Kotler Mm15e Inppt 09

CHAPTER 9 Identifying Market Segments and Targets

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LEARNING OBJECTIVES 1.

2. 3.

4.

5.

In what ways can a company divide the consumer market into segments? How should business markets be segmented? How should a company choose the most attractive target markets? What are the requirements for effective segmentation? What are the different levels of market segmentation? Copyright © 2016 Pearson Education Ltd.

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BASES FOR SEGMENTING CONSUMER MARKETS • Market segment  – A  – A group of customers who who share a similar set of needs and wants Geographic segmentation

Demographic segmentation

Psychographic segmentation

Behavioral segmentation

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GEOGRAPHIC SEGMENTATION • Geographical Geographical units  – Nations, states, regions, counties, cities, or neighborhoods

• Nielsen Claritas’ PRIZM  – Education and affluence  – Family life cycle  – Urbanization  – Race and ethnicity  – Mobility Copyright © 2016 Pearson Education Ltd.

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GEOGRAPHIC SEGMENTATION

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DEMOGRAPHIC SEGMENTATION  Age & lifecycle stage

Race & culture

Life stage

Gender 

Generation

Income

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DEMOGRAPHIC SEGMENTATION •  Age and life-cycle life-cycle stage stage  – Our wants and abilities change with age

• Life stage  – A  – A person’s major concern (e.g., divorce) divorce)

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DEMOGRAPHIC SEGMENTATION • Gender   – Men and women have different attitudes and behave differently

• Income  – Income segmentation is a long-standing practice

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DEMOGRAPHIC SEGMENTATION • Generation

Millennials (Gen Y)

Gen X

Baby Boomers

Silent Generation

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DEMOGRAPHIC SEGMENTATION • Race and culture

Hispanic Americans

 Asian Americans Americans

 African Americans Americans

LGBT

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PSYCHOGRAPHIC SEGMENTATION • Buyers are divided into groups on the basis of psychological/personali psychological/personality ty traits, lifestyle, or values

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FIGURE 9.1: VALS SEGMENTATION SYSTEM

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BEHAVIORAL SEGMENTATION • Marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product

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BEHAVIORAL SEGMENTATION • Needs and benefits • Decision roles  – Initiator   – Influencer   – Decider   – Buyer   – User 

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USER AND USAGE-RELATED VARIABLES Occasions

User status

Usage rate

 Attitude

Loyalty status

Buyerreadiness stage

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FIGURE 9.2 MARKETING FUNNEL

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FIGURE 9.3 BEHAVIORAL SEGMENTATION BREAKDOWN

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HOW SHOULD BUSINESS MARKETS BE SEGMENTED? ✓

Demographic ✓ Operating variables ✓ Purchasing approaches ✓ Purchasing approaches ✓ Situational factors characteristics ✓ Personal characteristics Copyright © 2016 Pearson Education Ltd.

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MARKET TARGETING

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EFFECTIVE SEGMENTATION CRITERIA

✓

Measurable ✓ Substantial ✓ Accessible ✓ Differentiable ✓ Actionable Copyright © 2016 Pearson Education Ltd.

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PORTER’S FIVE FORCES Threat of Rivalry

Threat of New Entrants

Threat of Substitutes

Threat of Buyer Bargaining Power 

Threat of Supplier  Bargaining Power 

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EVALUATING & SELECTING THE MARKET SEGMENTS • Figure 9.4: Possible Levels of Segmentation

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ONE-TO-ONE MARKETING Identify your prospects and customers Differentiate customers in terms of their needs and value to your company Interact to improve your knowledge about customers’ needs and to build relationships Customize products, services, and messages to each customer  Copyright © 2016 Pearson Education Ltd.

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LEGAL AND ETHICAL ISSUES • Marketers must avoid consumer backlash  – Labeling consumers  – Vulnerable groups  – Disadvantaged groups  – Potentially harmful products

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