CHAPTER

TWO
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.

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 What Kind of
Consumer Does This Ad Target?

Slide 3
This Ad Targets Runners Who Are Physically
Active People and Also Relish the Outdoors.

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 Why Segmentation is Necessary

Consumer needs
differs
Differentiation helps
products compete
Segmentation helps
identify media

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Positioning

The value
proposition,
expressed through
promotion, stating
the products or
services capacity
to deliver specific
benefits.

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Criteria for Effective Targeting

Identifiable Sizeable

Stable Accessible

Congruent with the

companys objectives
and resources
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 Which Distinct Benefit Does Each of the
Two Brands Shown in This Figure Deliver?

Chapter Three Slide 8

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

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Bases for Segmentation

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 Discussion Questions

Considering the largest bank in your colleges

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?

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Consumer-Rooted Segmentation Bases

Demographics

Geodemographic

Personality Traits

Lifestyles

Sociocultural

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Demographic Segmentation

Age Gender

Family Life-
Marital Status
cycle

Income,
Education, and
Occupation

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 Discussion Questions

What types of marketers might segment

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

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 Geodemographic Segmentation

Based on geography and demographics

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

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 One PRIZM Segment - Table 3.4 (excerpt)
MOVERS & SHAKERS
1.59 of U.S. households, Median household income: $95,372, Predominant employment:
Professional
Social group: Elite suburbs, Life stage group: Midlife success, Key education level: College
grad+
Adult age range: 3564

CHARACTERISTICS
Movers & Shakers is home to Americas up-and-coming business class: a wealthy suburban
world of dual-income couples who are highly educated, typically between the ages of 35
and 54 and often with children. Given its high percentage of executives and white-collar
professionals, theres a decided business bent to this segment: Movers & Shakers rank
number-one for owning a small business and having a home office.

LIFESTYLE TRAITS:
Go scuba diving/snorkeling, Plan travel on the Internet
Read PC Magazine, Listen to adult contemporary radio
Drive a Porsche
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 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

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 Lifestyles

Psychographics
Includes activities,
interests, and
opinions
They explain buyers
purchase decisions
and choices

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 Discussion Questions

How might you differ from a person with

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

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

AS AN OPPORTUNITY TO MAKE A NEW START

This group regards retirement as an exciting time. Work will have been
largely unrewarding, so the transition is seen as a freedom from the
constraints of their former role. Retirement will invigorate such people
and inspire them toward undertaking activities that work largely
prevented them from pursuing.
AS A CONTINUATION OF THEIR PRE-RETIREMENT LIFESTYLE
To such people, retirement is not perceived as signaling a drastic change.
Work life has not been as unsatisfying as for others, hence its ending is
not greeted with euphoria. There is, however, some satisfaction that
retirement permits more opportunity to devote time to existing activities
outside of their working role. The future is likely to see an increase in
such activities but no real desire to engage in new ones.
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VALS Figure 3.4

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 Socio-Cultural Values and Beliefs

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

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Consumption-Specific
Segmentation Bases
Usage rate

Usage situation

Benefit segmentation

Perceived brand
loyalty

Brand relationship

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

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 Consumption-Specific Segmentation
Usage-Behavior
Usage-situation segmentation
Segmenting on the basis of special occasions or
situations
Example : When Im away on business, I try to
stay at a suites hotel.

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 Which Consumption-Related
Segmentation Is Featured in This Ad?

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This is an Example of a Situational
Special Usage Segmentation.

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 Benefits Segmentation

Benefits sought represent consumer needs

Important for positioning
Benefits of media
 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

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 Implementing Segmentation Strategies

Micro- and behavioral targeting

Personalized advertising messages
Narrowcasting
Email
Mobile
Use of many data sources

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Sample Acxiom Clusters - Table 3.16 (excerpt)
Shooting Stars
Still relatively young at a mean age of 36, and with top rankings for
income, college education, home value and net worth, these
consumers have the world by the tail. Feeling financially secure with
large investment portfolios, Shooting Stars spend their disposable
Income making life a comfortable one, focusing on health, exercise,
gourmet food, golf, and travel.

Tots & Toys

Two thingswork and familyconsume these professional working
couples. Theyre putting their college degrees into action, climbing
the corporate ladder for lucrative careers, while saving for their
childrens education through do-it-yourself home improvements and
trips to the zoo for entertainment. With time at a premium, its not
surprising that the radio is the most relied-upon source for news and
entertainment.

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 Implementing Segmentation Strategies

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

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