Identifying Market segments and targets

Bases for segmenting consumer markets: Market segment consists of a group of customers
who share a similar set of needs and wants,
Geographic segmentation: Divide market based on geographical units. By mapping the
densest areas, the retailer can rely on customer cloning, assuming the best prospects live
where most customers already come from. Combining geographic and demographic is
possible to yield a more detailed description of consumers. PRIZM is such a method.
Demographic segmentation: Easy to measure, and these factors can be easily associated
with customer needs and wants. The demographic variables include gender, life and life
cycle, life stage, income, generation, social class, etc.
Life stage: what is the present concern or situation the customer is in.
Gender: Gender differences are shrinking as both men and women are expanding their roles.
Income: Major segmentation practice in automobiles, clothing, cosmetics, travel, etc.
Products are targeted to a specific segment based on whether they are premium or regular.
Brands try to have a product offering in multiple income segments.
Generation: Based on generation, the choice differs in terms of wants, influencing factors,
interests, etc.
Race and culture: Multicultural marketing is an approach recognizing different ethnic
groups have different needs and wants. Need to factor the norms, language nuances, buying
habits, business practices of multicultural markets. Three larges multicultural markets are
Hispanic American, African American, and Asian American.
LGBT: LGBT market make up 5% to 10% of the population and have $700 billion in buying
power. Lot of firms have taken initiatives to target this market.
Psychographic segmentation- Here, buyers are grouped according to their personality traits. The
segmentation is done using the VALS framework. It is divided horizontally into consumer motivation
and vertically into consumer resources.

The motivation is divided into ideals, achievements, and self-expression. Motivation decides the
personality traits, which, in tandem with the demographics, determines the resources.

Behavioral segmentation- People are segmented according to knowledge, attitude, use, and product
response.

 Need-based marketing segmentation is divided into enthusiasts, image seekers, savvy

shoppers, Traditionalist, Satisfied sippers, and Overwhelmed.
 Decision roles- The buying roles are divided and classified as Initiator, Influencer, Decider,
Buyer, and User.
 User and usage-related variables- The purchase can depend on the occasion, user status,
and usage rate.
 The buyer readiness stage can be assessed through the use of a marketing funnel.
 Loyalty status- These are divided based on loyalty level ranging from the hardcore to
switchers with no loyalty.
  Attitude- These are divided into enthusiastic, positive, indifferent, and negative towards the
product.

How the market should be segmented- Demographics variable followed by the operating
variables are used. Macro segmentation then micro-segmentation can be done based on price,
service, and quality.

Important characteristics of a market segment: -

 Measurable
 Substantial
 Accessible
 Actionable
 Differentiable

Two important factors for evaluation of a market segment are:

1. The objective and resources available

2. Overall attractiveness of the segment

Selecting the market segment

Single market concentration: Firms have a high level of knowledge of the segment and have a strong
market presence

Selective Specialization: The firm selects multiple attractive segments

Product Specialization: Specialization in manufacturing a particular product which is sold in all the
segments

Market Specialization: Multiple needs of one segment is focused on by the firm

Full Market Coverage: Covers all the customers by fulfilling all their needs

Some other considerations for evaluating and selecting a market segment involve factors like
intersegment cooperation, ethical choice of market segment, etc.