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MARKETING MANAGEMENT12th edition
8 Identifying Market
Segments and Targets
Kotler Keller
CHP: 8&10-2
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.
CHP: 8&10-4
Steps in Market Segmentation, Targeting, and Positioning
Market Segmentation
1. Identify bases for segmenting the market2. Develop segment profiles
Market Segmentation
1. Identify bases for segmenting the market2. Develop segment profiles
Market Targeting3. Develop measure of segment attractiveness4. Select target segments
Market Targeting3. Develop measure of segment attractiveness4. Select target segments
Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment
Market positioning5. Develop positioning for target segments6. Develop a marketing mix for each segment
CHP: 8&10-5
Four levels of Micromarketing
Segments
Local areas Individuals
Niches
CHP: 8&10-6
Segment Marketing
Targeting a group of customerswho share a similar set of
needs and wants.
CHP: 8&10-7
Figure 8.1 Basic Market Preference Patterns
CHP: 8&10-8
Niche marketingAn attractive niche market characterised as follows:
THE CUSTOMERS IN THE NICHE MARKET HAVE A
DISTINCT SET OF NEEDS;
THEY WILL PAY A PREMIUM TO THE FIRM THAT BEST
SATISFIES THEIR NEEDS;
THE NICHE IS NOT LIKELY TO ATTRACT OTHER COMPETITORS;
THE NICHE GAINS CERTAIN ECONOMIES THROUGH SPECIALISATION; & THE NICHE HAS SIZE, PROFIT, & GROWTH
PIOTENTIAL.
WHEREAS SEGMENTS ARE FAIRLY LARGE & NORMALLY
ATTRACT SEVERAL COMPETITORS, NICHE ARE FAIRLY SMALL
& NORMALLY ATTRACT ONLY ONE OR TWO.
CHP: 8&10-9
Local marketingReflects a growing trend called grassroots marketing:• Marketing activities concentrate on getting as close & personally
relevant to individual customers as possible: e.g. - Nike’s initial foray
• A large part of this is experiential marketing, “The idea is not to sell something, but to demonstrate how a brand can enrich a customer’s life”
• Pine & Gilmore argue that we are on the threshold of the “Experience Economy,” a new economic era in which businesses must orchestrate memorable events for their customers
• Those who favour localised marketing see national advertising as a waste. Counterpoint is brands overall image gets diluted if product & messages differ across localities
CHP: 8&10-10
Customerization
Combines operationally drivenmass customization with customizedmarketing in a way that empowers
consumers to design theproduct and service offering
of their choice.
CHP: 8&10-11
Figure 8.2 Examples of Market Customization
CHP: 8&10-12
Segmenting Consumer Markets
GeographicGeographic
DemographicDemographic
PsychographicPsychographic
BehavioralBehavioral
CHP: 8&10-13
Demographic Segmentation
Age and Life CycleAge and Life Cycle
Life StageLife Stage
GenderGender
IncomeIncome
GenerationGeneration
Social ClassSocial Class
CHP: 8&10-15
Actualisers:• Enjoy finer things• Receptive to new products, technology, distribution• Skeptical of advertising• Frequent readers of a wide variety of publications; light TV
viewersPrinciple oriented:• Little interest in image or prestige• Above-average consumer for home products• Like educational & public affairs programming; read widely & oftenStatus oriented:• Attached to premium products• Prime target for a variety of products• Average TV watchers, read business, news, & self-help
publicationsAction oriented:• Follow fashion & fads• Spend much of the disposable income in socialising• Buy on impulse; attend to advertising; listen to rock music
CHP: 8&10-16
Believers:• Buy American• Slow to change habits, look for bargains• Watch TV more than average; read retirement, home & garden, &
general interest magazinesStrivers:• Image conscious• Limited discretionary incomes but carry credit balances• Spend on clothing & personal care products; prefer TV to readingMakers:• Shop for comfort, durability, value• Unimpressed by luxuries• Buy the basics, listen to radio;• Read auto, home mechanics, fishing, outdoor magazinesStrugglers:• Brand loyal• Use coupons & watch for sales• Trust advertising; watch TV often; read tabloids & women’s
magazines
CHP: 8&10-17
Behavioral Segmentation
Decision Roles
• Initiator
• Influencer
• Decider
• Buyer
• User
Behavioral Variables
• Occasions
• Benefits
• User Status
• Usage Rate
• Buyer-Readiness
• Loyalty Status
• Attitude
CHP: 8&10-18
Figure 8.5 Behavioral Segmentation Breakdown
CHP: 8&10-19
Segmenting for Business Markets
DemographicDemographic
Operating VariableOperating Variable
Purchasing ApproachesPurchasing Approaches
Situational FactorsSituational Factors
PersonalCharacteristics
PersonalCharacteristics
CHP: 8&10-20
• Size, purchasing power, profiles of segments can be measured.
• Segments can be effectively reached and served.
• Segments are large or profitable enough to serve.
Measurable Measurable
AccessibleAccessible
SubstantialSubstantial
DifferentialDifferential
ActionableActionable
• Segments must respond differently to different marketing mix elements & programs.• Effective programs can be designed to attract and serve the segments.
Effective Segmentation Criteria
CHP: 8&10-21
Market TargetingEvaluating Market Segments
• Segment Size and Growth– Analyze current sales, growth rates and expected
profitability for various segments.• Segment Structural Attractiveness
– Consider effects of: competitors, availability of substitute products and, the power of buyers & suppliers.
• Company Objectives and Resources– Company skills & resources needed to succeed in
that segment(s).– Look for Competitive Advantages.
CHP: 8&10-22
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
Segment 1Segment 1
Segment 2Segment 2
Segment 3Segment 3
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing
Mix
CompanyMarketing Mix 1
CompanyMarketing Mix 1
CompanyMarketing Mix 2
CompanyMarketing Mix 2
CompanyMarketing Mix 3
CompanyMarketing Mix 3
MarketMarket
A. Undifferentiated Marketing
B. Differentiated Marketing
C. Concentrated Marketing
Market TargetingMarket Coverage Strategies
CHP: 8&10-23
Figure 8.6 Patterns of Target Market Selection
CHP: 8&10-24
Figure 8.6 Patterns of Target Market Selection
CHP: 8&10-25
Figure 8.6 Patterns of Target Market Selection
CHP: 8&10-26
Marketing Strategy
SegmentationSegmentation
TargetingTargeting
PositioningPositioning
CHP: 8&10-27
Positioning
Act of designing the company’soffering and image to occupy
a distinctive place in the mind ofthe target market.
CHP: 8&10-28
Choosing a Positioning Strategy
Step 1. Identifying Possible
Competitive Advantages
Step 2. Selecting the Right
Competitive Advantage
Step 3. Communicating and
Delivering the Chosen Position
CHP: 8&10-29
Defining Associations
Points-of-difference (PODs)
• Attributes or benefits consumers strongly associate with a brand, positively evaluate, and believe they could not find to the same extent with a competitive brand
Points-of-parity
(POPs)• Associations that are
not necessarily unique to the brand but may be shared with other brands
CHP: 8&10-30
Consumer Desirability Criteria for PODs
RelevanceRelevance
DistinctivenessDistinctiveness
BelievabilityBelievability
CHP: 8&10-31
Deliverability Criteria for PODs
FeasibilityFeasibility
CommunicabilityCommunicability
SustainabilitySustainability
CHP: 8&10-32
Examples of Negatively Correlated Attributes and Benefits
• Low-price vs. High quality
• Taste vs. Low calories
• Nutritious vs. Good tasting
• Efficacious vs. Mild
• Powerful vs. Safe
• Strong vs. Refined
• Ubiquitous vs. Exclusive
• Varied vs. Simple
CHP: 8&10-33
• Positioning: How many ideas to promote?
• Unique selling proposition
– Four major positioning errors1. Underpositioning
2. Overpositioning
3. Confused positioning
4. Doubtful positioning
Developing and Communicating a Positioning Strategy
CHP: 8&10-34
Differentiation Strategies
Product
Channel Image
Personnel
CHP: 8&10-35
Product Differentiation
• Product form• Features• Performance• Conformance• Durability• Reliability• Reparability
• Style• Design• Ordering ease• Delivery• Installation• Customer training• Customer consulting• Maintenance
CHP: 8&10-36
Identity and Image
Identity:
The way a
company aims to
identify or
position itself
Image:
The way the
public perceives
the company or its
products
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