Chapter 8

IDENTIFYING MARKET
SEGMENTS AND
TARGETS
 Companies cannot connect with all
customers in large, broad, or diverse
markets. But they can divide such markets
into groups of consumers or segments with
distinct needs and wants.
What is a market segmentation?

A market segment consist of a group of

customers who share a similar set of needs
and wants
What is a market targeting?

•Select one or more market segments to

enter.
What is a market positioning ?

•For each target segment, establish and

communicate the distinctive benefit(s) of
the company’s market offering
Bases for Segmenting
Consumer Markets

•Geographic Segmentation
•Demographic Segmentation
Geographic Segmentation

• divides the market into geographical

units such as nations, states, regions,
counties, cities, or neighborhoods.
Demographic Segmentation

• In demographic segmentation, we divide the

market on variables such as age, family size,
family life cycle, gender, income, occupation,
education, religion, race, generation, nationality,
and social class.
Here’s how marketers have used certain
demographic variables to segment markets.
• AGE AND LIFE-CYCLE STAGE Consumer wants and abilities change
with age.
• Life stage defines a person’s major concern, such as going through a
divorce, going into a second marriage, taking care of an older parent,
deciding to cohabit with another person, deciding to buy a new
home, and so on.
• GENDER Men and women have different attitudes and behave
differently, based partly on genetic makeup and partly on
socialization.
• INCOME Income segmentation is a long-standing practice in such
categories as automobiles, clothing, cosmetics, financial services, and
travel.
Demographic
Segmentation
CHAPTER 8
• In demographic segmentation, we divide the market on
variables such as age, family size, family life cycle,
gender, income, occupation, education, religion, race,
generation, nationality, and social class.

• One reason demographic variables are so popular

with marketers is that they’re often associated with
consumer needs and wants.

• Another is that they’re easy to measure. Even when we

describe the target market in non-demographic terms
(say, by personality type), we may need the link back
to demographic characteristics in order to estimate
the size of the market and the media we should use to
reach it efficiently.
AGE AND LIFE-CYCLE STAGE
A demographic segmentation strategy in which a
product-market is grouped into segments based on the
basis of age so that the organization can more precisely
target its offerings to the needs and wants of each stage
of life of interest to it.
 LIFE STAGE
Life stage segmentation deals with where a person is in
the course of their life. Someone who is married with five
children is likely to purchase different products than
someone who is just entering college.
 GENDER
Gender segmentation is the process of dividing of
potential markets based on gender (male or female).
Gender segmentation is done when a company which
manufactures products wants to focus only towards boys
or girls, as the products are very gender specific.
 INCOME
Income segmentation is when the customers are
segmented as per the annual or monthly income they are
earning. Income segmentation is best suited for products
which are very specific, niche and are priced high. It
helps companies to understand the relation between the
earning of a customer, the price being offered by the
company and the number of potential customers that a
company can have.