Kotler • KellerPhillip Kevin Lane

Marketing Management • 14e

Identifying Market Segments and Targets

Chapter 8

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Discussion Questions1. What are the different levels of market

segmentation?

2. In what ways can a company divide a market into segments?

3. What are the requirements for effective segmentation?

4. How should business markets be segmented?

5. How should a company choose the most attractive target markets?

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Target Marketing Requirements

1. Identify and profile distinct groups of buyers (market segmentation).

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

3. For each, establish and communicate benefits of offering (market positioning).

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Bases for Segmenting Consumers

Geographic

Demographic

Psychographic Behavioral

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Geographic Segmentation

Geoclustering

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Demographic Segmentation

Age and Life-cycle StageLife StageGenderIncomeGenerationRace and Culture

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Age and Life-Cycle Stage

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Life Stage

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GenderWomen:

Influence 80% of consumer purchasesMake 75% of new home decisionsPurchase 60% of cars

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Income

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Generation

Gen X (1964-1978)Baby Boomers (1946-1964)Silent Generation (1925-1945)

Millennials (Gen Y) – (1979-1994)-78 Million people-$187 annual spending power

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Cohort Size Defining Features

Millennials (1979-1994)

78 m Raised in affluence, tech savvy, perceived immunity from marketing

Gen X (1964-1978)

50 m Parents relied on day care, accepts diversity, pragmatic and individualistic

Baby Boomers(1946-1964)

76 mControl 3/4th of the wealth in the U.S, seek fountain of youth (hair color, hair replacement), home exercise equipment

Silent Generation(1925-1945)

42 m Lead vibrant lives, spend money and time on grandchildren.

U.S. Generation Cohorts

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Race and Culture

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Multicultural Market Profile

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Psychographic Segmentation

• Personality traits

• Lifestyle• Values

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Figure 8.1

VALS Segmentation System

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Behavioral Segmentation

User and Usage

Needs and Benefits

Decision Roles

Usage occasions

User status

Usage rate

Buyer-readiness

Loyalty status

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Figure 8.2

Brand Funnel

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Consumer Attitudes

Enthusiastic Positive Indifferent Negative Hostile

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Figure 8.3

Behavioral Segmentation

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Bases for Segmenting B2B Markets

Demographic

Operating Variables

Purchasing Approach

Situational Factors

Personal Characteristics

Industry, company size, location

Technology, user status, customer capabilities

Power structure, nature of existing relationship

Urgency, specific application, size of order

Buyer-seller similarity, loyalty, risk attitude

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Market Targeting

Effective Segmentation CriteriaMeasurableSubstantialAccessibleDifferentiableActionable

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Market TargetingPorter’s Five Force

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Evaluating and Selecting Segments

Individual marketing

Full market coverage

Multiple segment specialization

Single-segment concentration

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Figure 8.4

Levels of Segmentation