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8 Identifying Market Segments and Targets

Chapter Questions

What are the different levels of market segmentation? How can a company divide a market into segments? What are the requirements for effective segmentation? How should business markets be segmented? How should a company choose the most attractive target markets?
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Effective Targeting Requires

Identify and profile distinct groups of buyers who differ in their needs and preferences Select one or more market segments to enter Establish and communicate the distinctive benefits of the market offering

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What is a Market Segment?


A market segment consists of a group of customers who share a similar set of needs and wants.

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Segmenting Consumer Markets


Geographic
Demographic Psychographic Behavioral

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Geographic Segmentation

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Claritas Prizm

Education and affluence Family life cycle Urbanization Race and ethnicity Mobility

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Demographic Segmentation

Age and life cycle Life stage Gender Income Generation Social class Race and Culture

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Age and Lifecycle Stage

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Gender and Income

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Generational Influences

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Race and Culture

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Psychographic Segmentation and The VALS Framework

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Behavioral Segmentation Based on Needs and Benefits

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Behavioral Segmentation: Decision Roles


Initiator Influencer Decider Buyer User
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Behavioral Segmentation: Behavioral Variables


Occasions Benefits User Status Usage Rate

Buyer-Readiness Loyalty Status Attitude

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Figure 8.2 Example of a Brand Funnel

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Loyalty Status

Hard-core Split loyals Shifting loyals Switchers

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Figure 8.3 Behavioral Segmentation Breakdown

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Segmenting for Business Markets

Demographic Operating variable Purchasing approaches Situational factors Personal characteristics

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Steps in Segmentation Process

Need-based segmentation Segment identification Segment attractiveness Segment profitability Segment positioning Segment acid test Market mix strategy

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Effective Segmentation Criteria

Measurable Substantial Accessible Differentiable Actionable

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Porters 5 Forces Model


Threat of Rivalry

Threat of Buyer Bargaining Power

Threat of Supplier Bargaining Power

Threat of Substitutes

Threat of New Entrants

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Figure 8.4 Possible Levels of Segmentation

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For Review

What are the different levels of market segmentation? How can a company divide a market into segments? What are the requirements for effective segmentation? How should business markets be segmented? How should a company choose the most attractive target markets?
8-25

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

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