CHAPTER THREEMarket Segmentation and Strategic Targeting

Learning Objectives1. To Understand Why Market Segmentation Is Essential.2. To Understand the Criteria for Targeting Selected Segments Effectively.3. To Understand the Bases for Segmenting Consumers.4. To Understand How Segmentation and Strategic Targeting Are Carried Out.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 2

What Kind of Consumer Does This Ad Target?Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 3

This Ad Targets Runners Who Are Physically Active People and Also Relish the Outdoors.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 4

Why Segmentation is Necessary Consumer needs differs Differentiation helps products compete Segmentation helps identify mediaCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 5

Positioning The value proposition, expressed through promotion, stating the products or services capacity to deliver specific benefits.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 6

Criteria for Effective TargetingCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 7

Which Distinct Benefit Does Each of theTwo Brands Shown in This Figure Deliver?Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 8

The Dentyne Ads Benefit is Fresh Breath and the Nicorette Ad is Whitening and Smoking CessationCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 9

Bases for SegmentationCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 10

Discussion Questions Considering the largest bank in your colleges city or town: How might consumers needs differ? What types of products might meet their needs? What advertising media makes sense for the different segments of consumers?Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 11

Consumer-Rooted Segmentation BasesCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 12

Demographic SegmentationCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 13

Discussion Questions What types of marketers might segment according to social class? What ethical issues might marketers have when marketing to different social classes?Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 14

Geodemographic Segmentation Based on geography and demographics People who live close to one another are similar Birds of a feather flock togetherCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 15

One PRIZM Segment - Table 3.4 (excerpt)Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 16

Personality Traits People often do not identify these traits because they are guarded or not consciously recognized Consumer innovators Open minded Perceive less risk in trying new thingsCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 17

Lifestyles Psychographics Includes activities, interests, and opinions They explain buyers purchase decisions and choicesCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 18

Discussion Questions How might you differ from a person with similar demographics to yourself? How would this be important for marketers?Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 19

Two Views of Post-Retirement Lifestyle Table 3.6 (excerpt)Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 20

VALS Figure 3.4Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 21

Socio-Cultural Values and Beliefs Sociological = group Anthropological = cultural Include segments based on Cultural values Sub-cultural membership Cross-cultural affiliationsCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 22

Consumption-Specific Segmentation BasesCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 23

Consumption-Specific Segmentation Usage-Behavior Usage rate Awareness status Level of involvementCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 24

Consumption-Specific Segmentation Usage-Behavior Usage-situation segmentation Segmenting on the basis of special occasions or situations Example : When Im away on business, I try to stay at a suites hotel.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 25

Which Consumption-Related Segmentation Is Featured in This Ad?Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 26

This is an Example of a Situational Special Usage Segmentation.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 27

Benefits Segmentation Benefits sought represent consumer needs Important for positioning Benefits of mediaCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 28

Benefits Visiting Tourists Seek in National Park Table 3.13 (excerpt)Segment DescriptionEnvironmentalists Interested in an unpolluted, un-spoilt natural environment and in conservation. Not interested in socializing, entertainment, or sports. Desire authenticity and less man-made structures and vehicles in the park.Want-it-all Tourists Value socializing and entertainment more than conservation. Interested in more activities and opportunities for meeting other tourists. Do not mind the urbanization of some park sections.Independent Tourists Looking for calm and unpolluted environment, exploring the park by themselves, and staying at a comfortable place to relax. Influenced by word of mouth in choosing travel destinations.Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 29

Brand Loyalty and Relationships Brand loyalty includes: Behavior Attitude Frequency award programs are popular Customer relationships can be active or passive Retail customers seek: Personal connections vs. functional features Banking customers seek: Special treatment Confidence benefits Social benefitsCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 30

Implementing Segmentation Strategies Micro- and behavioral targeting Personalized advertising messages Narrowcasting Email Mobile Use of many data sourcesCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 31

Sample Acxiom Clusters - Table 3.16 (excerpt)Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 32

Implementing Segmentation Strategies Concentrated Marketing One segment Differentiated Several segments with individual marketing mixes CountersegmentationCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 33

All rights reserved. No part of this publication may be reproduced, stored in a 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 2010 Pearson Education, Inc. Publishing as Prentice HallCopyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Three Slide 34