CHAPTER

THREE
Market Segmentation
and Strategic Targeting
 Learning Objectives

1. To Understand Why Market Segmentation Is

Essential.
2. To Understand the Criteria for Targeting
Selected Segments Effectively.
3. To Understand the Bases for Segmenting
Consumers.
4. To Understand How Segmentation and
Strategic Targeting Are Carried Out.

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 What Kind of
Consumer Does This Ad Target?

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 This Ad Targets Runners Who Are Physically
Active People and Also Relish the Outdoors.

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 Why Segmentation is Necessary

• Consumer needs
differs
• Differentiation helps
products compete
• Segmentation helps
identify media

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 Positioning

The value
proposition,
expressed through
promotion, stating
the product’s or
service’s capacity
to deliver specific
benefits.

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 Criteria for Effective Targeting

Identifiable Sizeable

Stable Accessible

Congruent with the

company’s objectives
and resources
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 Which Distinct Benefit Does Each of the
Two Brands Shown in This Figure Deliver?

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 The Dentyne Ad’s Benefit is Fresh Breath and the
Nicorette Ad is Whitening and Smoking Cessation

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 Bases for Segmentation

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 Discussion Questions

• Considering the largest bank in your college’s

city or town: (Market credit cards to college
studets)
– Apply the five criteria for effective targeting to
marketing a credit card to college students.
– What advertising media makes sense for the
different segments of consumers?

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 Consumer-Rooted Segmentation Bases

Demographics

Geodemographic

Personality Traits

Lifestyles

Sociocultural

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 Demographic Segmentation

Age Gender

Family Life-
Marital Status
cycle

Income,
Education, and
Occupation

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 Discussion Questions

• What types of marketers might segment

according to social class?

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 Geodemographic Segmentation

• Based on geography and demographics

• People who live close to one another are
similar
• “Birds of a feather flock together”

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 One PRIZM Segment - Table 3.4 (excerpt)
MOVERS & SHAKERS
• 1.59 of U.S. households, Median household income: $95,372, Predominant employment:
Professional
• Social group: Elite suburbs, Life stage group: Midlife success, Key education level: College
grad+
• Adult age range: 35–64

CHARACTERISTICS
• Movers & Shakers is home to America’s up-and-coming business class: a wealthy suburban
world of dual-income couples who are highly educated, typically between the ages of 35
and 54 and often with children. Given its high percentage of executives and white-collar
professionals, there’s a decided business bent to this segment: Movers & Shakers rank
number-one for owning a small business and having a home office.

LIFESTYLE TRAITS:
• Go scuba diving/snorkeling, Plan travel on the Internet
• Read PC Magazine, Listen to adult contemporary radio
• Drive a Porsche
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 Personality Traits

• People often do not identify these traits

because they are guarded or not consciously
recognized
• Consumer innovators
– Open minded
– Perceive less risk in trying new things

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 Lifestyles

• Psychographics
• Includes activities,
interests, and
opinions
• They explain buyer’s
purchase decisions
and choices

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 Discussion Questions

• How might you differ from a person with

similar demographics to yourself?
• How would this be important for marketers?

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 Two Views of Post-Retirement Lifestyle
Table 3.6 (excerpt)

AS AN OPPORTUNITY TO MAKE A NEW START

• This group regards retirement as an exciting time. Work will have been
largely unrewarding, so the transition is seen as a freedom from the
constraints of their former role. Retirement will invigorate such people
and inspire them toward undertaking activities that work largely
prevented them from pursuing.
AS A CONTINUATION OF THEIR PRE-RETIREMENT LIFESTYLE
• To such people, retirement is not perceived as signaling a drastic change.
Work life has not been as unsatisfying as for others, hence its ending is
not greeted with euphoria. There is, however, some satisfaction that
retirement permits more opportunity to devote time to existing activities
outside of their working role. The future is likely to see an increase in
such activities but no real desire to engage in new ones.
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 VALS – Figure 3.4

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 Socio-Cultural Values and Beliefs

• Sociological = group
• Anthropological = cultural
• Include segments based on
– Cultural values
– Sub-cultural membership
– Cross-cultural affiliations

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 Consumption-Specific
Segmentation Bases
Usage rate

Usage situation

Benefit segmentation

Perceived brand
loyalty

Brand relationship

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 Consumption-Specific Segmentation
Usage-Behavior
• Usage rate
– Awareness status
– Level of involvement

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 Consumption-Specific Segmentation
Usage-Behavior
• Usage-situation segmentation
– Segmenting on the basis of special occasions or
situations
– Example : When I’m away on business, I try to
stay at a suites hotel.

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 Which Consumption-Related
Segmentation Is Featured in This Ad?

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 This is an Example of a Situational
Special Usage Segmentation.

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 Benefits Segmentation

• Benefits sought represent consumer needs

• Important for positioning
• Benefits of media

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 Benefits Visiting Tourists Seek in
National Park – Table 3.13 (excerpt)
Segment Description
Environmentalists Interested in an unpolluted, un-spoilt natural environment
and in conservation. Not interested in socializing,
entertainment, or sports. Desire authenticity
and less man-made structures and vehicles
in the park.

Want-it-all Tourists Value socializing and entertainment more than

conservation. Interested in more activities and
opportunities for meeting other tourists. Do not
mind the “urbanization” of some park sections.

Independent Tourists Looking for calm and unpolluted environment,

exploring the park by themselves, and staying at
a comfortable place to relax. Influenced by word
of mouth in choosing travel destinations.
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 Brand Loyalty and Relationships

• Brand loyalty includes:

– Behavior
– Attitude
• Frequency award programs are popular
• Customer relationships can be active or passive
• Retail customers seek:
– Personal connections vs. functional features
• Banking customers seek:
– Special treatment
– Confidence benefits
– Social benefits

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 Implementing Segmentation Strategies

• Micro- and behavioral targeting

– Personalized advertising messages
– Narrowcasting
• Email
• Mobile
– Use of many data sources

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 Implementing Segmentation Strategies

• Concentrated Marketing
– One segment
• Differentiated
– Several segments with individual marketing mixes
• Countersegmentation

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Copyright © 2010 Pearson Education, Inc. Publishing as

Prentice Hall

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