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Market Segmentation and Strategic

Targeting

CHAPTERTHREE

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Learning Objectives

1. 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.

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What Kind ofConsumer Does This Ad Target?

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This Ad Targets Runners Who Are Physically Active People and Also Relish the Outdoors.

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Why Segmentation is Necessary

• Consumer needs differs

• Differentiation helps products compete

• Segmentation helps identify media

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Positioning

The value proposition,

expressed through promotion, stating

the product’s or service’s capacity to deliver specific

benefits.

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Criteria for Effective Targeting

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Which Distinct Benefit Does Each of the Two Brands Shown in This Figure Deliver?

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The Dentyne Ad’s Benefit is Fresh Breath and the Nicorette Ad is Whitening and Smoking Cessation

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Bases for Segmentation

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Discussion Questions

• Considering the largest bank in your college’s 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?

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Consumer-Rooted Segmentation Bases

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Demographic Segmentation

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Discussion Questions

• What types of marketers might segment according to social class?

• What ethical issues might marketers have when marketing to different social classes?

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Geodemographic Segmentation

• Based on geography and demographics• People who live close to one another are

similar• “Birds of a feather flock together”

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One PRIZM Segment - Table 3.4 (excerpt)

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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 things

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Lifestyles

• Psychographics• Includes activities,

interests, and opinions

• They explain buyer’s purchase decisions and choices

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Discussion Questions

• How might you differ from a person with similar demographics to yourself?

• How would this be important for marketers?

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Two Views of Post-Retirement LifestyleTable 3.6 (excerpt)

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VALS – Figure 3.4

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Socio-Cultural Values and Beliefs

• Sociological = group• Anthropological = cultural• Include segments based on– Cultural values– Sub-cultural membership– Cross-cultural affiliations

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Consumption-Specific Segmentation Bases

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Consumption-Specific SegmentationUsage-Behavior

• Usage rate– Awareness status– Level of involvement

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Consumption-Specific SegmentationUsage-Behavior

• Usage-situation segmentation– Segmenting on the basis of special occasions or

situations– Example : When I’m away on business, I try to

stay at a suites hotel.

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Which Consumption-Related Segmentation Is Featured in This Ad?

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This is an Example of a Situational Special Usage Segmentation.

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Benefits Segmentation

• Benefits sought represent consumer needs• Important for positioning• Benefits of media

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Benefits Visiting Tourists Seek in National Park – Table 3.13 (excerpt)

Segment Description

Environmentalists Interested in an unpolluted, un-spoilt natural environmentand in conservation. Not interested in socializing, entertainment, or sports. Desire authenticityand less man-made structures and vehiclesin the park.

Want-it-all Tourists Value socializing and entertainment more thanconservation. Interested in more activities andopportunities for meeting other tourists. Do notmind the “urbanization” of some park sections.

Independent Tourists Looking for calm and unpolluted environment,exploring the park by themselves, and staying ata comfortable place to relax. Influenced by wordof mouth in choosing travel destinations.

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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 benefits

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Implementing Segmentation Strategies

• Micro- and behavioral targeting– Personalized advertising messages– Narrowcasting• Email• Mobile

– Use of many data sources

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Sample Acxiom Clusters - Table 3.16 (excerpt)

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Implementing Segmentation Strategies

• Concentrated Marketing– One segment

• Differentiated– Several segments with individual marketing mixes

• Countersegmentation

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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.

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