Market segmentation and

Strategic Targeting
 Market segmentation and Strategic
Targeting
• It is the process of
– Identifying distinct segments within a given
market or population
– Evaluating each market segment’s
potential
– Selection of the segments to be targeted
– Creation of a marketing mix for each target
segment selected
 Market Segmentation
• Consumers can be segmented based on
several factors
– Demographic
– Lifestyles
– Usage behaviour
– Needs
 Market Segmentation
• After segmenting and selecting a target
market, the product has to be positioned
• Positioning is the unifying element of
each marketing mix,
– because it expresses the offering’s
value proposition which details the
product/service’s capability to deliver
specific benefits corresponding to a
consumers’ unfulfilled needs
 Why is market segmentation
necessary
• Different people have different needs.
Therefore offerings satisfying those needs are
more likely to succeed.
• It avoids head- on competition and is more
profitable in spite of higher research,
production, advertising and distribution costs
• Research is a key factor that enables
marketers to uncover market segments with
unfulfilled needs of consumers
 Why is market segmentation
necessary
• Marketers also use segmentation research to
identify the most appropriate media in which
to place advertisements
• Almost all media vehicles from TV, radio, print
use segmentation research to determine the
characteristics of their audiences so that they
can attract advertisers seeking to reach a
given audience
 How to decide which segment to
target
• Not all segments identified may be profitable
or viable
• The challenge is to select one or more
segments with an appropriate marketing mix
• To be an effective target a market segment
should satisfy certain criteria
 Criteria for Effective Targeting
• Identifiable – to divide the market into
separate segments on the basis of common or
shared needs, the marketer must be able to
identify these characteristics which are
relevant to the product.
• Sizable – in order to be viable, a segment
should have enough customers to make it
profitable. To measure segment size marketer
use secondary data like census or NCAER
studies
 Criteria for Effective Targeting
• Stable – most marketers prefer to target
segments that are relatively stable in terms of
demographics and psychographics and are
likely to grow
• Accessible – marketers must be able to reach
the segment they want to target in an
economical way both from distribution as well
as marketing communication.
 Bases for Segmentation
• Geographic
• The first step in
developing a • Demographic
segmentation strategy • Psychological
is to select the most • Psychographic (lifestyles)
appropriate base for • Sociocultural
segmentation
• Usage based
• Benefits sought
• Use-situation
• Hybrid
 Geographic Segmentation
• Market divided by location
• By region – north, south, east, west
• City size – metros (6), mini metros (11), less
than 15 lakh etc
• Density of area – urban, suburban, semi-
urban, rural
• Climate – Temperature, humidity, rainfall
 Demographic
• Age – under 12, 12-17, 18-34 etc
• Sex – male, female
• Marital status – single, married, divorced,
widowed
• Income
• Education- high school, graduate, post
graduate
• Occupation – Senior Corporate, Businessman,
 Personality Traits
• Personality – Extrovert, novelty seeker,
aggressive, innovators
• Personality traits often cannot be discovered
by asking directly
• Personality can be inferred from the way
people respond to statements
• New products can be targeted at innovators
who can then be encouraged to initiate
positive word of mouth
 Lifestyles
• Also known as psychographics, consists of
activities, interests and opinions
• Interests and opinions are cognitive constructs,
which can be measured through surveys but are
not evidence-based
• Psychographic study includes a series of
questions accompanied by a Likert scale on
which respondents are asked to indicate their
level of agreement
 Lifestyles
• Some of the factors are similar to personality
traits and others include buying motives,
interest, attitudes, beliefs and values
• Psychographics are used widely in
segmentation and are part of any hybrid
segmentation framework.
• Demographics determine consumer’s needs
e.g.. Male and female need different products
 Lifestyles
• The ability to buy the products is determined
by income
• Psychographics explains how people buy
within the choices available to them
• E.g.. Age will determine whether you are likely
to be a student or not, but psychographics will
determine you choice of institution.
 VALS framework

INNOVATORS

High resources
Primary Motivations High innovation

Ideals Achievement Self-expression

THINKERS ACHIEVERS EXPERIENCERS

BELIEVERS
STRIVERS MAKERS

Low resources
SURVIVORS Low innovation
 VALS Segment
• Innovators – successful, sophisticated and high in self-
esteem. Exhibit all 3 primary motivations in varying
degrees. Their purchases reflect cultivated tastes for
upscales product. Receptive to new ideas and technology
• Thinkers – mature, satisfied, comfortable. Well educated
and actively seek out information in the decision process.
They favour durability, functionality and value
• Believers – strongly traditional and respect rules and
authority. Conservative hence slow to change and
technologically averse. They choose familiar products an
established brands
 VALS Segment
• Achievers – motivated by achievement &high
resources. Goal oriented life focused on family and
career. Prefer premium products that demonstrate
success to their peers
• Strivers – motivated by achievement & low
resources. Trendy and fun loving. They prefer stylish
products and emulate the purchases of people with
greater material wealth
• Experiencers – self expression and high resources.
Active and impulsive and spend higher portion of
their wealth on fashion and socialising
 VALS Segment
• Makers – motivated by self-expression &low
resources. They value practicality and self-
sufficiency. They spend leisure time on constructive
activities with family and close friends. They buy
basic products don’t value luxury
• Survivors – lead narrowly focused lives. Often feel
powerless due to low resources. Primarily concerned
about safety and security. They buy branded and
discounted products
 Bases for Segmentation
Consumer - Consumption-Specific
Rooted
Personal features Usage or purchase
•Demographics- age, gender, behavior
marital status, education, •Usage rate
Facts occupation, social class •usage situation
* Geographic location, address, •Brand loyalty
geodemographic •Psychographics – factual
behavior

Personality, lifestyle, Attitudes and preferences

sociocultural values
•Personality traits
Cognition •Lifestyle, psychographics, VALS
•Sociocultural values and beliefs
regarding the product
•Benefits wanted
•Level of involvement
•Awareness of product
alternatives
•Brand loyalty
 Implementing Segmentation
Strategies
• Behavioral targeting –based on usage
behavior e.g.. Google targeting ads based on
the websites you have visited
• Micro targeting – to reduce wastage, through
geodemographic targeting and data analysis.
Narrow casting through e-mails, mobiles and
direct mail