Introduction

Module:
Instructor:

Strategic Marketing
Bilal Ahmad

LECTURE: Strategic market

segmentation

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Learning Outcomes
Identification of Market segments
Buyers needs, preferences and purchase
behavior
Formation of market segments
Customer group identification
Forming

group

base

on

differences
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Finer segmentation strategies

Response

 Selecting the segmentation strategy

Strategic analysis of market segments

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 Identifying market segments

Segmentation variables
Characteristics of people and organizations

Consumer markets
Organizational markets
Product use situation segmentation
Buyers needs and preferences
Consumer needs
Attitudes
Perceptions

Purchase behaviour
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Identification of Market segments

Segmentation variables
Segmentation and targeting of customers allows the
marketer to deliver a product within the target audience
needs and wants (Pickton and Broderick, 2005: 373)

Purchase
Use
Buyers
Needs/Preferences
Characteristics
of People/
Behavior
Situation
Organizations

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Illustrative Segmentation Variables

Consumer
Markets
Age, gender, income,
family size, lifecycle
stage, geographic
location,
lifestyle

Type of industry, size,

geographic location,
corporate culture, stage of
development, producer/
intermediary

Use situation

Occasion, importance of
purchase, prior
experience with product,
user status

Application, purchasing
Procedure (new task,
modified rebuy, straight
rebuy

Buyers needs/
preferences

Brand loyalty status, brand

preference, benefits sought,
quality, proneness to make
a deal

Performance requirements,
brand preferences, desired
features, service
requirements

Purchase
behavior

Size of purchase,
frequency of purchase

Volume, frequency
of purchase

Characteristics
of people/
organizations

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Organizational Markets

Product use situation

segmentation
Definition
Market segmentation based on use of product
Needs and Preferences vary according to
different use situations

Mass customization

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Product use situation

segmentation
Example:
Astra/Merck segmentation based on.
Health care as business
Care administrator

Traditional
Physicians with standard patient needs

Cost sensitive
Physicians for whom cost is paramount

Medical though leaders

People on leading edge
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Buyer's needs and Prefrences

Needs and preferences

Specific to product
Specific to brand
Used as segmentation bases
Used as segmentation descriptors

Customer needs
Attitude
Perceptions

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Buyer's needs and Prefrences

Customer needs
Basic physiological needs
Nature and intensity of needs
Better solution (Filling the gap)

Attitudes
Attitude influence behavior
Marketing strategy development

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Buyer's needs and Prefrences

Perception
Process by which an individual selects,
organize, and interprets information inputs to
create a meaningful picture of the world.
(Bernard and Gary, Human behavior. 1964)

Evaluation of Positioning strategy

Strategic management of Positioning strategy

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Buyer's needs and Prefrences

Purchase behavior

Consumption variables
Volume of purchase
CRM system
Loyalty Program

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Buyer's needs and Prefrences

Purchase behavior

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Forming Market segments

Levels of involvement

Low involvement

Moderate
involvement

High Involvement

Habitual Decisions

Simple decisions

Lengthy decisions

E.g.. tea, toothbrush

E.g. Face wash,

snacks

E.g. Car, University

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Forming market segments

Requirements for segmentation

Response differences
Identifiable segments
Actionable segments
Cost/benefits
Stability

Approaches to segment identification

Customer group identification
Forming groups based on response differences

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Forming market segments

Example
Miller genuine draft
mainstream sophisticates

Milwaukees Best Light

hardworking men

Pilsner Urquell
beer afficionados

Miller Icehouse
for drinking buddies
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Beer market demographics

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Requirements for segmentations

Response differences
Identifiable segments
Actionable segments
Cost/benefits of segmentation
Stability over time
Product

Differentiation

segmentation
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and

market

Approaches to segment identification

Segment
identification

A-Start with
identifiers of
customer group

B-Start with
customer
response profile

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Customer group identifiaction

Management insight and available
information
Cross classification analysis
Data Mining for segmentation
Segmentation illustrations
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Forming group based on response

differences
Customer relationship management (CRM)
Cluster analysis
Perceptual maps

Product market area

Competitor analysis
Buyers perception analysis
Map preparation

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Finer segmentation strategies

Logic
Customized offerings
Diverse customer base
Close customer relationships

Finer segmentation strategies

Micro-segmentation
Mass customization
Variety-seeking strategy

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Selecting the segmentation strategy

Deciding how to segment

Strategic analysis of market segments

Customer analysis
Competitor analysis
Positioning analysis
Estimating segment attractiveness
Segmentation fit and implementation

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Strategic vision about future

Anticipating the future

Boundaries and composition of Product market

End-user customer base
Market and industry transformation
Potential threats
Value chain composition and structure
Product life cycle phase?

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