Market Segmentation and Strategic

Targeting

CHAPTERTHREE

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 2Chapter Three Slide

What Kind ofConsumer Does This Ad Target?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 3Chapter Three Slide

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 4Chapter Three Slide

Why Segmentation is Necessary

• Consumer needs differs

• Differentiation helps products compete

• Segmentation helps identify media

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 5Chapter Three Slide

Positioning

The value proposition,

expressed through promotion, stating

the product’s or service’s capacity to deliver specific

benefits.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 6Chapter Three Slide

Criteria for Effective Targeting

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 7Chapter Three Slide

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 8Chapter Three Slide

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 9Chapter Three Slide

Bases for Segmentation

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 10Chapter Three Slide

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?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 11Chapter Three Slide

Consumer-Rooted Segmentation Bases

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 12Chapter Three Slide

Demographic Segmentation

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 13Chapter Three Slide

Discussion Questions

• What types of marketers might segment according to social class?

• What ethical issues might marketers have when marketing to different social classes?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 14Chapter Three Slide

Geodemographic Segmentation

• Based on geography and demographics• People who live close to one another are

similar• “Birds of a feather flock together”

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 15Chapter Three Slide

One PRIZM Segment - Table 3.4 (excerpt)

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 16Chapter Three Slide

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 17Chapter Three Slide

Lifestyles

• Psychographics• Includes activities,

interests, and opinions

• They explain buyer’s purchase decisions and choices

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 18Chapter Three Slide

Discussion Questions

• How might you differ from a person with similar demographics to yourself?

• How would this be important for marketers?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 19Chapter Three Slide

Two Views of Post-Retirement LifestyleTable 3.6 (excerpt)

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 20Chapter Three Slide

VALS – Figure 3.4

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 21Chapter Three Slide

Socio-Cultural Values and Beliefs

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 22Chapter Three Slide

Consumption-Specific Segmentation Bases

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 23Chapter Three Slide

Consumption-Specific SegmentationUsage-Behavior

• Usage rate– Awareness status– Level of involvement

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 24Chapter Three Slide

Consumption-Specific SegmentationUsage-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.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 25Chapter Three Slide

Which Consumption-Related Segmentation Is Featured in This Ad?

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 26Chapter Three Slide

This is an Example of a Situational Special Usage Segmentation.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 27Chapter Three Slide

Benefits Segmentation

• Benefits sought represent consumer needs• Important for positioning• Benefits of media

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 28

Benefits Visiting Tourists Seek in National Park – Table 3.13 (excerpt)

Segment Description

Environmentalists Interested in an unpolluted, un-spoilt natural environmentand in conservation. Not interested in socializing, entertainment, or sports. Desire authenticityand less man-made structures and vehiclesin the park.

Want-it-all Tourists Value socializing and entertainment more thanconservation. Interested in more activities andopportunities for meeting other tourists. Do notmind the “urbanization” of some park sections.

Independent Tourists Looking for calm and unpolluted environment,exploring the park by themselves, and staying ata comfortable place to relax. Influenced by wordof mouth in choosing travel destinations.

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 29Chapter Three Slide

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 30Chapter Three Slide

Implementing Segmentation Strategies

• Micro- and behavioral targeting– Personalized advertising messages– Narrowcasting• Email• Mobile

– Use of many data sources

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 31Chapter Three Slide

Sample Acxiom Clusters - Table 3.16 (excerpt)

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 32Chapter Three Slide

Implementing Segmentation Strategies

• Concentrated Marketing– One segment

• Differentiated– Several segments with individual marketing mixes

• Countersegmentation

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 33Chapter Three Slide

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

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

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 34Chapter Three Slide