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1. Identify the essential components of a market.
2. Outline the role of market segmentation in developing a
marketing strategy.
3. Describe the criteria necessary for effective
segmentation.
4. Explain each of the four bases for segmenting consumer
markets.
5. Identify the steps in the market segmentation process.
6. Discuss four basic strategies for reaching target
markets.
7. Summarize the types of positioning strategies.
8. Explain the reasons for positioning and repositioning
products.

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º Ñefore a marketing mix strategy can be

implemented, the marketer must identify,
evaluate, and select a target market.

  people or institutions with
sufficient purchasing power, authority,
and willingness to buy


  specific segment of
consumers most likely to purchase a
particular product

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º c  goods or services
purchased by an ultimate consumer for
personal use
º Ñ  goods or services
purchased for use either directly or
indirectly in the production of other goods
and services for resale
º he key to classification is to identify the
purchaser and the reasons for buying the
goods.

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"#$%&$'(
º O
struggles to find significant sales growth
in consumer households
º Expands its ³Orofessional Division - sale to
janitors, fast-food workers, maids, and
launderers
º Conducted marketing research at hotels and
fast-food restaurants
º U.S. market is $3.2 billion

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Oroduct argeted
at Selected
Consumers

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Oroduct argeted
at the Ñusiness
Market: Comes in
1 and 5
allon
Containers.
Introduced more
than 40 years ago
to meet the
special needs of
foodservice
operators

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  *
 
 


º 
 
 

Division of the total market into smaller,
relatively homogeneous groups

º No single marketing mix can satisfy

everyone. herefore, separate marketing
mixes should be used for different market
segments.

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Serving the Hispanic-American Market

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º )
 
argeting a
Specific
Marketing
Segment

Which segment?

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.
 

º Market segmentation cannot be used in all
cases. o be effective, segmentation must
meet the following basic requirements.
he market segments must be measurable
in terms of both purchasing power and
size.
Marketers must be able to effectively
promote to and serve a market segment.
Market segments must be sufficiently large
to be potentially profitable.
he number of segments must match the
firm¶s capabilities.

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º 
 
 
  Dividing an
overall market into homogeneous groups on
the basis of their locations
Does not ensure that all consumers in a
location will make the same buying
decision.
Help in identifying some general patterns.

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º o-/
he 10 Largest Cities in the U.S.

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º 

his ad is an
example of
geographic
segmentation.
Why?

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º Î
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Core Ñased Statistical Area (CÑSA) ± at least one
urban area 10,000 or more population
Metropolitan Statistical Area (MSA) ± urban center
population of 50,000 and area population of over
100,000
Micropolitan Statistical Area ± at least one town
10,000 to 49,999 population
Consolidated Metropolitan Statistical Area (CMSA) ±
one of 25 urban giants
Orimary Metropolitan Statistical Area (OMSA) ±
urbanized county or counties, one million or more
population [Seattle, acoma, Ñremerton]

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º Î  
 
 

Demand for some goods and services can
vary according to the geographic region
Most major brands get 40-80 percent of
their sales from what are called ë


 
Climate is another important segmentation
factor
Northern consumers, for example, eat
more soup than Southerners
Southerners use more chlorine for their
swimming pools than Northern residents

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º o-1

eographic
Segmentation:
he
Importance of
Suburban
Homeowners¶
Ñuying Habits

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Segmentation
by Residence
Location

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º 
 2 
 
3 2
4
computer technology that records several
layers of data on a single map
Simplifies the job of analyzing
marketing information by placing data
in a spatial format . . .
he result of which is a geographic
map overlaid with digital data about
consumers in a particular area.

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  dividing
consumer groups according to characteristics
such as sex, age, income, occupation,
education, household size, and stage in the
family life cycle
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Marketers must ensure that traditional
assumptions are not false
Recently, the lines have increasingly blurred
Some companies market successfully to
both genders

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º
  ,
Identify market
segments on the
basis of age
Oroducts designed
to meet the specific
needs of certain
age groups
0ÿ Developing a
Oroduct Specifically
for Children

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º 5 
 
Rapidly growing market
Significant purchasing power
c .
endency among members of a
generation to be influenced and drawn
together by significant events occurring
during their key formative years, roughly
17 to 22 years of age

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º Ñ
Ñ
Ñorn from 1946
until 1965.
Nearly 42 percent
of U.S. adults
Values influenced
both by the
Vietnam War and
the career-driven
era
Ñaby boomers
over the age of 50
will have a total
disposable income
of $1 trillion
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MasterCard:
Appealing to
Ñaby Ñoomers¶
Nostalgia for
Music

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º
 
Ñy 2025, 1 in 5 over
age 65
Median age is now
35.2 years
Life expectancy is
74 for men and to
79 for women
Heads of
households aged
55-plus control
about three-quarters
of the country¶s total
financial assets.

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.  
Ñy 2050, nearly
half of the
population of the
US will belong to
nonwhite minority
groups.
he three largest
and fastest-growing
racial/ethnic groups
in the US are
African Americans,
Hispanics, and
Asian Americans.
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º .  
 

Hispanic
African Americans
Asian Americans
Native Americans
Oeople of Mixed Race

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Ñreakdown of U.S. Minority Oopulations

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he process of
family formation
and dissolution
Life stage, not age
per se, is the
primary
determinant of
many consumer
purchases

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Segmenting
by Family Life
Cycle Stage

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oday¶s U.S. households are very diverse
Married couples and their children
Ñlended by divorce or loss of spouse
Headed by single parent, same-sex
parents, grandparents

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5 as family income increases:
A smaller percentage of expenditures go
for food
he percentage spent on housing and
household operations and clothing
remains constant
he percentage spent on other items
(such as recreation and education)
increases

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Orincess Cruise
Lines argets
Oeople with Large
Disposable
Incomes

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º "


Segmentation
based on
income

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º 0
 
 
 ,

Obtaining the data necessary for global
demographic segmentation is often
difficult
Many countries do not operate regularly
scheduled census programs
 For example, the most recent census
of Holland is now over 20 years old,
and
ermany skipped its census
from 1970 to 1987
Daily life cycle data is difficult to apply in
global demographic segmentation
efforts

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º  
 
 
 
Divides a population into groups that have
similar psychological characteristics,
values, and lifestyles
6: people¶s decisions about how to
live their daily lives, including family, job,
social, and consumer activities
he most common method for developing
psychographic profiles of a population is to
conduct a large-scale survey
AIO statements describe activities,
interests, and opinions
VALS and VALS 2 [eight categories]
³Values and Lifestyles´
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º  
 
 
  


  like those done by Roper Starch
can paint useful pictures of the residents of
various countries
Roper found six psychographic consumer
segments that are common to 35 nations


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2 

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º Î 
 
 

 

Osychographic
profiles produce
rich descriptions of
potential target
markets

reater detail aids
in matching a
company¶s image
and its offerings
with the types of
consumers who
are likely
purchasers
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Appealing to
Intimates and
Fun Seekers

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º 
99*

 

Dividing a consumer population into
homogeneous groups based on
characteristics of their relationships to the
product
Can take the form of segmenting based on:
Ñenefits that people seek when they buy
a product
Usage rates for a product [7'$%'
 :
Consumers¶ brand loyalty toward a
product

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º Ñ 
Focuses on the
attributes that
people seek in a
good or service
and the benefits
that they expect to
receive from that
good or service

roups consumers
into segments
based on what
they want a
product to do for
them

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º .
Segmenting
by Ñenefits
Sought

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º Î
*

Segmenting by grouping people according
to the amounts of a product that they buy
and use
Markets often divided into heavy-user,
moderate-user, and light-user segments
he 80/20 principle (³Oraedo¶s Law´) holds
that a big percentage of a product¶s
revenues (roughly 80%) comes from a
relative small, loyal percentage (around
20%) of total customers

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º Ñ
6

Segmenting consumers grouped according
to the strength of brand loyalty felt toward a
product
Frequent flyer programs of airlines and
many hotels

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º Î 
 
 Ñ

Increase accuracy in reaching the right
markets
Combine multiple bases

eographic and Demographic
Oroduct-related with income and
expenditure patterns

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º Develop a Relevant Orofile for each

Segment

º Forecast Market Ootential

º Forecast Orobable Market Share

º Select Specific Market Segments

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*
  


 

º Î  

   when a firm

produces only one product or product line
and promotes it to all customers with a single
marketing mix

º 0 

   when a firm

produces numerous products and promotes
them with a different marketing mix designed
to satisfy smaller segments

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  3  

  4 when a firm commits all of its
marketing resources to serve a single market
segment

º 
   involves targeting potential

customers at a very basic level, such as by
ZIO code, specific occupation, lifestyle, or
individual household

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Orocter and

amble
Oracticing
Differentiated
Marketing

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No single, best choice strategy suits all
firms
Determinants of a market-specific strategy:
Company resources
Oroduct homogeneity
Stage in the product life-cycle
Competitors¶ strategy

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   a marketing strategy that
emphasizes serving a specific market
segment by achieving a certain position
in buyers¶ minds
Attributes
Orice/quality
Competitors
Application
Oroduct user
Oroduct class

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raphic illustration that shows differences
in consumers¶ perceptions of competing
products

*
Marketing strategy to change the position
of its product in consumers¶ minds relative
to the positions of competing products

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