• Target marketing
• Identifying market segments, selecting one or more of them, and developing
products and marketing programs tailored to each.
• Creating value for targeted customers
1. Market segmentation
Dividing a market into smaller groups with distinct needs, characteristics or
behaviors that might require separate marketing strategies or mixes
2. Market targeting
• The process of evaluating each market segment’s attractiveness and
selecting one or more segments to enter
• Actually differentiating the market offering to create superior customer value
• Arranging for a market offering to occupy a clear, distinctive and desirable
place relative to competing products in the minds of target consumers.
• Geographic segmentation
• Dividing a market into diff. geographical units such as nations, regions,
provinces, countries, cities or neighborhoods.
• Localizing products, advertising, promotion and sales efforts to fit the needs of
ind. regions, cities and neighborhoods.
• Demographic segmentation
• Dividing the market into groups such as age, gender, family size, family life
cycle, income, occupation, education, religion, race, generation and nationality.
• Most popular segmenting method
• Easiest to measure, but very simplistic
• Identifying the target segment involves developing a detailed profile of its
members - across many diff. demographic characteristics
Age and life-cycle stage
• Dividing a market into diff. age and life-cycle groups
• Be careful to guard against stereotypes
• Age is often a poor indicator of a person’s lifecycle, health, work, family status, needs and buying
• Employ positive images and appeals
• Dividing a market into diff. groups based on gender DemographicSegmentation
• Dividing a market into diff. income groups
• Some companies target affluent consumers with luxury goods and convenient services.
• Others target low / middle-income groups.
• Psychographic segmentation
• Dividing a market into diff. groups based on social class, lifestyle or personality
• Dividing a market into groups based on consumer knowledge, attitudes, uses or
responses to a product
Dividing the market into groups according to occasions when buyers get the idea to buy, actually
make their purchase or use the purchased item
• Help firms increase product usage; increase demand for nonholiday occasions
• E.g. Coca-Cola’s “Good Morning” campaign, Christmas, Valentine’s Day
• Dividing the market into groups according to the diff. benefits that consumers seek from the product
• Segmented into nonusers, ex-users, potential users, first-time users and regular users of a product.
• Marketers want to reinforce and retain regular users, attract targeted nonusers, and reinvigorate
relationships with ex-users.
• Potential users can be changed to heavy users
• Segmented into light, medium and heavy product users
• Heavy users are small in % of the market, but high % of total consumption
• Consumers can be loyal to brands, stores and companies
• Can be divided into groups according to their degree of loyalty
• Completely loyal: 1 brand --> pinpoint target market & develop marketing appeals
• Somewhat loyal: 2-3 brands --> detect which brands are most competitive with its own
• No loyalty: want something diff. every time or buy whatever’s on sale. --> marketing weaknesses
Using multiple segmentation bases
• To identify smaller, better-defined target groups.
Segmenting business markets
• Business marketers use many of the same variables to segment their markets
Also use some additional variables
• customer operating characteristics
• purchasing approaches • situational factors
• personal characteristics
Companies set up separate systems for dealing with larger or multiple-location
• Within a given target industry and customer size, the company can segment by
purchase approaches and criteria.
Buying behavior and benefits provide the best basis for segmenting business markets.
Segmenting international markets
• Can be segmented by geographic, economic, political and cultural factors.
Intermarket / cross-market segmentation
• Forming segments of consumers who have similar needs and buying behavior
even though they are located in diff. countries.
Requirements for effective segmentation
• The size, purchasing power and profiles of the segments can be measured.
Market segments can be effectively reached and served (distribution, adverts)
• Market segments are large or profitable enough to serve
• Profitability sustainable over time
A segment should be the largest possible homogenous group worth pursuing with
a tailored marketing program.
• Segments respond differently to diff. marketing mix elements and programs.
• Effective programs can be developed (marketing mix).
Evaluating market segments
1. Segment size and growth
2. Segment structural attractiveness
3. Company objectives and resources
• A set of buyers sharing common needs or characteristics that the company
decides to serve.
1. Undifferentiated / mass marketing
Ignore market segment diff. and go after the whole market with one offer.
• Uncommon today
• Focus on what is common in the needs of consumers rather than on what is
different. • Designs a product and a marketing program that will appeal to the largest
no. of buyers.
Trouble competing with more-focused firms that do a better job of satisfying
the needs of specific segments and niches.
2. Differentiated / segmented marketing
• A firm decides to target several market segments and designs separate
offers for each.
• For higher sales and stronger position within each market segment
Creates more total sales than mass marketing across all segments
• Increases the costs of doing business
• Developing separate marketing plans for the separate segments requires
extra marketing research, forecasting, sales analysis, promotion planning
and channel management.
• Increases promotion costs
• E.g. Gap (Banana Rep., Gap, Old Navy)
3. Concentrated / niche marketing
A firm goes after a large share of one or a few submarkets
• Strong market position due to its greater knowledge of customer needs in
the niches it serves and the special reputation it acquires.
• Effective by improving its products, prices and programs
Efficient by targeting its g+s, channels and communication programs toward
consumers that it can serve best and most profitably.
• Attract few competitors, as it’s unimportant / overlooked by larger
Start as nichers --> broader competitors