Schiffman - CB10 - PPT - 03 - Market Segmentation and 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
Why Segmentation is Necessary
• Consumer needs
differs
• Differentiation helps
products compete
• Segmentation helps
identify media
Criteria for Effective Targeting
Bases for Segmentation
Behavioral Data is evidance based; it can be determined from direct

questioning (or obeservation), categorized using objective and
measurable criteria, such as demographic and consists of :
1.Consumer – intrinsic factor: age, gender, marital status, income,
education.
2.Consumption-based factor: quantity of product purchased, frequency
of leasure activities,
Cognitive factors are abstracts that “reside” in the consumer’s mind, can
be determined only through psycological and attitudinal questioning, and
generally have no single, universal definisions, and consists of :
1.Consumer – intrinsic factor: personality traits, cultural values, attitude
toward politics and social issues.
2.Consumption-based factor: attitudes and preferencesm such as
benefits sought products and attitudes regarding shopping.
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
Demographics
1. The easiest and most logical way to classify people and can
be measured more precisely that other segmentation bases
2. Offer most cost-effective way ti locate and reach specific
segments, because most of the secondary data compiled
about any population consists of demographics
3. Using demographics, marketers can identify new segments
created by shift in populations’ age, income, and location.
4. Determined many consumption behaviour, attitudes and
many media exposure pattern.
Demographic Segmentation
Age
Gender
Family and Household
Social Class
• Is a hierachy in which individuals in the same

class generally have the same degree of
status, whereas members of other classes
have either higher or lower status.
Ethnicity
• What types of marketers might segment

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

• Where person lives determines some aspects of
consumption behaviour.
• People who live close to one another are similar “Birds of
a feather flock together”.
• Hybrid segmentation schemes based on the premis that
people who live close to one another are likely to have
similar financial means, taste, preference, lifestyles, and
consumption habits.
• PRIZM the primary application of geodemographics
One PRIZM Segment - Table 3.4 (excerpt)
Green Consumer
• Type of green consumer :

1. Environmental activist : “green” ethusiasts and
people who adopt lifestyle focused on health and
sustainability
2. Organic Eater : concern about sustaining their own
health and not so much about sustaining the planet
3. Economizer : experiementing with buying eco-
friendly products in order to save money.
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
VALS
• VALS : Values and Lifestyles

• Segmentation system combining lifestyle and
values.
• Drawing on Mashlow’s need hierarchy and the
concept of a person “social character”.
• Develop by Strategic Business Insight
• How might you differ from a person with

similar demographics to yourself?
• How would this be important for marketers?
Two Views of Post-Retirement Lifestyle
Table 3.6 (excerpt)
VALS – Figure 3.4
Socio-Cultural Values and Beliefs
• Sociological = group
• Anthropological = cultural
• Include segments based on
– Cultural values
– Sub-cultural membership
– Cross-cultural affiliations
Consumption-Specific
Segmentation Bases
Consumption-Specific Segmentation
Usage-Behavior
• Usage rate
Reflects the difference among heavy,
medium and light user and non user of
specific product/service/brand.
– 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
• Based on the benefits that consumers seek

from products and services.
• Benefits sought represent consumer needs
• Important for positioning
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
• Brand loyalty includes:
– Behavior
– Attitude
• Frequency award programs are popular
• Customer relationships can be active or passive
• Retail customers seek:
– Personal connections vs. functional features
• 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
• Countersegmentation
Behavioral Targeting
• Consist of sending consumers personalized

and prompt offers and promotional message
designed to reach the right consumer and
deliver to them high relevant accucate
segment.
Several Method
• Tracking online navigation

• Geographic Location and Mobile Targeting
• Purchase Behaviour (predictive analytics)
• The information “arms race”
Positioning
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mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.
Copyright © 2010 Pearson Education, Inc. Publishing as

Prentice Hall

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CHAPTER

1. To Understand Why Market Segmentation Is

Behavioral Data is evidance based; it can be determined from direct

• Considering the largest bank in your college’s

• Is a hierachy in which individuals in the same

• What types of marketers might segment

• Based on geography and demographics

• Type of green consumer :

• People often do not identify these traits

• VALS : Values and Lifestyles

• How might you differ from a person with

• Based on the benefits that consumers seek

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

Independent Tourists Looking for calm and unpolluted environment,

• Micro- and behavioral targeting

• Consist of sending consumers personalized

• Tracking online navigation

Copyright © 2010 Pearson Education, Inc. Publishing as

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