CHAPTER

THREE
Market Segmentation
and Strategic
Targeting

-Dr Surinder
 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.
Chapter Three Slide 2
 What Kind of
Consumer Does This Ad Target?

Chapter Three Slide 3

This Ad Targets Runners Who Are Physically
Active People and Also Relish the Outdoors.

Chapter Three Slide 4

 Why Segmentation is Necessary

• Consumer needs differ.

• Differentiation helps
products compete.
• Segmentation helps
identify media.

Chapter Three Slide 5

Positioning

The value
proposition,
expressed through
promotion, stating
the product’s
capacity to deliver
specific benefits.

Chapter Three Slide 6

 Which Distinct Benefit Does Each of the
Two Brands Shown in This Figure Deliver?

Chapter Three Slide 7

The Dentyne Ad’s Benefit is Fresh Breath and the
Nicorette Ad is Whitening and Smoking Cessation

Chapter Three Slide 8

Criteria for Effective Targeting

Chapter Three Slide 9

 Segmentation

• Consumer Characteristics
– Facts : Can be determined from direct questioning
and can be characterised by a single objective
measure.
– Cognitions: Are abstract and can be determined
only through a complex questioning.
 Segmentation - Contd..

• Consumer Rooted: They stem from

consumers’ physical, social and psychological
characteristics versus consumption-specific
usage behaviour (facts) or attitude and
preference towards a specific product or
buying situation( cognition).
Bases for Segmentation

Chapter Three Slide 12

 Discussion Questions

• Considering a restaurant in your college’s city

or town:
– How might consumers’ needs differ?
– What types of products might meet their needs?
– What advertising media make sense for the
different segments of consumers?

Chapter Three Slide 13

Consumer-Rooted Segmentation Bases

Chapter Three Slide 14

Demographic Segmentation

Chapter Three Slide 15

Segmentation- Age
 Segmentation

• Gender
• Marital Status: Singles, Divorced, Single
Parent, double income groups.
• Family life cycle: Bachelorhood,
honeymooners, parenthood, postparenthood,
and dissolution
• Income/ education/Occupation
 Geodemographic Segmentation

• Based on geography and demographics

• People who live close to one another are
similar
• “Birds of a feather flock together”

Chapter Three Slide 19

One PRIZM Segment - Table 3.4 (excerpt)

Chapter Three Slide 20

Chapter Three Slide 21
 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

Chapter Three Slide 22

 Lifestyles

• Psychographics
• Includes activities,
interests, and
opinions
• They explain buyer’s
purchase decisions
and choices

Chapter Three Slide 23

 Discussion Questions

• How might you differ from a person with

similar demographics to yourself?
• How would this be important for marketers?

Chapter Three Slide 24

Four Views of Post-Retirement Lifestyle
Table 3.6 (excerpt)

Chapter Three Slide 25

 Contd..
Table 3.6 (excerpt)

Chapter Three Slide 26

 Socio-Cultural Values and Beliefs

• Sociological = group
• Anthropological = cultural
• Include segments based on
– Cultural values
– Sub-cultural membership
– Cross-cultural affiliations

Chapter Three Slide 27

Consumption-Specific
Segmentation Bases

Chapter Three Slide 28

 Consumption-Specific Segmentation
Usage-Behavior
• Usage rate
– Awareness status
– Level of involvement

Chapter Three Slide 29

 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.

Chapter Three Slide 30

 Which Consumption-Related
Segmentation Is Featured in This Ad?

Chapter Three Slide 31

This is an Example of a Situational
Special Usage Segmentation.

Chapter Three Slide 32

 Benefits Segmentation

• Benefits sought represent consumer needs

• Important for positioning
• Benefits of media
• Benefits includes
– Functional benefit
– Value for money
– Social benefit
– Etc

Chapter Three Slide 28

 Benefits Visiting Tourists Seek in
National Park
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.
Chapter Three Slide 34
 Brand Loyalty and Relationships

• Brand loyalty
• Frequency award programs are popular
• Customer relationships can be active or passive
• Retail customers seek:
– Personal connections vs. functional features
• Banking customers seek:
– Confidence benefits
– Social benefits

Chapter Three Slide 35

 Implementing Segmentation Strategies

• Micro- and behavioral targeting

– Personalized advertising messages
– Narrowcasting
• Email
• Mobile
– Use of many data sources

Chapter Three Slide 36

 Implementing Segmentation Strategies

• Concentrated Marketing
– One segment
• Differentiated
– Several segments with individual marketing mixes
• Countersegmentation

Chapter Three Slide 37