MARKETING MANAGEMENT

12th edition

8
Identifying Market
Segments and
Targets

Kotler Keller
Chapter Questions

• What are the different levels of market

segmentation?
• How can a company divide a market into
segments?
• How should a company choose the most
attractive target markets?
• What are the requirements for effective
segmentation?

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Mature
consumers
are a rapidly
growing market

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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.

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Ford’s Model T Followed a Mass
Market Approach

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Four levels of Micromarketing

Segments Niches

Local areas Individuals

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Segment Marketing

Targeting a group of customers

who share a similar set of
needs and wants.

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Flexible Marketing Offerings

• Naked solution • Discretionary options

– Product and service – Some segment
elements that all members value
segment members – Options may carry
value additional charges

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Figure 8.1 Basic Market Preference Patterns

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Niche Marketers

Enterprise Rent-a-Car
targets the insurance-
replacement market

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Niche Marketers: Tom’s

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The Experience Economy

Experience

Services

Goods

Commodity
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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.

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Figure 8.2 Examples of Market
Customization

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Segmenting Consumer Markets

Geographic
Geographic

Demographic
Demographic

Psychographic
Psychographic

Behavioral
Behavioral

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Claritas’ Prizm

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Demographic Segmentation

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

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Toyota Scion targets Gen Y
consumers

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Figure 8.3
Profiling American Generations
• GI Generation • Generation X
– 1901-1924 – 1965-1977
• Silent Generation • Generation Y
– 1925-1945 – 1978-1994
• Baby Boomers • Millenials
– 1946-1964 – 1995-2002

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Figure 8.4
The VALS
Segmentation
System

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Behavioral Segmentation
Decision Roles Behavioral Variables
• Initiator • Occasions
• Influencer • Benefits
• Decider • User Status
• Buyer • Usage Rate
• User • Buyer-Readiness
• Loyalty Status
• Attitude
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Mobil’s 5 Customer Segments

Price Shoppers Road Warriors

Home Bodies Gen F

True Blues

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Loyalty Status

Hard-core

Split loyals
Shifting loyals

Switchers
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The Conversion Model

Convertible Shallow Average Entrenched

Users Nonusers

Strongly Weakly
Ambivalent Available
unavailable unavailable

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Figure 8.5 Behavioral
Segmentation Breakdown

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Segmenting for Business Markets

Demographic
Demographic

Operating
Operating Variable
Variable

Purchasing
Purchasing Approaches
Approaches

Situational
Situational Factors
Factors
Personal
Personal
Characteristics
Characteristics
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BB&T Bank’s
B-to-B
advertising

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Nextel

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Models of Sequential Segmentation

Stage of decision Orientation

• First-time • Price-oriented
prospects • Solution-oriented
• Novices • Strategic-value
• Sophisticates

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Steps in Segmentation Process

Needs-based segmentation

Segment identification Marketing-Mix

Segment attractiveness Strategy

Segment profitability

Segment positioning

Segment acid test

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Figure 8.6 Patterns of Target Market
Selection

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Figure 8.6 Patterns of Target Market
Selection

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Figure 8.6 Patterns of Target Market
Selection

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Effective Segmentation Criteria

Measurable
Measurable

Substantial
Substantial

Accessible
Accessible

Differentiable
Differentiable

Actionable
Actionable

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Figure 8.7 Segment-by-Segment
Invasion Plan

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Pepsi used megamarketing in India

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Marketing Debate

 Is mass marketing dead?

Take a position:
1. Mass marketing is dead.
2. Mass marketing is still a viable way
to build a profitable brand.

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Marketing Discussion

 How would you classify yourself in

terms of the various segmentation
schemes?

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