CHAPTER
TWO
Market Segmentation
and Strategic Targeting
Why Segmentation is Necessary
• Consumer needs
differs
• Differentiation helps
products compete
• Segmentation helps
identify media
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 2
Positioning
The value
proposition,
expressed through
promotion, stating
the product’s or
service’s capacity
to deliver specific
benefits.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 3
Criteria for Effective Targeting
Identifiable Sizeable
Stable Accessible
Congruent with the
company’s objectives
and resources
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Bases for Segmentation
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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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Geodemographic Segmentation
• Based on geography and demographics
• People who live close to one another are
similar
• “Birds of a feather flock together”
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 8
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
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 9
Lifestyles
• Psychographics
• Includes activities,
interests, and
opinions
• They explain buyer’s
purchase decisions
and choices
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 10
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.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 11
Socio-Cultural Values and Beliefs
• Sociological = group
• Anthropological = cultural
• Include segments based on
– Cultural values
– Sub-cultural membership
– Cross-cultural affiliations
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 12
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
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 14
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.
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 15
Which Consumption-Related
Segmentation Is Featured in This Ad?
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Benefits Segmentation
• Benefits sought represent consumer needs
• Important for positioning
• Benefits of media
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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
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 18
Implementing Segmentation Strategies
• Micro- and behavioral targeting
– Personalized advertising messages
– Narrowcasting
• Email
• Mobile
– Use of many data sources
Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 19
