CHAPTER 18

Market Segmentation
and Targeting with
Value Orientation

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 Chapter 18: Market Segmentation and Targeting with Value Orientation

At the end of this chapter, you should be able to:

⮚ Understand What is Meant by Market Segmentation and

Why Marketers Resort to Segmenting the Market
⮚ Appreciate that it is the Consumers who are Segmented,
Not the Product, Nor, Price
⮚ Comprehend that Markets can be Segmented Using Several Bases:
• Geographics
• Demographics
• Socio-Culturals
• Psychographics
• Buying Behaviour
• Multi Level Segmentation, Using Several Bases
⮚ Appreciate that Segmentation with Value Orientation is Another
distinct Approach Which has Certain Unique Advantages
⮚ Understand the Various Tasks Involved in Segmentation
⮚ Grasp How to Choose the Target Market/ Handle Market Targeting
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 Chapter 18: Market Segmentation and Targeting with Value Orientation

■ Markets are Heterogeneous; Segmentation Divides Them into

Homogeneous Sub-Units
■ The Consumers in the Various Segments will Vary ‘Across’
Segments, but be Homogeneous ‘Within’
■ It is the Consumers who are Segmented, Not the Product, Nor, Price

Why Segment the Market?

■ Facilitates Right Choice of Target Market

■ Facilitates Effective Tapping of the Chosen Market
■ Makes the Marketing Effort More Efficient and Economic
■ Helps Identify Less Satisfied Segments and Concentrate on Them
■ Benefits the Consumer as Well

Chart 18.1 Benefits Conferred by Market Segmentation (Pg 298)

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 Chapter 18: Market Segmentation and Targeting with Value Orientation
Why Segment the Market (…contd)

■ Is Unsegmented Marketing Not Possible at all?

⮚ Unsegmented marketing is low on rewards, high on risks
⮚ Unsegmented marketing misses out the advantage of STP

Markets can be Segmented Using Several Bases

■ Geographic Segmentation
■ Demographic Segmentation
■ Socio-Cultural Factors
■ Psychographic Segmentation
■ Buying Behaviour Segmentation

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Segmentation Using Several Bases (…contd)
■ Geographic Segmentation
⮚ Based on factors like climatic zone, continent/ country, region, state,
district, urban/ rural area etc
■ National marketers in India often segment the market by region, state,
district and urban/ rural areas, in the first instance, and then segment
them further using other bases
■ Sometimes the marketers treat the north and south of India as two
distinct segments
■ When there are clearly identifiable differences between one region and
the other, with implications to marketing, geographic segmentation will
be useful

■ Demographic Segmentation
⮚ Age
⮚ Tweens, a new segment based on age
Exhibit 18.1 How Tweens Constitute a
⮚ Gender
Distinct Consumer Segment (Pg 300)
⮚ Women as a market segment for apparels
■ Adidas targets women in India
⮚ Purchasing capacity, a major base in demographic segmentation
■ HCL locates a new market segment based on purchasing capacity
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 Chapter 18: Market Segmentation and Targeting with Value Orientation
Segmentation Using Several Bases (…contd)
■ Socio-Cultural Factors
⮚ Culture and social class the two main bases here
■ Psychographic Segmentation
⮚ Lifestyle a major base in psychographic segmentation
Exhibit 18.2 Coffee Cafes Thrive on Lifestyle Segments (Pg
302)

⮚ Psychographic segmentation helps in positioning/ repositioning,

launch of new products, and brand extensions

■ Buying Behaviour Segmentation

⮚ Usage-based segmentation
■ Start with current users of the brand
■ Tackle current users of competitors’ brands
■ Tackle non-users, entering the category for the first time
■ In India, in most categories, ‘First Time Users’ will mean a major segment

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 Chapter 18: Market Segmentation and Targeting with Value Orientation
Buying Behaviour Segmentation (…contd)
⮚ ‘Benefit’ segmentation
■ Example of ‘calorie watchers’ and health seekers: Diet Horlicks, Diet
Pepsi, Whole Wheat/ Brown Bread, Sugar Free
See Exhibit 20.2 Benefits Buyers Sought in Cars, in Chapter 20
⮚ Volume segmentation
■ Quantity of purchase- actual or potential- is the base
■ Consumers segmented as light or medium or heavy users
■ Consumers segmented as bulk buyers and small scale buyers
■ Regular buyers and one-time buyers
⮚ Purchase occasion
■ Segmentation based on the specific occasion on which the consumers
buy the product
⮚ Attitude towards the product
■ Enthusiastic buyers, indifferent buyers, negative minded buyers
⮚ Loyalty to the brand
■ Extent of brand loyalty, another useful base
⮚ Buying Behaviour Segmentation is especially useful with new
products
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Segmentation Using Several Bases (…contd)

■ Multi-Level Segmentation: A Market Can and Must be Segmented

Using Several Bases
⮚ The various bases discussed earlier are not mutually exclusive;
it is not an either or situation

⮚ Since customer characteristics stand distributed over several

variables, any market can be segmented through several
variables/ bases. They can also be used in combinations

⮚ Multi-level segmentation enables sharper targeting and choice of

sharply focused marketing mix
■ Example of GM. GM identified 40 different ‘customer needs’ in
passenger cars and correspondingly 40 different market segments in
which it would compete with its offers

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Segmentation Chapter
with 18: Market Segmentation and Targeting with Value Orientation
Value Orientation

■ Taking Segmentation to a Higher Level, Based on the Value Sought

by Buyers
⮚ Example of Porsche

■ Value-Oriented Segmentation Makes Sense as People Seek Different

Value in the Same Product

■ Value-Oriented Segmentation would Accomplish Many Vital Purposes

⮚ Will facilitate deep differentiation, in particular
⮚ Will build the differentiation into the up-stream marketing activities
⮚ Will help occupy new segments

■ How to Spot the Differing Value Needs of Consumers?

Exhibit 18.3 Titan Watches (Pg 308-309)

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Tasks Involved in Segmentation
⮚ Profiling the differences between one segment and the other in
terms of their needs/value requirement
⮚ Finding out by what descriptive characteristics can consumers be
tagged on to a specified segment
⮚ Disaggregating the consumers into suitable segments based on the
above steps
⮚ Checking whether it is possible to formulate separate/ distinctive
marketing programme/ marketing mix for the different segments
⮚ Finding out which segments will be particularly happy with the
offerings of the firm and considered as the natural targets of the firm
⮚ Estimating the likely levels of purchase by each of the segments
⮚ Ensuring that the segments arrived at are effective
Chart 18.2 Attributes of
■ Market Gridding Effective Segments (Pg 310)
■ Another analytical technique facilitating market segmentation

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 Chapter 18: Market Segmentation and Targeting with Value Orientation
Choosing the Target Market (Market Targeting)
■ Segmentation is just a prelude, a tool; choosing the target market is
the ultimate purpose

■ Choose All Segments? Only One? Or a Few?

Chart 18.3 Steps in Choosing
■ Evaluation of the Segments the Target Market (Pg 311)

⮚ As firms vary in objectives and competencies, different segments

may suit different firms
⮚ Within a segment, the highly attractive portions could be chosen

Exhibit 18.4 Airtel Cherry Picks Market Segments (Pg 311)

■ Adding Further Segments to One’s Target Market

Exhibit 18.5 Adding Further Segments (Pg 312)

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 Chapter 18: Market Segmentation and Targeting with Value Orientation
Choosing the Target Market (…contd)

■ Steps in Choosing Target Market – Illustration of Bath Soaps

⮚ Carries two broad segments : premium and popular
⮚ Evaluating the two segments
■ Is it sizeable?
■ Is it growing?
■ Is it profitable?
■ Is it accessible?
■ Is it compatible with the firm’s ambitions, resources and capabilities?
⮚ Further segmenting of both segments with other relevant bases

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 Chapter 18: Market Segmentation and Targeting with Value Orientation

Market Targeting, an Integral Part of Marketing Strategy

⮚ Wrong targeting renders strategy ineffective; even MNCs

seem to err in targeting
■ Example of Levi’s
■ Example of Reebok
■ Example of Pierre Cardin

⮚ Mismatch between segments chosen and firm’s

resources may also lead to failure

Exhibit 18.6 Mismatch Between Chosen Segments and the Firm’s

Resources – Nestle (Pg 315)

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