Kotler FW 4e Basic 07

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Copyright 2009, Prentice-Hall, Inc. 7-1

A Framework for

Marketing Management

Chapter 7

Identifying Market Segments and Targets


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Chapter Questions

What are the different levels of market

segmentation?

How can a company identify the segments

that make up a market?

How should a company choose the most

attractive target markets?


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Target Marketing Requires That

Marketers Identify and profile distinct groups of buyers

who differ in their needs and preferences

(market segmentation).

Select one or more segments to enter(market targeting).

Establish and communicate the offerings

distinctive benefit(s) to each target segment(marketing positioning).


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Levels of Market Segmentation

Segment marketing

Niche marketing

Local marketing

Individual marketing


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Segment Marketing

Market segmenta group of customers who share a

similar set of needs and wants.

Flexible market offeringconsists of:

Naked solution containing the product and serviceelements that all segment members value.

Discretionary options that some members value.

Homogeneous preferencesexist when all

consumers have roughly the same preferences. Diffused preferencesconsumers vary greatly in

their preferences.


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Niche Marketing

Nichea more narrowly defined customer

group seeking a distinctive mix of benefits.

Attractive when:

Customers have a distinct set of needs

Fairly small but has size, profit, and growth potential

Customers will pay a premium

Nichergains certain economies through specialization


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Local Marketing

Marketing programs tailored to the needs and

wants of local customer groups in particular

trading areas, neighborhoods, even individual

stores. Grassroots marketingconcentrating on

getting as close and personally relevant to

individual customers as possible.


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Individual Marketing

Leads to:

Segments of one

Customized marketing

One-to-one marketing

Customerizationcombines operationally

driven mass customization with customized

marketing in a way that empowersconsumers to design the product and service

offering of their choice.


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Bases for Segmenting Consumer

Markets Geographic

Demographic

Psychographic

Behavioral


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Geographic Segmentation

Dividing the market into different

geographical units such as:

Nations

States

Regions

Counties

Cities Neighborhoods


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Demographic Segmentation

Divide the market into groups based on age

and other variables:

Life-cycle stage

Life stage

Gender

Income

Generation Social class


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Psychographic Segmentation

Psychographicsthe science of using

psychology and demographics to better

understand consumers.

Buyers divided into groups on the basis of:

Psychological/personality traits

Lifestyle

Values VALS Framework


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Behavioral Segmentation

Divide consumers into

groups on the basis of

their knowledge of,

attitude toward, useof, or response to a

product.

Behavioral variables:

Occasions

Benefits

User status

Buyer-readiness

stage

Loyalty status Attitude


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Bases for Segmenting Business

Markets Demographic

Operating variables

Purchasing approaches

Situational factors

Personal characteristics


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Effective Segmentation Criteria

Measurable

Substantial

Accessible

Differentiable

Actionable


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Evaluating and Selecting Market

Segments Must look at two factors:

Segments overall attractiveness

Companys objectives and resources


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Patterns of Target Market Selections

Single-segment concentration Focus on one segment

Selective specialization Select a number of segments

Product specialization Specialize in making a certain product for several

segments.

Market specialization

Serve many needs of a particular customer group. Full market coverage

Serve all customer groups with all the products they mightneed.


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Full Market Coverage

Undifferentiated marketingfirm goes after

the whole market with one market offering.

Differentiated marketingoperate in several

market segments and design differentprograms for each segment.


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Additional Considerations

Segment-by-segment invasions

Enter one segment at a time and avoid letting rivals know

what segment(s) will be next.

Megamarketingthe strategic coordination of economic,

psychological, political, and public relations skills to gain

the cooperation of a number of parties in order to enter or

operate in a given market.

Ethical choice of market targets Concerns over targeting vulnerable or disadvantaged

groups with potentially harmful products.


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retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.

Copyright 2009 Pearson Education, Inc.Publishing as Prentice Hall

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Kotler FW 4e Basic 07