Chapter

6
Identifying
Market Segments
and Targets

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Learning Objectives
1. In what ways can a company divide the consumer
market into segments?
2. How should business markets be segmented?
3. How should a company choose the most attractive
target markets?
4. What are the requirements for effective
segmentation?
5. What are the different levels of market
segmentation?

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MASS MARKET APPROACH

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PEPSI USED MEGAMARKETING IN INDIA

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 MASS MARKETING
• Seller engages in
– Mass Production
– Mass Distribution
– Mass Promotion
of one product for all buyers.
Eg.
Model T-ford in one Colour, Coke 6.5 Ounce bottle
Pros:- Creates Largest Potential Market-
>lower cost-> lower price->Higher Margins.
Cons:-Due to proliferation of markets and
Distribution channels it is difficult and
expensive to reach mass market
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 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

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 FOUR LEVELS OF
MICROMARKETING

Segments

Niches

Local areas

Individuals
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 Bases for Segmenting Consumer
Markets
• Market segment
– A group of customers who share a similar set
of needs and wants

Geographic Demographic
segmentation segmentation

Psychographic Behavioral
segmentation segmentation

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 Geographic Segmentation
• Geographical units
– Nations, states, regions, counties, cities, or
neighborhoods
• Nielsen Claritas’ PRIZM
– Education and affluence
– Family life cycle
– Urbanization
– Race and ethnicity
– Mobility
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Geographic Segmentation

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Demographic Segmentation

Age & life-

Life stage
cycle stage

Race & Gender

culture

Generation Income

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 Demographic Segmentation
• Gender
– Men and women have
different attitudes and
behave differently
• Income
– Income segmentation is
a long-standing practice

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 Demographic Segmentation
• Generation
Millennials (Gen Y) (1977-1994)

Gen X (1964-1978)

Baby Boomers (1946-1964)

Silent Generation (1925-1945)

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 Demographic Segmentation
• Race and culture

Hispanic Americans Asian Americans

African Americans LGBT

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 Psychographic Segmentation
• Buyers are divided into groups on the basis of
psychological/personality traits, lifestyle, or
values

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 3. Psychographic Segmentation
• Divides buyers into different groups based on
Psychological Parameters
• Life styles (AIO), Values Religion Food habit, Dress code
• Veg/Nonveg
• Veg:-Jains: Roots
• Nonveg : ->Beef , Halal V/s Jhatka
• Liquor : - Laws in Pakistan prohibits the sale of liquor to Muslims
• Personality:
• Eg.
• Titan Watches-
• Edge, Regalia, Nebula, Raga for different life style segments.
• Ornate watches with Gold Plated Bracelet V/s Leather Belt
• Fast Track meant for Youth and teenagers
• Sonata- Value for money @ affordable price
• Raymonds, Reid & Taylor- Suiting for elite class
3. Psychographic Segmentation Condt.
• One of the most popular commercially available classification
systems is SRI Consulting Business Intelligence’s (SRIC-BI)
VALS™ Framework
• VALS signifies values and lifestyles
• Classifies US Adults in 8 Primary Groups
• Based on Questionnaire featuring 4 Demographics and 35
attitudinal questions.
• Its continuously updated with new data from more than 80k
surveys / year
• VALS Main Dimensions :
• Horizontal : Consumer Motivation
• Vertical : Consumer Resources
 The VALS Segmentation System
Resources High

Knowledge & Principles Success to peers Social or Physical Activity, Variety, Risk
l ow

High
io n

ation
ivat

Motiv
Mot

Resources LOW
BEHAVIORAL SEGMENTATION
• Marketers divide buyers into groups on the
basis of their knowledge of, attitude toward,
use of, or response to a product

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 4. Behavioral Segmentation
Basis: Knowledge, attitude, use of or Response to product
[Link] Roles
• Initiator
• Influencer
• Decider
• Buyer
• User
4.2. Behavioral Variables
• Occasions: Cards, Chocolates & Sweets, Cars White goods, Biscuits…
• Benefits : Shampoo, Soap
• User Status : non User, ex user, potential users, first-time user & Regular User.
• Blood Bank, Infant Products

• Usage Rate : Light, Medium and Heavy (Mobile Service Providers : Talk Time and Data Plan)
• Buyer-Readiness : Next Slide
• Loyalty Status : Next Slide
• Attitude : Enthusiastic, Positive, Indifferent, Negative and Hostile
BEHAVIORAL SEGMENTATION
• Needs and benefits
• Decision roles
– Initiator
– Influencer
– Decider
– Buyer
– User

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 USER AND USAGE-RELATED
VARIABLES
Occasions
Buyer-readiness stage:
unaware of the product,
aware,
informed,
Attitude: interested,
desire the product,
enthusiastic,
and some intend to buy
positive,
indifferent,
negative, and User status :
hostile. nonusers,
ex-users,
potential users,
first-time users, and
regular users
Loyalty status:
1. Hard-core loyals—Consumers who buy only one
brand all the time
2. Split loyals—Consumers who are loyal to two or
three brands Usage rate:
3. Shifting loyals—Consumers who shift loyalty light,
from one brand to another medium, and
4. Switchers—Consumers who show no loyalty to heavy users
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any brand
 Figure 9.3
Behavioral Segmentation Breakdown

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How Should Business Markets Be
Segmented?

 Demographic
 Operating variables
 Purchasing approaches
 Purchasing approaches
 Situational factors
 Personal characteristics

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 Effective
Segmentation Criteria

 Measurable
 Substantial
 Accessible
 Differentiable
 Actionable

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 One-to-one marketing
Identify your prospects and customers

Differentiate customers in terms of their needs

and value to your company

Interact to improve your knowledge about customers’

needs and to build relationships

Customize products, services,

and messages to each customer

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 Legal and Ethical Issues
• Marketers must avoid
consumer backlash
– Labeling consumers
– Vulnerable groups
– Potentially harmful
products

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