MARKETING MANAGEMENT

12th edition

8
Identifying Market
Segments and
Targets

Kotler Keller
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.

CHP: 8&10-2
Ford’s Model T Followed a Mass
Market Approach

CHP: 8&10-3
 Steps in Market Segmentation,
Targeting, and Positioning

Market
Market Segmentation
Segmentation
1.
1.Identify
Identifybases
basesfor
for
segmenting
segmentingthethemarket
market
2.
2.Develop
Developsegment
segmentprofiles
profiles

Market
Market Targeting
Targeting
3.
3.Develop
Developmeasure
measureof of
segment
segmentattractiveness
attractiveness
4.
4.Select
Selecttarget
targetsegments
segments

Market
Market positioning
positioning
5.
5.Develop
Developpositioning
positioningfor
for
target
targetsegments
segments
6.
6.Develop
Developaamarketing
marketing
mix
mixfor
foreach
eachsegment
segmentCHP: 8&10-4
Four levels of Micromarketing

Segments Niches

Local areas Individuals

CHP: 8&10-5
Segment Marketing

Targeting a group of customers

who share a similar set of
needs and wants.

CHP: 8&10-6
Figure 8.1 Basic Market Preference Patterns

CHP: 8&10-7
Niche marketing
An attractive niche market characterised as follows:
THE CUSTOMERS IN THE NICHE MARKET HAVE A
DISTINCT SET OF NEEDS;
THEY WILL PAY A PREMIUM TO THE FIRM THAT BEST
SATISFIES THEIR NEEDS;
THE NICHE IS NOT LIKELY TO ATTRACT OTHER COMPETITORS;
THE NICHE GAINS CERTAIN ECONOMIES THROUGH
SPECIALISATION; & THE NICHE HAS SIZE, PROFIT, & GROWTH
PIOTENTIAL.
WHEREAS SEGMENTS ARE FAIRLY LARGE & NORMALLY
ATTRACT SEVERAL COMPETITORS, NICHE ARE FAIRLY SMALL
& NORMALLY ATTRACT ONLY ONE OR TWO.

CHP: 8&10-8
 Local marketing
Reflects a growing trend called grassroots marketing:
• Marketing activities concentrate on getting as close & personally
relevant to individual customers as possible: e.g.
- Nike’s initial foray

• A large part of this is experiential marketing, “The idea is not to sell

something, but to demonstrate how a brand can enrich a customer’s
life”

• Pine & Gilmore argue that we are on the threshold of the “Experience
Economy,” a new economic era in which businesses must orchestrate
memorable events for their customers

• Those who favour localised marketing see national advertising as a

waste. Counterpoint is brands overall image gets diluted if product &
messages differ across localities

CHP: 8&10-9
Customerization

Combines operationally driven

mass customization with customized
marketing in a way that empowers
consumers to design the
product and service offering
of their choice.

CHP: 8&10-10
Figure 8.2 Examples of Market
Customization

CHP: 8&10-11
Segmenting Consumer Markets

Geographic
Geographic

Demographic
Demographic

Psychographic
Psychographic

Behavioral
Behavioral

CHP: 8&10-12
Demographic Segmentation

Age
Age and
and Life
Life Cycle
Cycle
Life
Life Stage
Stage
Gender
Gender
Income
Income
Generation
Generation
Social
Social Class
Class

CHP: 8&10-13
Figure 8.4
The VALS
Segmentation
System

CHP: 8&10-14
Actualisers:
• Enjoy finer things
• Receptive to new products, technology, distribution
• Skeptical of advertising
• Frequent readers of a wide variety of publications; light TV viewers
Principle oriented:
• Little interest in image or prestige
• Above-average consumer for home products
• Like educational & public affairs programming; read widely & often
Status oriented:
• Attached to premium products
• Prime target for a variety of products
• Average TV watchers, read business, news, & self-help
publications
Action oriented:
• Follow fashion & fads
• Spend much of the disposable income in socialising
• Buy on impulse; attend to advertising; listen to rock music
CHP: 8&10-15
Believers:
• Buy American
• Slow to change habits, look for bargains
• Watch TV more than average; read retirement, home & garden, &
general interest magazines
Strivers:
• Image conscious
• Limited discretionary incomes but carry credit balances
• Spend on clothing & personal care products; prefer TV to reading
Makers:
• Shop for comfort, durability, value
• Unimpressed by luxuries
• Buy the basics, listen to radio;
• Read auto, home mechanics, fishing, outdoor magazines
Strugglers:
• Brand loyal
• Use coupons & watch for sales
• Trust advertising; watch TV often; read tabloids & women’s magazines

CHP: 8&10-16
Behavioral Segmentation
Decision Roles Behavioral Variables
• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude
CHP: 8&10-17
Figure 8.5 Behavioral
Segmentation Breakdown

CHP: 8&10-18
Segmenting for Business Markets

Demographic
Demographic

Operating
Operating Variable
Variable

Purchasing
Purchasing Approaches
Approaches

Situational
Situational Factors
Factors
Personal
Personal
Characteristics
Characteristics
CHP: 8&10-19
Effective Segmentation
Criteria

Measurable
Measurable • Size, purchasing power, profiles
of segments can be measured.

Accessible
Accessible • Segments can be effectively
reached and served.

Substantial
Substantial • Segments are large or
profitable enough to serve.
• Segments must respond
Differential
Differential differently to different marketing
mix elements & programs.

• Effective programs can be

Actionable
Actionable designed to attract and serve
the segments.
CHP: 8&10-20
Market Targeting
Evaluating Market Segments
• Segment Size and Growth
– Analyze current sales, growth rates and expected
profitability for various segments.
• Segment Structural Attractiveness
– Consider effects of: competitors, availability of
substitute products and, the power of buyers &
suppliers.
• Company Objectives and Resources
– Company skills & resources needed to succeed in
that segment(s).
– Look for Competitive Advantages. CHP: 8&10-21
Market Targeting
Market Coverage Strategies
Company
Company
Marketing
Marketing Market
Market
Mix
Mix
A. Undifferentiated Marketing
Company
Company
Marketing Segment
Segment11
MarketingMix
Mix11
Company
Company Segment
Segment22
Marketing
MarketingMix
Mix22
Company
Company Segment
Segment33
Marketing
MarketingMix
Mix33
B. Differentiated Marketing

Segment
Segment11
Company
Company
Marketing
Marketing Segment
Mix Segment22
Mix
Segment
Segment33
CHP: 8&10-22
C. Concentrated Marketing
Figure 8.6 Patterns of Target Market
Selection

CHP: 8&10-23
Figure 8.6 Patterns of Target Market
Selection

CHP: 8&10-24
Figure 8.6 Patterns of Target Market
Selection

CHP: 8&10-25
Marketing Strategy

Segmentation
Segmentation

Targeting
Targeting

Positioning
Positioning

CHP: 8&10-26
Positioning

Act of designing the company’s

offering and image to occupy
a distinctive place in the mind of
the target market.

CHP: 8&10-27
Choosing a Positioning
Strategy

Step 1. Identifying
Possible Competitive
Advantages
Step 2. Selecting the
Right Competitive
Advantage
Step 3. Communicating
and Delivering the
Chosen Position

CHP: 8&10-28
Defining Associations
Points-of-difference Points-of-parity
(PODs) (POPs)
• Attributes or benefits • Associations that are
consumers strongly not necessarily unique
associate with a brand, to the brand but may
positively evaluate, and be shared with other
believe they could not brands
find to the same extent
with a competitive
brand

CHP: 8&10-29
Consumer Desirability Criteria for
PODs

Relevance
Relevance

Distinctiveness
Distinctiveness

Believability
Believability

CHP: 8&10-30
Deliverability Criteria for PODs

Feasibility
Feasibility

Communicability
Communicability

Sustainability
Sustainability

CHP: 8&10-31
Examples of Negatively Correlated
Attributes and Benefits
• Low-price vs. High • Powerful vs. Safe
quality • Strong vs. Refined
• Taste vs. Low • Ubiquitous vs.
calories Exclusive
• Nutritious vs. Good • Varied vs. Simple
tasting
• Efficacious vs. Mild

CHP: 8&10-32
Developing and Communicating a
Positioning Strategy
• Positioning: How many ideas to
promote?
• Unique selling proposition
– Four major positioning errors
1. Underpositioning
2. Overpositioning
3. Confused positioning
4. Doubtful positioning

CHP: 8&10-33
Differentiation Strategies

Product Personnel

Channel Image

CHP: 8&10-34
Product Differentiation
• Product form • Style
• Features • Design
• Performance • Ordering ease
• Conformance • Delivery
• Durability • Installation
• Reliability • Customer training
• Reparability • Customer consulting
• Maintenance

CHP: 8&10-35
Identity and Image

Identity: Image:
The way a The way the
company aims to public perceives
identify or the company or its
position itself products

CHP: 8&10-36