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Objectives
Identifying Market Segments
 Choosing Target Markets

©2000 Prentice Hall
Steps in Market Segmentation,
Targeting,and Positioning
Market
Segmentation
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
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Market
Targeting
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market
Positioning
5. Identify
possible
positioning
concepts for
each target
segment
6. Select,
develop, and
communicate
the chosen
positioning
concept
Basic Market-Preference
Patterns
Sweetness
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(c) Clustered
preferences
Creaminess
(b) Diffused
preferences
Creaminess
Creaminess
(a) Homogeneous
preferences
Sweetness
Sweetness
Market-Segmentation
Procedure
Survey
 Motivations
 Attitudes
 Behavior
Analysis
 Factors
 Clusters
Profiling
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Bases for Segmenting
Consumer Markets
Geographic
Region, City or Metro
Size, Density, Climate
Demographic
Age, Gender, Family size
and Fife cycle, Race,
Occupation, or Income ...
Psychographic
Lifestyle or Personality
Behavioral
Occasions, Benefits,
Uses, or Attitudes
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Bases for Segmenting
Business Markets
Demographic
 Operating Variables
 Purchasing Approaches
 Situational Factors
 Personal Characteristics

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Effective Segmentation
Measurable
• Size, purchasing power,
profiles of segments can
be measured.
Substantial
• Segments must be large or
profitable enough to serve.
Accessible
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• Segments can be
effectively reached and
served.
Differential
• Segments must respond
differently to different
marketing mix elements &
actions.
Actionable
• Must be able to attract and
serve the segments.
Heavy and Light Users of
Common Consumer Products
PRODUCT (% USERS)
Soups and
detergents (94%)
HEAVY HALF
LIGHT HALF
75%
25%
Toilet tissue (95%)
71%
29%
Shampoo (94%)
79%
21%
Paper towels (90%)
75%
25%
Cake mix (74%)
83%
17%
Cola (67%)
83%
17%
Beer (41%)
87%
13%
Dog food (30%)
81%
19%
Bourbon (20%)
95%
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5%
Additional Segmentation
Criteria
Ethical Choice of Market Targets
 Segment Interrelationships &
Supersegments
 Segment-by-Segment Invasion Plans
 Intersegment Cooperation
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Five Patterns of Target Market
Selection
Single-segment
concentration
Product
specialization
Selective
specialization
M1 M2 M3
M1 M2 M3
M1 M2 M3
P1
P1
P1
P2
P2
P2
P3
P3
P3
Market
specialization
Full market
coverage
M1 M2 M3
P = Product
M = Market
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M1 M2 M3
P1
P1
P2
P2
P3
P3
Segment-by-Segment
Invasion Plan
Customer Groups
Product Varieties
Airlines
Railroads
Truckers
Large
computers
Mid-size
computers
Personal
computers
Company A
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Company B
Company C
Review
Identifying Market Segments
 Choosing Target Markets

©2000 Prentice Hall