Chapter 3

Market Segmentation

Consumer Behavior,
Ninth
Ninth Edition
Edition

Schiffman & Kanuk

Copyright 2007 by Prentice Hall

 Exercise 1
• For each of the following products, identify
the segmentation base that you consider to
be the best one for targeting consumers:
(a) coffee
(b) soups
(c) home exercise equipment
(d) portable telephones
(e) nonfat frozen yogurt.
Explain your choices

3-2
 Exercise 2
• Find three advertisements that you
believe are targeted at a particular
psychographic segment. How effective
do you think each ad is in terms of
achieving its objective? Why?

3-3
 Exercise 3
• Given the business challenges of the last few years, companies
must always look for new ways to retain customers and
enhance the value experience brought to them. One company
that has specialized in this art is Carnival Cruise Lines. Carnival
has learned how to target potential customers, provide fun and
excitement for current customers, and bring loyal customers
back again and again. Personal attention, e-mail reminders, and
an interactive Web site have aided the company in building and
maintaining relationships with customers. Your group’s
assignment is to construct a segmentation profile of Carnival’s
first time customers, current customers, and past customers.
Though information specifics will be beyond your grasp,
general information about these groups can be obtained via the
company’s Web site (see www.carnival.com).
• Your profiles should consider age, income, lifestyle, and other
variables in chapter 3.
• Based on your profiles, comment on any new perceived
opportunities for Carnival based on your segmentation work.

3-4
 Chapter Outline
• What Is Market Segmentation?
• Bases for Segmentation
• Criteria for Effective Targeting of
Segments
• Implementing Segmentation Strategies

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 Market Segmentation
The process of dividing a
potential market into
distinct subsets of
consumers and selecting
one or more segments as
a target market to be
reached with a distinct
marketing mix.

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 Three Phases of Marketing
Strategy

Phase 3
Product/Brand Positioning

Phase 2
Target Market and Marketing Mix Selection

Phase 1
Market Segmentation

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 Ryka produces
sneakers that
meet the special
needs of
women’s feet.

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 Discussion Question
• Considering the largest bank in your
college’s city or town:
– How might consumers’ needs differ?
– What types of products might meet their
needs?
– What advertising media makes sense for
the different segments of consumers?

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 Bases for Segmentation

• Geographic
• Demographic
• Psychological
• Psychographic
• Sociocultural
• Use-Related
• Usage-Situation
• Benefit Sought
• Hybrid

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 Market Segmentation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Region Southwest, Mountain States, Western
City Size Major metropolitan areas, small cities, towns
Density of area Urban, suburban, rural
Climate Hot, humid, rainy
Demographic Segmentation
Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Gender Male, female
Marital status Single, married, divorced, living together, widowed
Income Under $25,000, $25,000-$34,999, $35,000-$49,999,
$50,000-$74,999, $75,000-$99,999, $100,000 and over
Education Some high school, high school graduate, some college,
college graduate, postgraduate
Occupation Professional, blue-collar, white-collar, agricultural,
military

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 Market Segmentation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Needs-motivation Shelter, safety, security, affection, sense of self-worth
Personality Extroverts, novelty seeker, aggressives, innovators
Perception Low-risk, moderate-risk, high-risk
Learning-involvement Low-involvement, high-involvement
Attitudes Positive attitude, negative attitude
Psychographic
(Lifestyle) Segmentation Economy-minded, outdoors enthusiasts, status seekers

Sociocultural Segmentation
Cultures French, South Indian
Religion Hindu, Catholic, Muslim, other
Social class Lower, middle, upper
Family life cycle Bachelors, young married, empty nesters

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 Market Segmentation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Use-Related Segmentation
Usage rate Heavy users, medium users, light users, non users
Awareness status Unaware, aware, interested, enthusiastic
Brand loyalty None, some, strong
Use-Situation Segmentation
Time Leisure, work, rush, morning, night
Person Self, family members, friends, boss, peers
Benefit Segmentation Convenience, social acceptance, long lasting, economy,
value-for-the-money

Hybrid Segmentation
Demographic/ Combination of demographic and psychographic profiles
Psychographics of consumer segments profiles

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 Geographic Segmentation
The division of a total potential
market into smaller subgroups on
the basis of geographic variables
(e.g., region, state, or city)

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 Demographic Segmentation
• Age
• Gender
• Marital Status
• Income, Education, and Occupation

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 Web sites for Singles
Looking for a Match
weblink weblink

Match.com targets all

The Right Stuff
singles targets only Ivy
League graduates
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 Psychological Segmentation
• Personality
• Perceptions
• Attitudes

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 Two High-End Watches for Different
Psychological Segments

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 Psychographic Segmentation

• Also known as Lifestyle Analysis

• Psychographic variables include
attitudes, interests, and opinions
(AIOs)

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 Opinions
and Attitudes

ADBUSTERS
Web site is
targeted to
consumers
with a certain
attitude toward
advertisers weblink

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 Sociocultural Segmentation
• Family Life Cycle
• Social Class
• Culture

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 Family Life Cycle Advertising

Video cameras
are often
purchased by
young couples
with children.

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 Use-Related Segmentation
• Rate of Usage
– Heavy vs. Light
• Awareness Status
– Aware vs. Unaware
• Brand Loyalty
– Brand Loyal vs. Brand Switchers

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 Usage-Situation Segmentation
• Segmenting on the basis of special
occasions or situations
• Example Statements:
– Whenever our daughter Jamie gets a raise,
we always take her out to dinner.
– When I’m away on business, I try to stay at
a suites hotel.
– I always buy my wife flowers on
Valentine’s Day.

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 Benefit Segmentation

Segmenting on the basis of the most

important and meaningful benefit

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 Band-aid
offers “flex”
as a
benefit to
consumers.

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 Hybrid Segmentation
Approaches
• Psychographic-Demographic Profiles
• Geodemographic Segmentation
• SRI Consulting’s VALS
– http://www.strategicbusinessinsights.com/
vals/presurvey.shtml#start

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 Criteria for Effective Targeting of
Market Segments
• Identification
• Sufficiency
• Stability
• Accessibility

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 Implementing Segmentation
Strategies
• Concentrated Marketing
– One segment
• Differentiated
– Several segments with individual
marketing mizes

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 Exercise
• SRI Consulting’s VALS
– http://www.strategicbusinessinsights.com/
vals/presurvey.shtml#start

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