Market Segmentation &

Strategic Targeting
 Learning Outcomes
• Understand the Criteria for Targeting Selected
Segments Effectively
• Appreciate the Bases for Segmenting Consumers
• Understand the link between Segmentation and
Strategic Targeting Are Carried Out
 Criteria for Targeting Selected Segments
Effectively
To be an effective target, a market segment should be:-

• IDENTIFIABLE: Segments should be identified on the basis

of common needs & characteristics that are relevant to the
product or service.

• SIZEABLE: In order to be a viable(sizeable) market, a

segment must consist of enough consumers to make
targeting profitable. To measure the size & profitability,
marketers do consumers survey to estimate a given group of
buyer’s size, spending power & buying tendency
• STABLE or Growing: Most marketers prefer to targets
those consumer segments who are relatively stable in terms
of consumption patters & avoid fickle (unpredictable)
segments

• ACCESSIBLE (Reachable in terms of Media & Cost):

Able to reach that market segment in an economical way.
With the diversification of magazines, the emergence of TV
channels & growth of new media, marketers have more
avenues to reach unique segments & do so with customized
products and promotional messages
 Bases for Segmenting Consumers
• Geographic Segmentation
• Demographic Segmentation
• Psychological/Psychographic
• Socio-cultural Segmentation
• Use-Related Segmentation
• Usage-Related Segmentation
• Benefit Segmentation
 Geographic Segmentation
• The Market divided by (Region, City Size, Climate, Area)
• The strategy is that people who live in same are share similar
needs & wants which differ from those people who lives in
other areas (urban vs rural areas)
• Different regions with its own promotional & advertising
budget
• Wal-Mart basic marketing strategy was to locate discount
stores in small towns (often in rural areas) that other major
retail chain operations were ignoring at the time
• Geographic segments can be reached through local media,
newspapers, TV, radio & through local regional magazines
 DEMOGRAPHIC SEGMENTATION
• Segmentation on the basis of age, gender, martial status,
income, occupation and education
• Demographics help to locate a target market , whereas
psychological & socio-cultural characteristics help to describe
how its members think & how they feel
• Demographic information is the most accessible & cost-
effective way to identify a target market
• Demographic variables reveal ongoing trends, such as shift in
age, gender and income distributions, that signal business
opportunities
 Psychological/Psychographic
• In Psychological segmentation consumers are segmented in
terms of their needs, motivations, personalities, perceptions,
learning, level of involvement & attitudes that influences
consumer decision making & consumption behavior

• Psychographics are referred to as AIO, Activities (i.e., how

the consumer spends time, e.g., working, vacationing, hiking)
Interests (the consumer’s preferences & priorities, e.g.,
home, fashion, food) and Opinions (how the consumer feels
about a wide variety of events and political, social, the state
of education, the future)
 Socio-cultural Segmentation
• Segmentation on the basis of Family life cycle, social class &
culture, Subculture and Cross Culture

• Family Life cycle involves bachelorhood, honeymooners,

parenthood, post parenthood & dissolutions

• Social class: ( Class A,B & C) Social vary in terms of values,

product preferences & buying habits

• Culture: It a group sharing similar values, beliefs & customs

• Subculture: These groupings are based on specific
demographic characteristics (e.g., race, religion, ethnicity, or
age) or lifestyle characteristics (working women or golfers)

• Cross Culture: Culturally distinct segments can be

prospects for the same product but often are targeted more
efficiently with different promotional appeals. Bicycle
promoted in Asia for means of transportation but in America
it’s a health fitness product
 Use-Related Segmentation
• Segmentation categorizes consumer in terms of products,
service, or brand usage characteristics, such as usage rate,
awareness status and degree of brand loyalty
• Rate of Usage: It differentiates among heavy users, medium
users, light users, and nonusers of a specific product, service,
or brand
• Awareness Status: Marketers have to determine whether
potential consumers are aware of the product, interested in
product, or need to be informed about the product
• Brand loyalty: Marketers try to identify the characteristics of
their brand-loyal consumers so the promotional efforts can be
directed to those people with similar characteristics in large
population
 Usage-Related Segmentation
• Marketers recognize the occasion often determines what
consumers will purchase or consume.

• Situational Factors that influence a consumption choice

include weekday or workday (e.g., going to the movie), on
time or in a rush

• Many products are promoted for special usage occasions. The

greeting card industry, florist & candy industries who
promote their products on valentines day & mother’s day.
The diamond industry promote diamonds as an engagement
symbol.
 Benefit Segmentation
• Marketing & advertising executives attempt to isolate the one
particular benefit that they should communicate to
consumers.

Examples of benefits that are commonly used include:

Financial security (Met Life), comfort (Bausch & Lomb
disposable contact lenses), good health (Egg Beaters egg
substitute) proper fit (Wrangler women’s jeans), and
backache relief (Advil)
 Implementation of Segmentation Strategies

Concentrated vs Differentiated Marketing: Targeting several

segments using individual marketing mix is called
differentiated marketing ; targeting just one segment with a
unique marketing mix is called concentrated marketing

• Differentiated marketing is for financially strong companies

that are well established in a product category and
competitive with other firms that also are strong in the
category (soft drinks, automobiles & detergents)

• If a company is a small or new to the field, concentrated

marketing is probably better. A company can survive &
prosper by filling niche not occupied by stronger competitors
Countersegmentation: Company seeks to discover a more
generic need or consumer characteristic that would apply to
the members of two or more segments and recombine those
segments into a single segment that could be targeted with
an individually tailored product or promotional campaign.
This is called countersegmentation strategy

Example: For some business schools, countersegmentation

strategy effectively solved the problem (e.g., by combining
advertising, publicity, sales promotion, & personal selling
courses into a single course called promotion