What is Market Segmentation? Bases for Segmentation Three Phases of Marketing Strategy Geographic Segmentation Psychological Segmentation Opinions and Attitudes Criteria for Effective Targeting of Segments Implementing Segmentation Strategies

1. SESSION 3
MARKET
SEGMENTATION
Prepared By:
Prof. Nishant Agrawal

2. CHAPTER OUTLINE
• WHAT IS MARKET SEGMENTATION?
• BASES FOR SEGMENTATION
• CRITERIA FOR EFFECTIVE TARGETING OF SEGMENTS
• IMPLEMENTING SEGMENTATION STRATEGIES

3. MARKET SEGMENTATION
THE PROCESS OF
DIVIDING A POTENTIAL
MARKET INTO
DIFFERENT SUBSETS
OF CONSUMERS AND
SELECTING ONE OR
MORE SEGMENTS AS A
TARGET MARKET TO BE
REACHED WITH A
DIFFERENT MARKETING

4. THREE PHASES OF MARKETING
STRATEGY
Phase 2
Target Market and Marketing Mix Selection
Phase 3
Product/Brand Positioning
Phase 1
Market Segmentation

5. SEGMENTATION STUDIES
• DISCOVER THE NEEDS AND WANTS OF
GROUPS OF CONSUMERS TO DEVELOP
SPECIALIZED PRODUCTS TO SATISFY GROUP
NEEDS
• USED TO IDENTIFY THE MOST APPROPRIATE
MEDIA FOR ADVERTISING

6. RYKA
PRODUCES
SNEAKERS
THAT MEET
THE SPECIAL
NEEDS OF
WOMEN’S
FEET.

7. DISCUSSION QUESTION
• CONSIDERING THE LARGEST BANK IN YOUR
COLLEGE’S CITY OR TOWN:
• HOW MIGHT CONSUMERS’ NEEDS DIFFER?
• WHAT TYPES OF PRODUCTS / SERVICE MIGHT MEET
THEIR NEEDS?

8. BASES FOR SEGMENTATION
Personal Feature Purchase Behaviors
•Demographic, age, gender, marital
status, family life cycle. Income,
education, occupation, social class
•Geographic location, address
•Usage Rate
•Usage Situation
•Brand Loyalty
•Psychographics factual behaviors
Personality , lifestyles and socio
culture value
•Personality traits
•Lifestyle, VALS
•socio culture value
Attitude and preferences regarding
the product
•Benefits wanted
•Level of involvement
•Awareness of product alternatives
•Brand loyalty
Consumer Rooted Consumption Specific
Facts
Cognitions

9. BASES FOR SEGMENTATION
• FACTS: WHICH CAN BE DETERMINE FROM DIRECT
QUESTIONING AND CATEGORIZED BY SINGLE
OBJECTIVE MEASURE
• COGNITIONS: WHICH ARE ABSTRACT CAN BE
DETERMINED ONLY THROUGH MORE COMPLEX
QUESTIONING AND WHERE MOST OF THE CONSTRUCT
MEASURED HAVE NO SINGLE DEFINITION

10. BASES FOR SEGMENTATION
• GEOGRAPHIC
• DEMOGRAPHIC
• PSYCHOLOGICAL
• PSYCHOGRAPHIC
• SOCIO CULTURAL
• USE-RELATED
• USAGE-SITUATION
• BENEFIT SOUGHT
• HYBRID

11. Table 3.1 Market Segmentation
Occupation
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Geographic 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 status
Sex
Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, female
Single, 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

12. Table 3.1, continued
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Learning-involvement
Perception
Personality
Needs-motivation Safety, security, affection, sense of self-worth
Extroverts, novelty seeker, aggressives, innovators
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,Hindu, Moslem, other
African American,, Asian,
Family life cycle
Social class Lower, middle, upper
Bachelors, young married
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation

13. SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Use-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
PRIZM NE
Geodemographics
“Movers & Shakers,” “New Empty Nests,” “Boomtown
Singles,” “Bedrock America”
Demographic/
Psychographics
Combination of demographic and psychographic profiles
of consumer segments profiles
SRI VALSTM
Innovators, Thinkers, Believer, Achievers, Strivers,
Experiencer, Makers, Survivors
Hybrid Segmentation
Table 3.1, continued

14. GEOGRAPHIC SEGMENTATION
• THE DIVISION OF A TOTAL POTENTIAL MARKET INTO
SMALLER SUBGROUPS ON THE BASIS OF
GEOGRAPHIC VARIABLES
(E.G., REGION, STATE, OR CITY) (EX. TEA, DETERGENT,
SKIN CREAM)
• WHERE PERSON LIVES DETERMINES SOME ASPECTS
OF CONSUMPTION BEHAVIOR.

15. PERSONALITY TRAITS
• PERSONALITY TESTS WHICH ARE GENERALLY IN THE
FORM OF QUESTIONS OR STATEMENT PRESENTED TO
THE RESPONDENT RESEARCHER CAN DETERMINE
ONE’S PERSONALITY AND USE IT IN SEGMENTATION.
• EX. CONSUMER WHO ARE OPEN MINDED AND
GENERALLY TAKE LESS RISK THAT OTHERS IN TRYING
NEW THINGS

16. DEMOGRAPHIC SEGMENTATION
• AGE
• SEX
• MARITAL STATUS
• INCOME, EDUCATION, AND OCCUPATION

17. PSYCHOLOGICAL
SEGMENTATION
• MOTIVATIONS
• PERSONALITY
• PERCEPTIONS
• LEARNING
• ATTITUDES

18. TWO HIGH-END WATCHES FOR
DIFFERENT PSYCHOLOGICAL
SEGMENTS

19. PSYCHOGRAPHIC/ LIFESTYLE ANALYSIS
SEGMENTATION
• PSYCHOGRAPHIC VARIABLES INCLUDE ATTITUDES,
INTERESTS, AND OPINIONS (AIO) WHERE INTEREST
AND OPINIONS ARE COGNITIVE CONSTRUCT.
• AIOS GIVE AN IN-DEPTH LOOK INTO THE BUYING
BEHAVIOUR OF THE SEGMENT.
• IN AIO RESEARCH, THE SUBJECT IS ASKED IF HE OR
SHE AGREES OR DISAGREES WITH
CERTAIN STATEMENTS DESIGNED TO EXPLORES HIS
OR HER ATTITUDES, MOTIVES, NEEDS,

20. Instructions: 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
TABLE 3.6 AIO

21. weblink
Opinions
and Attitudes
ADBUSTERS
Web site is
targeted to
consumers
with a certain
attitude toward
advertisers

22. VALS ( VALUES ATTITUDE AND LIFESTYLE)
• RESEARCH METHODOLOGY USED FOR PSYCHOGRAPHIC MARKET
SEGMENTATION. COMBINATION OF LIFESTYLE AND VALUES.

23. VALS ( VALUES ATTITUDE AND
LIFESTYLE)
• INNO VATO R THEY HAVE THE HIGHEST INCOMES & SUCH HIGH SELF-
RESPECT AND RICH RESOURCES . THEY ARE LOCATED ABOVE THE
RECTANGLE. SELF IMAGE IS IMPORTANT TO THEM AS AN EXPRESSION OF
INDEPENDENCE AND CHARACTER.
• THINKERS THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF
THOSE WHO ARE MOTIVATED BY IDEALS. THEY ARE MATURE,
RESPONSIBLE, WELL-EDUCATED PROFESSIONALS. WELL INFORMED
ABOUT WHAT GOES ON IN THE WORLD AND ARE OPEN TO NEW IDEAS
AND SOCIAL CHANGE.
• BELIEVERS THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF
THOSE WHO ARE MOTIVATED BY IDEALS. THEY ARE CONSERVATIVE AND
PREDICTABLE CONSUMERS WHO FAVOUR LOCAL PRODUCTS AND
ESTABLISHED BRANDS.

24. • STRIVERS / TO STRUGGLE THESE CONSUMERS ARE THE LOW-
RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY ACHIEVEMENTS.
THEY HAVE VALUES VERY SIMILAR TO ACHIEVERS BUT HAVE FEWER
ECONOMIC, SOCIAL, AND PSYCHOLOGICAL RESOURCES. STYLE IS
EXTREMELY IMPORTANT TO THEM
• EXPERIENCES THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF
THOSE WHO ARE MOTIVATED BY SELF-EXPRESSION. THEY ARE THE
YOUNGEST OF ALL THE SEGMENTS, WITH A MEDIAN AGE OF 25. THEY
HAVE A LOT OF ENERGY, WHICH THEY TRANSFER INTO PHYSICAL
EXERCISE AND SOCIAL ACTIVITIES. THEY ARE ENTHUSIASTIC
CONSUMERS, SPENDING HEAVILY ON CLOTHING, FAST-FOODS AND
OTHER YOUTHFUL FAVOURITES.
• MAKERS THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF
THOSE WHO ARE MOTIVATED BY SELF-EXPRESSION. THEY ARE

25. • SURVIVO RS. THESE CONSUMERS HAVE THE LOWEST INCOMES. THEY
HAVE TOO FEW RESOURCES TO BE INCLUDED IN ANY CONSUMER SELF-
ORIENTATION AND ARE THUS LOCATED BELOW THE RECTANGLE. THEY
ARE THE OLDEST OF ALL THE SEGMENTS, WITH A MEDIAN AGE OF 61.
WITHIN THEIR LIMITED MEANS, THEY TEND TO BE BRAND-LOYAL
CONSUMERS.
• CULTURE SEGMENTATION
• MARKETERS CAN SEGMENT SOME POPULATIONS ON THE BASIS OF
CULTURE BECAUSE MEMBERS OF THE SAME CULTURE TENT TO
SHARE SAME VALUE,

26. FAMILY LIFE CYCLE ADVERTISING
Video cameras
are often
purchased by
young couples
with children.

27. Target reaches
out to the
Latino
market.

28. DISCUSSION QUESTIONS
• WHAT TYPES OF MARKETERS MIGHT SEGMENT
ACCORDING TO SOCIAL CLASS?
• WHAT ETHICAL ISSUES MIGHT MARKETERS HAVE WHEN
MARKETING TO DIFFERENT SOCIAL CLASSES?

29. CONSUMPTION SPECIFIC SEGMENTATION BASE
• USAGE RATE SEGMENTATION
• DIFFERENCE AMONG HEAVY, MEDIUM AND LIGHT USERS AND NON
USERS OF SPECIFIC PRODUCT, SERVICE OR BRAND.
• MARKETERS OF MANY PRODUCTS SUCH AS SOUP, LAUNDRY
DETERGENT AND DOG FOOD HAVE FOUND RELATIVE SMALL GROUP
OF HEAVY USERS ACCOUNT.
• USAGE SITUATION SEGMENTATION
• OCCASION OR SITUATION OFTEN DETERMINE WHAT CONSUMERS
WILL PURCHASE OR CONSUME MARKETERS SOMETIMES USE THE
USAGE SITUATION AS SEGMENTATION VARIABLE.
• MANY PRODUCTS ARE PROMOTED FOR SPECIAL USAGE OCCASIONS.
LIKE GREETING CARD INDUSTRY

30. High
Low
Consumption
High Low
LoLows
(starve)
HiHighs
(stroke)
LowHighs
(chase)
HiLows
(tickle)
SEGMENTING CUSTOMERS BY
USAGE
TABLE 3-8Current Share

31. 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.

32. BENEFIT SEGMENTATION
THE BENEFITS THAT CONSUMERS SEEK FROM
PRODUCT AD SERVICE ARE THE ESSENCE THE
BENEFIT SEGMENTATION.
Band-aid offers
“flex” as a
benefit to
consumers.

33. HYBRID SEGMENTATION
APPROACHES
• PSYCHOGRAPHIC-DEMOGRAPHIC PROFILES
• GEODEMOGRAPHIC SEGMENTATION
• SRI CONSULTING’S VALS

34. SELECTED DEMOGRAPHIC
PROFILE OF USA TODAY EXCERPT
FROM TABLE 3-10
USA TODAY USA
TODAY.COM
USA TODAY
NETWORK
Men 66% 70% 66%
Women 34% 30% 34%
Age 18-49 62% 73% 64%
Age 25-54 65% 78% 67%
Age 55+ 27% 18% 25%
Average Age 45 43 45
Attended college
or beyond
77% 83% 77%
College graduate
or beyond
55% 65% 56%

35. SELECTED LIFESTYLE PROFILE OF USA
TODAY EXCERPT FROM TABLE 3-11
%
Comp
Index
Tech Savvy Readers
Use Internet more than once a day 32% 174
Internet access at home 79% 128
Online purchase for business or personal use in past
30 days
40% 182
Household owns a PC 84% 119
Owns digital camera 22% 130
Leisure Activities
Attended movies in last 6 months 73% 120
Bought music CD/tapes in last 12 months 46% 126
Book reading 45% 120
Entertain friends or relatives at home in last 12 months 48% 123
Household subscribes to cable 69% 112

36. PRESENTATION
CRITERIA FOR EFFECTIVE TARGETING
AND
IMPLEMENTING SEGMENTATION STRATEGIES

37. END OF SESSION
“MISTAKES ARE THE
PROOF THAT YOU
ARE