Market Segmentation

Market Segmentation

Definition of a Target Market: A sub-group of a larger market chosen as the focal point for a marketing or advertising campaign.

Market Segmentation

The identification of specific portions of a

market and targeting them with specific advertising

messages is called market segmentation.

Market segmentation divides the pool of potential customers into segments.

The STP Marketing Process(Segmenting, Targeting, Positioning)

1. Break the market into smaller, more homogenous segments

2. Specifically target the discrete market segments

3. Position the product or service to appeal to the targeted segments

Identifying Target Segments: Market Segmentation

Demographics

Geography

Psychographics

Lifestyles

Benefits

Commitment Levels

Usage Patterns

Demographic Segmentation

1. Age

2. Gender

3. Race

4. Marital Status

5. Income

6. Education

7. Occupation

How would you describe the

demographic segment targeted by this

advertising campaign?

How would you describe the

demographic segment targeted by this

advertising campaign?

How about this ad? What is the target

demographic for this ad campaign?

How about this ad? What is the target

demographic for this ad campaign?

Geographic Segmentation

Psychographics and Lifestyle Segmentation

Activities

Interests

OpinionsLifestyle

Lifestyle segmentation provides insight into consumer’s motivations

One Psychographic Segmentation System

Self Orientation--What gives shape, substance, character to consumers’ identitiesResources--Physical, psychological, material, social means at consumers’ disposal

MAKERS

• practical; self-sufficient; like to work with their hands; value things with a functional purpose such as tools and utility vehicles; tend to hunt and fish more than the general population.

ACHIEVERS

• conventional; politically conservative; social lives revolve around family, church and career; work provides status, material success and sense of duty; tend to own swimming pools.

EXPERIENCERS

• young, enthusiastic, seek variety and excitement; into sports and social activities; spend money on fast food, clothes, movies, music; likely to have attended rock concert in past year.

STRIVERS

• money defines success; concerned about opinions of others; trying to find their place in life but may feel unsure of themselves; want to be stylish and own high-status possessions.

ACTUALIZERS

• successful, affluent, active, high self-esteem, interested in expressing themselves in different ways; often leaders yet seek new challenges; tendency for foreign travel, dinner parties and the arts.

STRUGGLERS

• poor, elderly, low education, concerned about health, cautious; may feel resigned and passive about life; worried about security and safety; may not buy much but are loyal to their favorite brands.

BELIEVERS

• conventional, conservative, predictable; strong, fixed beliefs and rules of conduct about church, family, community and nation; modest incomes and education but sufficient to meet their needs.

FULFILLED

• mature, reflective; well educated, well informed and value knowledge; professional occupations; while respecting order, also open to new ideas and change in society; want durability and functionality in what they buy.

Segmenting by Usage and Commitment

• Advertising targeted to:– Heavy users– Nonusers– Brand-loyal users– Switchers/Variety seekers– Emergent Consumers

Benefit Segmentation

Passenger Safety?

Prestige?

Fuel Economy?

What psychographic grouping do you think this ad is aimed at?

What psychographic grouping do you think this ad is aimed at?

TARGET MARKET?

TARGET MARKET?

TARGET MARKET?

TARGET MARKET?

PART 2:CONSUMER BEHAVIOR

WE NOW KNOW WHO THEY ARE. BUT WHAT MOTIVATES THEM?

CONSUMER BEHAVIOR

TO INFLUENCE CONSUMERS, WE NEED TO KNOW WHAT MOTIVATES THEM

-PSYCHOLOGICAL FACTORS• NEEDS AND WANTS • PERCEPTIONS • ATTITUDES, VALUES

-SOCIAL FACTORS• CULTURE• SUB-CULTURE• FAMILY, PEERS

Different Views of What Causes Motivation

Expectancy Theory (degree of pull)

Expectancy Theory (degree of pull)

Drive Theory (degree of push)

Drive Theory (degree of push)

Biological Vs. Learned NeedsBiological Vs. Learned Needs

Focuses on Biological Needs that Produce Unpleasant States of Arousal, i.e. Hunger.

Homeostasis: Behavior Which Tries to Reduce or Eliminate This Unpleasant State and Return to Balance.

Behavior is Largely Pulled by Expectations of Achieving Desirable Outcomes (a Positive Outcome or Absence of Negative) - Pulled Toward the Outcome

Two Dimensions of Motivation • Motivational Intensity or Strength:

– The amount of push or pull that motivation exerts on an individual (e.g., amount of tension, consequences, immediacy). The Degree to Which a Person is Willing to Expend Energy to Reach One Goal as Opposed to Another.

• Motivational Direction:– Particular way a consumer attempts to reduce

motivational tension (eg. how to become wealthy)

Motivational Direction: Goal Directed Behavior

• Positive– Approach

e.g., Work out to look and feel healthy

• Negative– Avoidance

e.g., Work out to avoid being stigmatized socially

Motivational Direction: Needs vs. Wants

WantsThe specific Way a Need is Satisfied, depends on

Individual’s Unique History, Learning Experiences and Cultural Environment.

Needs• Needs are more fundamental than wants

• e.g., How to satisfy hunger? How to relieve boredom? How to get interest of sexually attractive person?

Motivational Direction

UtilitarianUtilitarian

Four Types of NeedsFour Types of Needs

Biogenic Biogenic

PsychogenicPsychogenic

HedonicHedonic

Marketers Tend to Focus on Psychogenic Needs

• Need for Achievement– Value personal accomplishment

• Need for Affiliation– Desire being in the company of other people

• Need for Power– Control one’s environment

• Need for Uniqueness– Desire to assert one’s individual identity

– Examples of products focused on these needs?

Another Model of Needs:Maslow’s Hierarchy - Holds that Needs

Evolve as Society or a Consumer Develops

Physiological

Safety

Social

Esteem

SelfActualization

Values--Identify What is Good and Desirable

• Values are higher level motives that tell us how desirable a given goal is (e.g., beautify the world, comfortable life, self respect).

• Cultural values – values common to one’s culture (e.g., achievement, autonomy, interdependence)

• Consumption-specific values – values related to the process of buying (e.g., convenience, friendly service)

• Product-specific values – values related to a particular product (e.g., flexibility, speed, natural materials, creative)

POSITIONING

• Where is product positioned in the minds of target market with respect to other products?

• Head-on (Duracell vs. Energizer)

• Brand Dominance (Coke: the real thing)

• Product Differentiation (Jolt Cola)

• Technical Innovation (Gillette Mach 3)

• Lifestyle (any beer, soft drink aimed at you)

Types of Involvement

• Rational and emotional involvement

• Rational involvement would be devoid of any affect e.g. Choice of steam iron , the consumer would try to optimise a cost-benefit ration with no emotion or interest toward product category - pleasure is absent

• Emotional involvement might include hedonic pleasure eg. Choice of restaurant (Hirschman and Holbrook, 1982)