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Chapter 3

Consumer Behavior,Consumer Behavior,Eighth EditionEighth Edition

SCHIFFMAN & KANUK

Market Segmentation

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Market Market SegmentationSegmentation

The process of dividing a potential market into distinct

subsets of consumers and selecting one or more segments as a target market to be

reached with a distinct marketing

mix.

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Three Phases of Marketing Strategy

• Phase 1: Market Segmentation

• Phase 2: Target Market and Marketing Mix Selection

• Phase 3: Product/Brand Positioning

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Table 3.1: Sodexho’s Segmentation of College-age Eating Patterns

Star Gazers• Light, healthy foods• Price insensitive• Brand conscious• Employed full-time

over summer• Active, out-going• Family income >

100,000

Fun Express• Variety, taste, and

nutrition• Price conscious• Work part-time over

summer• Value leisure time• Family income

$30,000 - 60,000

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“Best” Customer Segmentation

High

Low

Consumption

High Current Share Low

LoLows(starve)

HiHighs(stroke)

LowHighs(chase)

HiLows(tickle)

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Segmentation Studies• Designed to discover the needs and wants of

specific groups of consumers in order to develop specialized products to satisfy specific group needs (e.g., Centrum)

• Designed to guide the repositioning of a product (e.g., Nintendo)

• Used to identify the most appropriate media for advertising (e.g., People and Teen People)

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Bases for Segmentation• Geographic Segmentation• Demographic Segmentation• Psychological Segmentation• Psychographic Segmentation• Sociocultural Segmentation• Use-Related Segmentation• Usage-Situation Segmentation• Benefit Segmentation• Hybrid Segmentation Approaches

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Table 3.2 Market Segmentation

Occupation

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation

Climate

Density of area

City Size

Region Southwest, Mountain States, Alaska, Hawaii

Major metropolitan areas, small cities, towns

Urban, suburban, exurban, rural

Temperate, hot, humid, rainy

Demographic Segmentation

Income

Marital statusSexAge Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

Male, femaleSingle, married, divorced, living together, widowed

Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over

Education Some high school, high school graduate, some college, college graduate, postgraduate

Professional, blue-collar, white-collar, agricultural, military

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Table 3.2, continuedSEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvement

Perception

Personality

Needs-motivation Shelter, safety, security, affection, sense of self-worth

Extroverts, novelty seeker, aggressives, low dogmatics

Low-risk, moderate-risk, high-risk

Low-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)

Religion

Cultures

(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers

American, Italian, Chinese, Mexican, French, Pakistani

Catholic, Protestant, Jewish, Moslem, other

African-American, Caucasian, Asian, Hispanic

Family life cycle

Social class Lower, middle, upper

Bachelors, young married, full nesters, empty nesters

Attitudes Positive attitude, negative attitude

Sociocultural Segmentation

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SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESUse-Related Segmentation

Brand loyalty

Awareness status

Usage rate Heavy users, medium users, light users, non users

Unaware, aware, interested, enthusiastic

None, some, strong

Use-Situation Segmentation

Location

Objective

Time Leisure, work, rush, morning, night

Personal, gift, snack, fun, achievement

Home, work, friend’s home, in-store

Person Self, family members, friends, boss, peers

Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money

Geodemographics “Money and Brains,” “Black Enterprise,” “Old Yankee Rows,” “Downtown Dixie-Style”

Demographic/Psychographics

Combination of demographic and psychographic profiles of consumer segments profiles

SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler

Hybrid Segmentation

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Geographic Geographic SegmentationSegmentation

The division of a total potential market into smaller subgroups on

the basis of geographic variables (e.g., region, state, or

city).

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Demographic Segmentation

• Age• Sex• Marital Status• Income, Education, and Occupation

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Age: Segmentation by Age Effects and Cohort Effects

• Seven Life Development Stages (Table 3.3)– Provisional Adulthood

• Pulling up roots

– First Adulthood• Reaching out, Questions/questions, Mid-life

explosion

– Second Adulthood• Settling Down, Mellowing, Retirement

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Marital Status

• Households as a consuming unit– Singles– Divorced– Single parents– Dual-income married

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Psychological Segmentation

• Motivations• Personality• Perceptions• Learning• Attitudes

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AIOsAIOs

Psychographic (lifestyle) variables

that focus on activities, interests,

and opinions.

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Table 3.6 Excerpts from AIO InventoryInstructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement.

I feel that my life is moving faster and faster, sometimes just too fast.

If I could consider the “pluses” and “minuses,” technology has been good for me.

I find that I have to pull myself away from e-mail.

Given my lifestyle, I have more of a shortage of time than money.

I like the benefits of the Internet, but I often don’t have the time to take advantage of them.

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

[1] [2] [3] [4] [5] [6] [7]

Agree Completely

Disagree Completely

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Table 3.7 A Hypothetical Psychographic Profile of the Techno-Road-Warrior

•Sends and/or receives 15 or more e-mail messages a week

•Regularly visits Web sites to gather information and/or to comparison shop

•Often buys personal items via 800 numbers and/or over the Internet

•May trade stocks and/or make travel reservations over the Internet

•Earns $100,000 or more a year

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Figure 3.1 Centrum Targets Lifestyle

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Sociocultural Segmentation

• Family Life Cycle• Social Class• Culture, Subculture, and Cross-Culture

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Family Life Cycle• Phases a family goes through in their

formation, growth, and final dissolution– Bachelorhood– Honeymooners– Parenthood– Post-parenthood– Dissolution

• Explicit basis: marital status, family status• Implicit basis: age, income, employment

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Use-Related Segmentation

• Rate of Usage– Heavy vs. Light

• Awareness Status– Aware vs. Unaware

• Brand Loyalty– Brand Loyal vs. Brand Switchers

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Figure 3.2Campbell’s

Seeks to Create

Awareness and Interest

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Usage-Situation Segmentation

• Segmenting on the basis of special occasions or situations

• Example Statements:– Whenever our daughter, Jamie, gets a raise, we

always take her out to dinner.– When I’m away on business, I try to stay at a

suites hotel.– I always buy my wife flowers on Valentine’s

Day.

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Figure 3.3Ad Designed to Spell OutRewards of Consumer

Loyalty

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Figure 3.4Occasion-Specific

Ad

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Benefit Segmentation

• Segmenting on the basis of the most important and meaningful benefit– Prudential - financial security– Iomega - data protection– Wheaties - good health– Eclipse - fresh breath

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Figure 3.5Ad OfferingCombined Benefits

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Hybrid Segmentation Approaches

• Psychographic-Demographic Profiles• Geodemographic Segmentation• SRI Consulting’s Values and Lifestyle

System (VALSTM)

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Table 3.8 Demographic-Psychographic Profile of Newsweek

• Total adult readers 19,593,000

• Men

• Professionals/ Managers

• Age 35-49

• Household income >$100,000

• Married

• Own laptop PC

• Spent $3000+ on vacation last year

% Index

100.0 10055.9 11735.3 17436.5 11425.1 17262.4 10912.0 15012.3 164

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Table 3.9 Demographic-Psychographic Internet Shopping Styles

• E-bivalent Newbies

• Time-Sensitive Materialists

• Clicks & Mortar

• Hooked, Online, & Single

• Hunter-Gatherers

• Brand Loyalists

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Figure 3.6TargetingAn ActiveLifestyle

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Table 3.10 Sample Claritas Geodemographic Clusters

Blue Blood Estates• .8% of U.S. households• Professional• Elite super-rich• College graduate• 35-44, 45-54, 55-64• Country club members,

own mutual phones, play golf

Young Influentials• 1.1% of U.S.

households• Professional• College graduate• Under 24, 25-34• Yuppies, drink

imported beer, read fashion magazines

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STRUGGLERS

FULFILLEDS

BELIEVERS

ACHIEVERS EXPERIENCERS

STRIVERS MAKERS

Low Resources

High Resources

Action OrientedStatus OrientedPrinciple Oriented

ACTUALIZERSFigure 3.8 VALS

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Figure 3.9 VALS 2 Segments and Participation in Selected Sports

Percent of adults in each VALS 2 type who participated in selected sports in 1995.

0 2 4 6 8 10 12 14

Strugglers

Believers

Strivers

Fulfilleds

Makers

Achievers

Experiencers

Actualizers

Mountain/rock climbing Jet skiing/wave running/water biking Inline skating

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Table 3.11 Size of VALS Segment as Percent of U.S. Population

VALSVALSTMTM SEGMENT SEGMENTPERCENT OF PERCENT OF POPULATIONPOPULATION

Actualizer10.511.7%

StrugglerMakerExperiencerStriverAchieverBelieverFulfilled

9.512.012.911.814.717.0

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Mindbase Segmentation

• Monitor Mindbase based on Yankelovich’s Monitor Survey of American Values and Attitudes

• Table 3.12

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Table 3.12 Eight Major Mindbase Segments

• Up and Comers

• Young Materialists

• Stressed by Life

• New Traditionalists

• Family Limited

• Detached Introverts

• Renaissance Elders

• Retired from Life

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Criteria For Effective Targeting of Market Segments

• Identification• Sufficiency• Stability• Accessibility