Target Marketing Strategy: Process Overview.
Today understanding people needs in more complex due tomarket fragmentation = the creation of many
consumer groups due to a diversity of distinct needs and wants in a modern society.
So, marketers usetarget marketing strategy = dividing the total market into different segments on the basis of
customer characteristics, selecting one or more segments, and developing products to meet the needs of those specific
Indentify and Select Market(s)
You should decide what market are you in (film, phone,..) and geographical scope. See Figure 6.1 on page 177.
Criteria for Identifying Market Segments
1. Members are similar enough within the Group.
2. Members are different enough between the Groups. (or else it will be mass marketing )
3. Segment must be large enough now and in the future.
4. It should be measurable market ( people have purchasing power)
5. Reachable Segment (you can identify and communicate to them)
Step 1: Segmentation
Segmentation = the process of dividing a larger market into smaller pieces based on one or more meaningfully
Segment Consumer Markets
To group consumers into segments, you can use seversegmentation variables = dimensions that divide the
total market into fairly homogenous groups, each with different needs and preferences.
Segment by Behaviour = divide people on the basis of how they act toward, or feel or use product.
1. Benefit segmentation = divide people according to what kind of benefits they seek in product category.
2.Usage Segmentation = segmentation approach that groups consumers based on the amount of a product
purchased or consumed or how the product is used.
80/20 rule = marketing rule that usually 20% percent of purchasers account for 80% of product’s sales (there are heavy
With the help of the internet marketers take new approac. Long tail = new approach of segmentation based on
the idea that companies can make money by selling small amounts of times that only a few people want, provided they
sell enough different items.
4.Usage occasions = indicator used on one type of market segmentation based on when consumers use the
product most. Can market for Tax season, for Halloween or Christmas. Segment by Psychographics
Psychographic segmentation = a segmentation approach that groups people based on their attitudes, beliefs,
values, lifestyles, or other psychological orientations.
VALS framework can be used to for this segmentation. It focuses on values and lifestyles of consumers. See page 184.
Segment by demographics: Sex . Sometimes it makes sense to segment according to gender.
Segment by demographics: Age.
Consumers in different ages have different needs and wants. Baby boomers, 1/3 Canadian pop. (1947-1966), baby bust
or generation X (1967-1979), baby boom echo or generation Y (1980-1995) and the millennium busters (1995-2010).
Baby boomers spend a lot to look young, leisure time, health.
Generation X are more skeptical, more entrepreneurial.
Generaion Y is online, more socially and environmentally aware. Spend money on clothes, sports, personal grooming,
dining, and electronics. TV marketing does not work for them, internet is better.
Teens are also attractive segment.
Segment by Demographics: Family Life Cycle
Young adults, singles = go bars, exercise, movie, alcohol.
Married with children=household, children stuff.
Ssegmentation by Demographics: Income and Social Class.
Rich = target for luxury products
Segment by Demographics: Ethnicity
In Canada there are British, then French(22 % of Canada) , Aboroginal are 1.2 milion, then German, Italian and Chineses.
2.8% Asian, 2.1% Black.
Segment by Demographics: Geography
Preferences depend also on where you live. Sometimes marketers combine geography with demographics.
Geodemography = segmentation technique that combines geography with demographics.
Segment Business to Business Markets
B2B marketers who work business to business marketers.
Segment by Organizational Behaviour
Segment them on how the operate. Can also divide on the scope: organization, small business, government, home
Segment by Industrial Psychographics
Segment accordingly of the psychology of the buying agents in firms and also according to values and goals of the
businesses. Segment by Organizational Demographics
Demographic data help business marketers to understand needs and characteristics of their potential customers.
Step 2: Targeting
At this stage marketers evaluate the potential segment and decide on which they will invest resources.
1. Evaluate Market Segments
1. Is the segment actionable? Look at characteristics and see if it segment different.
2. Can marketer adequately serve needs of this segment? Does firm have resources and expertise?
2. Develop Segment Profiles
Develop a briesegment profile = a description of the “typical” customer in a segment. Usually marketers give this
customer a name. More sophisticated marketers usecluster analysis = a computer software that groups survey
respondents based on the commonality of their answers to questions, putting respondents with similar answers in the
same group, while maximizing the differences between the groups and segments. To estimate th