Three: Market Segmentation and Strategic Targeting

CHAPTER
THREE
Market Segmentation
and Strategic
Targeting
Learning Objectives
1. To Understand Why Market Segmentation Is

Essential.
2. To Understand the Criteria for Targeting
Selected Segments Effectively.
3. To Understand the Bases for Segmenting
Consumers.
4. To Understand How Segmentation and
Strategic Targeting Are Carried Out.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 2
What Kind of
Consumer Does This Ad Target?
This Ad Targets Runners Who Are Physically
Active People and Also Relish the Outdoors.
Why Segmentation is Necessary
• Consumer needs
differs
• Differentiation helps
products compete
• Segmentation helps
identify media
Positioning
The value
proposition,
expressed through
promotion, stating
the product’s or
service’s capacity
to deliver specific
benefits.
Criteria for Effective Targeting
Which Distinct Benefit Does Each of the
Two Brands Shown in This Figure Deliver?
The Dentyne Ad’s Benefit is Fresh Breath and the
Nicorette Ad is Whitening and Smoking Cessation
Bases for Segmentation
Discussion Questions
• Considering the largest bank in your college’s

city or town:
– How might consumers’ needs differ?
– What types of products might meet their needs?
– What advertising media makes sense for the
different segments of consumers?
Consumer-Rooted Segmentation Bases
Demographic Segmentation
1. What types of marketers might segment

according to social class?
2. What ethical issues might marketers have
when marketing to different social classes?
Geodemographic Segmentation
1. Based on geography and demographics

2. People who live close to one another are
similar
3. “Birds of a feather flock together”
Personality Traits
• People often do not identify these traits

because they are guarded or not consciously
recognized
• Consumer innovators
– Open minded
– Perceive less risk in trying new things
Lifestyles
• Psychographics
• Includes activities,
interests, and
opinions
• They explain buyer’s
purchase decisions
and choices
• How might you differ from a person with

similar demographics to yourself?
• How would this be important for marketers?
VALS – Figure 3.4
Socio-Cultural Values and Beliefs
1. Sociological = group
2. Anthropological = cultural
3. Include segments based on
– Cultural values
– Sub-cultural membership
– Cross-cultural affiliations
Consumption-Specific
Segmentation Bases
Consumption-Specific Segmentation
Usage-Behavior
• Usage rate
– Awareness status
– Level of involvement
Consumption-Specific Segmentation
Usage-Behavior
• Usage-situation segmentation
– Segmenting on the basis of special occasions or
situations
– Example : When I’m away on business, I try to
stay at a suites hotel.
Which Consumption-Related
Segmentation Is Featured in This Ad?
This is an Example of a Situational
Special Usage Segmentation.
Benefits Segmentation
1. Benefits sought represent consumer needs

2. Important for positioning
3. Benefits of media
Benefits Visiting Tourists Seek in
National Park – Table 3.13 (excerpt)
Segment Description
Environmentalists Interested in an unpolluted, un-spoilt natural environment
and in conservation. Not interested in socializing,
entertainment, or sports. Desire authenticity
and less man-made structures and vehicles
in the park.
Want-it-all Tourists Value socializing and entertainment more than

conservation. Interested in more activities and
opportunities for meeting other tourists. Do not
mind the “urbanization” of some park sections.
Independent Tourists Looking for calm and unpolluted environment,

exploring the park by themselves, and staying at
a comfortable place to relax. Influenced by word
of mouth in choosing travel destinations.
Brand Loyalty and Relationships
1. Brand loyalty includes:
– Behavior
– Attitude
2. Frequency award programs are popular
3. Customer relationships can be active or passive
4. Retail customers seek:
– Personal connections vs. functional features
5. Banking customers seek:
– Special treatment
– Confidence benefits
– Social benefits
Implementing Segmentation Strategies
• Micro- and behavioral targeting

– Personalized advertising messages
– Narrowcasting
• Email
• Mobile
– Use of many data sources
Sample Acxiom Clusters - Table 3.16 (excerpt)
Implementing Segmentation Strategies
• Concentrated Marketing
– One segment
• Differentiated
– Several segments with individual marketing mixes

Three: Market Segmentation and Strategic Targeting

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CHAPTER

1. To Understand Why Market Segmentation Is

• Considering the largest bank in your college’s

1. What types of marketers might segment

1. Based on geography and demographics

• People often do not identify these traits

• How might you differ from a person with

1. Benefits sought represent consumer needs

Want-it-all Tourists Value socializing and entertainment more than

Independent Tourists Looking for calm and unpolluted environment,

• Micro- and behavioral targeting

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