SEGMENTATION

Session 8
SUBHADIP ROY
Steps in Market Segmentation,
Targeting, and Positioning
Questions

• How can a company identify the

segments that make up a market?
• What criteria can a company use to
choose the most attractive target
markets?
Ford’s Model T Followed a Mass
Market Approach??????
The Ford Ad
Issues To Begin With
 Mass-Marketing vs. Segmentation
 Sector vs. Segment
 Flexi-Offerings

• Naked Solution
• Discretionary Option
Four Levels of Micromarketing

Segments Niches

Local areas Individuals

Preference Patterns

Homogeneous

Diffused

Clustered
Bases for Segmenting Consumer
Markets
 Geographic

 Demographic

 Psychographic (Lifestyle, Personality,

Values)
 Behavioural (Occasion, User Status,
Usage Rate)
Demographic Segmentation
Age and Life Cycle
Life Stage
Gender
Income
Generation
Social Class
Behavioral Segmentation
Decision Roles Behavioral Variables
 Occasions
 Initiator
 Benefits
 Influencer
 User Status
 Decider
 Usage Rate
 Buyer
 Buyer-Readiness
 User
 Loyalty Status

 Attitude
Multi-attribute Bases

 Geodemographic

 Psychodemographic

 Psychobehavioural
Patterns of Target Market Selection
Patterns of Target Market Selection
Patterns of Target Market Selection
Segmenting Industrial Markets
Industrial marketers can hardly be blamed for
feeling that segmentation is very difficult for
them. Not only has little been written on the
subject as it affects industrial markets, but
such analysis is also more complex than for
consumer markets.
- Benson P. Shapiro
Thomas V. Bonoma
HBR, 2001
SEGMENTATION BASES
-Shapiro and Bonoma

DEMOGRAPHICS

OPERATIONAL VARIABLES

PURCHASING APPROACH

SITUATIONAL FACTORS

PERSONAL
CHARACTERISTICS
SEGMENTATION BASES
 DEMOGRAPHICS
• THE INDUSTRY
• COMPANY SIZE
• CUSTOMER LOCATION
 OPERATING VARIABLES
• COMPANY TECHNOLOGY
• PRODUCT AND BRAND USE STATUS
• CUSTOMER CAPABILITIES
 PURCHASING APPROACH
• PURCHASING FUNCTION ORGANIZATIONS
• POWER STRUCTURE
• GENERAL PURCHASING POLICIES
• BUYER-SELLER RELATIONSHIPS
SEGMENTATION BASES Contd.
 SITUATIONAL FACTORS
• URGENCY
• PRODUCT APPLICATION
• SIZE OF ORDER
 PERSONAL CHARACTERISTICS OF THE
BUYER
• PERSONALITY VARIABLES
• APPROACH TO BUYING
• LOYALTY
 VALS
Framework
o VALS tries to explain the
relations between consumer
personality traits and overall
consumer behavior. VALS
uses psychology to analyze
the dynamics underlying
consumer preferences and
choices.
o Developed built by Arnold
Mitchell to explain changing
U.S. values and lifestyles in
the 1970s. VALS was formally
inaugurated as an SRI
International product in 1978
The VALS People
 Innovators – Sophisticated, high self esteem, upscale and
image is important
 Thinkers – Conservative, practical, income allows many
choices, look for value
 Achievers – Goal oriented lifestyle, image is very important
 Experiencers – Like “cool stuff,” like excitement and variety’
spend a high proportion of income on fashion
 Believers – Conservative, like familiar and established
brands
 Strivers – Trendy and fun loving, money defines success,
concerned about the opinion of others
 Makers – Practical people, do it yourself, unimpressed by
material possessions, prefer value to luxury
 Survivors – Few resources, buy at a discount, very modest
market, little motivation to buy
Effective Segmentation
 Only when the segment is:
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable
Evaluation of Segments
QUALITATIVE METHODS
 DELPHI
 PANEL CONSENSUS
 HISTORICAL ANALOGY
 SALES FORCE COMPOSITE
QUANTITATIVE METHODS
TREND PROJECTIONS
REGRESSION ANALYSIS
CORRELATION ANALYSIS
INPUT/OUTPUT ANALYSIS
ECONOMETRIC MODELS
Thank You, Class