Chapter 3 Market Segmentation

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Consumer Behavior,Ninth Edition

Schiffman & Kanuk

Chapter 3Market Segmentation

Consumer Behavior,Ninth Edition

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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 2Target Market and Marketing Mix Selection

Phase 3

Product/Brand Positioning

Phase 1Market Segmentation

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Segmentation Studies

• Discover the needs and wants of groups of consumers to develop specialized products to satisfy group needs

• Used to identify the most appropriate media for advertising

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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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Table 3.1 Market Segmentation

Occupation

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Southwest, Mountain States, Alaska, Hawaii

Major metropolitan areas, small cities, towns

Urban, suburban, exurban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusSexAge Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, married, divorced, living together, widowed

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

Professional, blue-collar, white-collar, agricultural, military

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Table 3.1, continuedSEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, affection, sense of self-worth

Extroverts, novelty seeker, aggressives, innovators

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers

American, Italian, Chinese, Mexican, French, Pakistani

Catholic, Protestant, Jewish, Moslem, other

African American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Attitudes Positive attitude, negative attitude

Sociocultural Segmentation

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SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyalty

Awareness status

Usage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective

Time Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievement

Home, work, friend’s home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money

PRIZM NE Geodemographics

“Movers & Shakers,” “New Empty Nests,” “Boomtown Singles,” “Bedrock America”

Demographic/Psychographics

Combination of demographic and psychographic profiles of consumer segments profiles

SRI VALSTM Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors

Hybrid Segmentation

Table 3.1, continued

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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

• Sex

• Marital Status

• Income, Education, and Occupation

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Web sites for SinglesLooking for a Match

Match.com targets all singles

The Right Stuff targets only Ivy

League graduates

weblink weblink

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Psychological Segmentation

• Motivations

• Personality

• Perceptions

• Learning

• AttitudesHarley-Davidson Video

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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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Instructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement.

I feel that my life is moving faster and faster, sometimes just too fast.

If I could consider the “pluses” and “minuses,” technology has been good for me.

I find that I have to pull myself away from e-mail.

Given my lifestyle, I have more of a shortage of time than money.

I like the benefits of the Internet, but I often don’t have the time to take advantage of them.

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

Agree Completely

Disagree Completely

Table 3.6 Excerpts from AIO Inventory

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weblink

Opinions and Attitudes

ADBUSTERS Web site is targeted to consumers

with a certain attitude toward

advertisers

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Sociocultural Segmentation

• Family Life Cycle

• Social Class

• Culture, Subculture, and Cross-Culture

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Family Life Cycle Advertising

Video cameras are often

purchased by young couples with children.

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Target reaches out to the

Latino market.

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Discussion Questions

• What types of marketers might segment according to social class?

• What ethical issues might marketers have when marketing to different social classes?

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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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High

Low

Consumption

High Low

LoLows(starve)

HiHighs(stroke)

LowHighs(chase)

HiLows(tickle)

Segmenting Customers by UsageTable 3-8

Current Share

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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

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Selected Demographic Profile of USA Today Excerpt from Table 3-10

USA TODAY USA TODAY.COM

USA TODAY NETWORK

Men 66% 70% 66%

Women 34% 30% 34%

Age 18-49 62% 73% 64%

Age 25-54 65% 78% 67%

Age 55+ 27% 18% 25%

Average Age 45 43 45

Attended college or beyond

77% 83% 77%

College graduate or beyond

55% 65% 56%

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Selected Lifestyle Profile of USA Today Excerpt from Table 3-11

% Comp

Index

Tech Savvy Readers

Use Internet more than once a day 32% 174

Internet access at home 79% 128

Online purchase for business or personal use in past 30 days

40% 182

Household owns a PC 84% 119

Owns digital camera 22% 130

Leisure Activities

Attended movies in last 6 months 73% 120

Bought music CD/tapes in last 12 months 46% 126

Book reading 45% 120

Entertain friends or relatives at home in last 12 months 48% 123

Household subscribes to cable 69% 112

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VALS Framework Figure 3-7

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Discussion Question

• How would you classify yourself according to VALS? Your parents?

• Do you think this represents you as a consumer?

• If so, for what products does this fit you as a consumer?

• Copy down the URL below to take the VALS survey tonight. See if you were right in your classification…http://www.sric-bi.com/VALS/presurvey.shtml

weblink

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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