8

Identifying
Market Segments
and Targets

Marketing Management, 13th ed

LEVELS OF MARKETING SEGMENTATION
The starting point of discussing segmentation is Mass Marketing
“ in mass marketing the seller engages in
Mass production
Mass distribution
Mass promotion
Of one product for all buyers
Positive point
Lowest costs , which leads to Lower prices , with higher margins
But some claims that Mass marketing is dying , because
people are shifting to
(1)Segment marketing
(2)Niche marketing
(3)Local Marketing
(4)Individual marketing
Ford’s Model Followed a Mass Market
Approach
 Four levels of Market
segmentation

Segments Niches

Local
Individuals
 1. Segment Marketing

What is a Market Segment ?

A market segment consists of a group of customers who share a similar
set of needs and wants.
---Rather than creating the segments , the marketer’s
task is to identify them and decide, which ones to target
---Segment marketing , can offer better marketing ,
over mass marketing by better design , price , disclose
and deliver the product or service and also can fine-
tune the marketing program
SEGMENT MARKETING (Cont…….)
Anderson and narus , have urged marketers to present
flexible market offerings to all members of a segment ,
Which is made up of two parts
(1)A naked solution : containing the product and service
elements that all segment members value
(2)Discretionary options : that some segment members
value. Each options might carry an additional charge.

We can characterize market segments in different ways

(1)Homegeneous preferences : it exists when all consumers
have roughly the same preferences , the market shows no
natural segments.
(2)Diffused preferences : consumers vary greatly in their
preferences.
(3)Clustered preferences : when natural market segments
emerge from group of consumers with shared preferences.
2. NICHE MARKETING

(a)A niche is a more narrrowly defined customer seeking a

distinctive mix of benefits.
(b) Marketers usually identify niches by dividing a segment into
subsegments.

What does an attractive niche look like

(1)The customer have a distinct set of needs , they will pay a
premium to the firm that best satisfies them
(2) the niche is fairly small but has size , profit , and growth
potential and is unlikely to attract many other competitors
(3)The nicher gains economies through specialization.

Some large companies have have even turned to niche

marketing.
Niche marketers aim to understand their customer’s needs so
well that the customers willingly pay a premium.
 What is Customerization?

Customerization combines operationally

driven mass customization with customized
marketing in a way that empowers
consumers to design the product and service
offering of their choice.
Segmenting Consumer Markets

Geographic
Geographic –– Region,
Region, City,
City, Rural
Rural
–Semi-urban
–Semi-urban ,, urban
urban

Demographic
Demographic –– Age,
Age, Family
Family size,
size,
Gender,
Gender, Income,
Income, Occupation
Occupation Education
Education

Psychographic
Psychographic ––
Life
Life style
style (Culture
(Culture ,, sports
sports &outdoor
&outdoor )) ,,
Personality
Personality

Behavioral
Behavioral –– Occasions,
Occasions,
Benefits,
Benefits, User
User status&
status& rate
rate ,loyalty
,loyalty
status,
status, Attitude
Attitude toward
toward the
the product
product
 Behavioral Segmentation

Decision Roles Behavioral Variables

• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude
 The Brand Funnel Illustrates
Variations in the
Buyer-Readiness Stage
• Aware
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used
 Loyalty Status

Hard-core
Who Buy only 1brand
all the time

Split loyals
Who are loyal to 2 or 3 brands

Shifting loyals
Who shift loyalty from one brand to other
Switchers
who show no loyalty to any brand
 Figure 8.3 Behavioral
Segmentation Breakdown
Effective Segmentation Criteria

Measurable-- characteristics
Measurable characteristics can
can be
be
measured
measured e.g
e.g size,
size, purchasing
purchasing power
power

Substantial
Substantial -- large
large and
and profitable
profitable
enough
enough to
to served.
served.

Accessible
Accessible ––
Effectively
Effectively reached
reached and
and served
served

Differentiable
Differentiable –– Conceptually
Conceptually
distinguishable
distinguishable and
and respond
respond differently
differently

Actionable
Actionable
 Figure 8.4 Patterns of
Target Market Selection
 Figure 8.4 Patterns of
Target Market Selection
 Figure 8.4 Patterns of
Target Market Selection
Segment-by-segment invasion Plans