Market Segmentation, Targeting and

Positioning

Chapter 10

What is a market segment?

A group of customers within the same general market who are defined by: Differences from other groups Similarities within the group regarding wants,

buying preferences, or buying behavior

Target Market

The specific market segment for which the marketer designs a particular marketing mix

Market segmentation

The process of dividing the total market for a good or service into smaller, internally homogeneous groups

Benefits of market segmentation

Small firms- allocate resources to specifically defined and selected markets

Medium firms- rapid growth Large firms- reach fragmented groups

Process of segmentation

Identify current and potential wants within the market

Identify characteristics that distinguish among the segments

Determine the size of segments and how well they are being served

Characteristics of good market segments

Differences in consumers Similarities within the segment Measurable attributes Large enough Accessible

Limitations of segmentation

“Too small” segments Misread differences and similarities Cost inefficient Too many spin-offs Short term vs. long-term orientation Unable to use certain media Firms compete in too many segments Confuse people Products get locked in a declining segment Slow to seek innovative possibilities

The first cut:

Ultimate vs. Business consumers

Consumer markets

Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation

Benefits desired Usage rate

Geographic segmentation

Regional distribution City or metro size Urban, suburban, rural Climate Trends

Global marketing Micromarketing

Demographic segmentation

Income/education level Age

Age effects Cohort effects

Gender Family life cycle Occupation Ethnicity/race

Psychographic segmentation

Personality Lifestyle

VALS Attitudes Opinions

Behavioral segmentation

Benefits desired Usage rate

Segmenting business markets

Customer location Customer type Size Organization structure Purchase criteria Transaction conditions

Buying situation Usage rate Purchase procedure

Target market Strategy

Analyze demand Homogeneous Clustered Diffused

Aggregation strategy Single segment strategy Multiple segment strategy

Forecasting market demand

Quantitative methods Qualitative methods

Basic forecasting terms

Market share Market factor Market potential Sales potential Sales forecast

Forecasting sales

Table 10-3