Segmentation and Targeting

Sujit R. Jagadale
Discussion Name a product in which everyone wants the
Question same thing.

2
 3

• Have you ever seen different search options

popping up on your and your friend’s
Zomato/Foodpanda/Makemytrip/Trivago
searches?

• Don’t you think organizations recognize

differences in customer preferences and
needs?

10/08/2020
• Packaged Tea Leaves

10/08/2020 4
 • The marketing process of STP identifies firm’s potential
customers, selects which customers a firm should
pursue, and formulates its value proposition for target
customers.

10/08/2020 5
10/08/2020 6
 Psychologists:

• Consumers have different motivations that

drive their purchases

Economists:
Segmentation • Imperfect competition exists; consumers
have heterogeneous needs

Marketers:

• The market is comprised of different

segments

7
 8

Segmentation

• Segmentation
• Breaking the market into more
homogeneous consumer groups
• A single product, price, promotion
is unlikely to satisfy all consumers’
needs
 Segmentation
Segmentation is
separation of a
heterogenous group of
customers with
different needs into Segmentation informs
homogenous about potential new
subgroups or segments opportunities.
of customers with
similar needs and
preferences.
Firms do not create Exercise- offering of
customers they only only one product for
uncover them. entire market.

10/08/2020 9
 Marketing
Segmentation

10
 Types of Segmentation

• One-to-one marketing
• Each customer serves as his own segment
• Product is tailored for each person’s desires
• Is usually more effective in meeting customers’
needs but hard to achieve efficiently and may
involve quality issues
• e.g., Toyota allows customers to “build”
their own Scion; however, options were
limited; discontinued.

11
 Types of Segmentation

• Mass marketing
• All customers are treated the same
• Is usually more efficient but not effective in
meeting customer needs
• e.g., Pepsi seems to be mass marketed but
is not
• Pepsi, Diet Pepsi, Caffeine free Pepsi,
2-liters, 12 pack cans, 6 pack bottles,
etc.

12
 Segmentation

• Segmentation falls between one-to-one and mass marketing

• As segment size increases, segments become more
heterogeneous
• As segment size decreases, segments become less profitable
• Marketers need the “optimal” segment size 
• Niche
• Targeting small market that firm serves well

13
10/08/2020 14
 • Ford- “Any customer can have a car
painted in any color that he wants so
long as it is black.”
• Amazon books
• Zomato offers

• Amazon mom

10/08/2020 15
 Identifiable • HUL and P & G- small shampoo sachets

Substantial • Large enough to serve profitably

• Through communication and distribution

Accessible channel
Characteristics of
Useful Segmentation
Stable • Lifestyle segments, international segments

Differentiable • Alcoholic and nonalcoholic beer

Actionable • Small segment car- Nano

10/08/2020 16
10/08/2020 17
10/08/2020 18
 Segmentation: Demographics

• Demographics
• Marketers may change marketing mix
• Gender, age, stage in life cycle, education, income, ethnicity
• Demographic variables are clear and easy to recognize
• However, they may not determine interests
• e.g., Do all older people dislike new technology? Do only
men like to hunt?

19
 Segmentation: Geographic

• Geographic distinctions between customers can change preferences/needs

• Cultural differences can exist between countries or within a
country
• e.g., Southern USA prefers spicier food
• Urban living is different than small town
• e.g., NYC residents want smaller dishwashers
• Hot climates require different products than cold climates
• e.g., Minnesotans need snow blowers

20
 Segmentation:
Geographic/Demographic

• Combining geographic and

demographic information
can be powerful

21
 • Psychological: get inside the heads and hearts of customers
• Attitudes: e.g., Favorable attitude toward “green” products
• Knowledge & awareness: e.g., Don’t know about the
product
• Wants and needs: e.g., Need for safety
• Affiliations: e.g., Members of the AMA
Segmentation: • Traits: e.g., Extroverts who want to socialize
Psychological • Expertise &
enthusiasts
involvement: e.g., New, motorcycle

• Brand attributes sought e.g., Low price and red color

• Risk orientation: e.g., Risk adverse-late technology
adopters
• Aspirations: e.g., Want to be a better cook
• Vary in terms of relevancy to the product

22
 Segmentation:
Psychological/Lifestyle

• Psychological & lifestyle

• e.g., Gardeners, food
connoisseurs, etc.

• Vals: psychographic segmentation tool

• Marketers determine people’s
attitudes and what they value and
use this knowledge to
communicate effectively
• e.g., Strivers are trendy, like
to impress, often impulsive

23
 • Behavioral: behaviors people engage in
• Attitudes can’t be observed; behaviors
can
• Intentions do not always equal behaviors
• Behaviors help predict future behavior
Segmentation: • Current users; Nonusers
Behavioral • Nonusers may use competitors or don’t
buy
• 80:20: 80% of sales come from 20%
of customers
• It costs 6 times more to acquire
new customer compared to
retaining loyal

24
 • Patterns of co-purchasing
• Purchase a new house, usually purchase
Segmentation: Behavioral new appliances, curtains, etc.
• Create opportunities for cross selling

25
10/08/2020 26
 Segmentation
Strategies

• Multiple segments in a
marketplace

27
 Segmentation
Strategies

• Breadth strategy
• Serve more than one
segment

28
 Segmentation
Strategies

• Depth strategy
• Serve one segment well

29
 Segmentation
Strategies

• Tailored strategy
• Different products for
different segments

30
 Discussion Question

• You are currently selling Jamaican food to

college students. Discuss at least two
methods to expand your business.

31
 Targeting

Targeting involves A firm’s choice of Mass customization is

evaluating the target segments not suited for all
attractiveness of each depends on the level products and
market segment, of segmentation in a services- technology
selecting one or more particular products
segments to pursue, marketplace. It
and designing ranges from mass
markets programmes market to
to serve them. customization, to
one-to-one
Coca-Cola
marketing.(mass market
approach)
One-to-one marketing, mass
customization
• Levi’s customizable jeans,
google adds are based on
content of e-mail

10/08/2020 32
10/08/2020 33
 • Approach of Maruti
• List down the cars and its target
segment
• Which approach is this?

10/08/2020 34
 • Public reaction, privacy and ethical
considerations
• Comparison shopping
Ethical and privacy Issues • Coca-Cola vending machine
• Data mining to follow purchase
pattern

10/08/2020 35
 Pricing strategy
Product strategy
(airline- business
(clothing)
and leisure)

From ST to Communication
strategy (urban
Salesforce and
channel strategy
Strategy Formation and rural) (urban and rural)

Customer
relationship
management
(based on premier
customer etc.)

10/08/2020 36
10/08/2020 37
 Thank You!!!

10/08/2020 38