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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 service
elements 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
Nicher gains 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 empowers
consumers 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, use
of, 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 might
need.
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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 different
programs 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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