic needs
Behavioral Segmentation
• Occasions
• Benefits
• User Status (Non user, ex-user, potential user etc)
• Usage Rate (Light user, medium user, heavy user)
• Buyers readiness stage (interested buyer, non interested
buyer etc.)
• Loyalty status (Hard core loyals, split loyals, shifting
loyals, switchers)
• Attitude (enthusiastic, positive, indifferent, negative,
hostile)
Targeting Approaches
• Single-segment concentration
• Selective specialization
• Product specialization
• Market specialization
• Full market coverage
Single Segment Concentration
• Targeting one specific segment
• Advantage of greater knowledge of the segment
needs
• Can lead to cost minimization through economy
of scale and economy of experience.
• But such targeting can be risky
• What if the market sours
• What if the competitors invade the market
• Polaroid’s camera falling off
Selective Specialization
• Firm selecting number of segments. There
may be little or no synergy between them.
• Companies are able to scatter their risks
this way.
• Gourmet • Water
• Candy • Jam & Ketchup
• Drinks • TV Channel
• Ice Cream
• Juices
• Magazines
• Milk
• Mithai
• Nimko
Product Specialization
• Firm making same product & selling to
different market segments.
Market Specialization
• Different products for similar market
Full Market Coverage
• Serving all customer groups with all the
products they might need