MARKETING MANAGEMENT12th edition

8 Identifying Market

Segments and Targets

Kotler Keller

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Chapter Questions

• What are the different levels of market segmentation?

• How can a company divide a market into segments?

• How should a company choose the most attractive target markets?

• What are the requirements for effective segmentation?

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Mature consumers are a rapidly growing market

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Effective Targeting Requires…

• Identify and profile distinct groups of buyers who differ in their needs and preferences.

• Select one or more market segments to enter.

• Establish and communicate the distinctive benefits of the market offering.

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Ford’s Model T Followed a Mass Market Approach

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Four levels of Micromarketing

Segments

Local areas Individuals

Niches

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Segment Marketing

Targeting a group of customerswho share a similar set of

needs and wants.

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Flexible Marketing Offerings

• Naked solution– Product and service

elements that all segment members value

• Discretionary options– Some segment

members value– Options may carry

additional charges

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Figure 8.1 Basic Market Preference Patterns

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Niche Marketers

Enterprise Rent-a-Cartargets the insurance-replacement market

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Niche Marketers: Tom’s

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The Experience Economy

Commodity

Goods

Services

Experience

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Customerization

Combines operationally drivenmass customization with customizedmarketing in a way that empowers

consumers to design theproduct and service offering

of their choice.

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Figure 8.2 Examples of Market Customization

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Segmenting Consumer Markets

Geographic

Demographic

Psychographic

Behavioral

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Claritas’ Prizm

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Demographic Segmentation

Age and Life Cycle

Life Stage

Gender

Income

Generation

Social Class

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Toyota Scion targets Gen Y consumers

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Figure 8.3 Profiling American Generations

• GI Generation– 1901-1924

• Silent Generation– 1925-1945

• Baby Boomers– 1946-1964

• Generation X– 1965-1977

• Generation Y– 1978-1994

• Millenials– 1995-2002

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Figure 8.4 The VALS Segmentation System

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Behavioral Segmentation

Decision Roles• Initiator• Influencer• Decider• Buyer• User

Behavioral Variables• Occasions• Benefits• User Status• Usage Rate• Buyer-Readiness• Loyalty Status• Attitude

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Mobil’s 5 Customer Segments

Road Warriors

Gen F

True Blues

Home Bodies

Price Shoppers

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Loyalty Status

Switchers

Shifting loyals

Split loyals

Hard-core

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The Conversion Model

Convertible Shallow Average Entrenched

Stronglyunavailable

Ambivalent AvailableWeakly

unavailable

Users Nonusers

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Figure 8.5 Behavioral Segmentation Breakdown

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Segmenting for Business Markets

Demographic

Operating Variable

Purchasing Approaches

Situational Factors

PersonalCharacteristics

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BB&T Bank’s B-to-B advertising

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Nextel

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Models of Sequential Segmentation

Stage of decision• First-time

prospects• Novices• Sophisticates

Orientation• Price-oriented• Solution-oriented• Strategic-value

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Steps in Segmentation Process

Needs-based segmentation

Segment identification

Segment attractiveness

Segment profitability

Segment positioning

Segment acid test

Marketing-MixStrategy

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Figure 8.6 Patterns of Target Market Selection

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Figure 8.6 Patterns of Target Market Selection

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Figure 8.6 Patterns of Target Market Selection

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Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable

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Figure 8.7 Segment-by-Segment Invasion Plan

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Pepsi used megamarketing in India

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Marketing Debate

Is mass marketing dead?

Take a position:1. Mass marketing is dead.2. Mass marketing is still a viable wayto build a profitable brand.

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Marketing Discussion

How would you classify yourself interms of the various segmentationschemes?