Consumer Behavior,Ninth Edition

Schiffman & Kanuk

Market SegmentationConsumer Behavior,

Prepared By,Mr. Nishant Agrawal

METAS Adventist College (NEHU)

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Outline

• What Is Market Segmentation?• Bases for Segmentation• Criteria for Effective Targeting of

Segments• Implementing Segmentation Strategies

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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

reach.

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Three Phases of Marketing Strategy

Phase 2Target Market

Phase 3Product/Brand Positioning

Phase 1Market Segmentation

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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

• Ex. Start Plus & Start Gold

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Discussion Question

• 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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Bases for Segmentation

• Geographic

• Demographic

• Psychological

• Psychographic

• Sociocultural

• Use-Related

• Usage-Situation

• Benefit Sought

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Market Segmentation

Occupation

SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation

ClimateDensity of areaCity SizeRegion Southwest, Mountain States, Alaska, Hawaii

Major metropolitan areas, small cities, townsUrban, suburban, exurban, ruralTemperate, hot, humid, rainy

Demographic Segmentation

IncomeMarital status

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

Single, married, divorced, living together, widowedUnder $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, postgraduateProfessional, blue-collar, white-collar, agricultural, military

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Table 3.1, continuedSEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation

Learning-involvementPerceptionPersonalityNeeds-motivation Safety, security, affection, sense of self-worth

Extroverts, novelty seeker, aggressive, innovatorsLow-risk, moderate-risk, high-riskLow-involvement, high-involvement

Psychographic

Subcultures (Race/ethnic)ReligionCultures

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

American, Italian, Chinese, Mexican, French, PakistaniCatholic, Hindu, Moslem, otherAfrican American, Asian

Family life cycleSocial 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 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 Free time, 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

Continue…

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Geographic Segmentation

• The division of A total potential market into smaller

subgroups on the basis of geographic variables

• Region

• State

• City

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Demographic Segmentation

• Segmentation according to demography is based on

variables such as age, generation, religion,

occupation and education level

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Psychological Segmentation

• Motivations

• Personality

• Perceptions

• Learning

• Attitudes

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Psychographic Segmentation

• Psychographic segmentation which is sometimes

called lifestyle is measured by studying the activities,

interests, and opinions of customers. It considers how

people spend their spare time.

• Lifestyle products may pertain to high involvement products

and purchase decisions, to speciality or luxury products and

purchase decisions.

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Sociocultural Segmentation

• Family Life Cycle

• Social Class (Lower , middle and Upper )

• Culture, Subculture

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Family Life Cycle Advertising

Video cameras are

often purchased

by young couples

with children.

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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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Use-Related Segmentation

• Consumers are grouped in different segments based on

consumption of certain products and services and usage

rate, brand loyalty, adoption of innovative product, time,

location, person etc. 

• The objective of this segmentation is to penetrate in others

market.

• For example, Coca-Cola and Pepsi target the same

customers, it has to be surveyed why consumption of one

brand is more than the other.

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Usage-Situation Segmentation

• Segmenting on the basis of special occasions or

situations

• Example Statements:

– When I’m away on business, I try to stay at a suites hotel.

– When there is holiday we spend time with family / friends.

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Benefit Segmentation• Benefit segmentation requires marketers to divide the market

based on the perceived benefit of the product or service.

• This type of segmentation may be used in clothing,

appliance, consumer, cosmetic, and several other industries.

• The segmentation of the consumers based on what

particular benefit of the product appeals to them.

• Different consumers look for different benefits and the

marketer needs to understand each segment and

accordingly develop his communication for each group.

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Criteria for Effective Targeting of Market Segments

• Identification

• Sufficiency

• Stability

• Accessibility

• Measurable and Obtainable

• Relevant

• Valid

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Implementing Segmentation Strategies

• Concentrated Marketing

– One segment

• Differentiated

– Several segments with individual marketing sizes

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Targeting

• First you decide which segments to target by finding the

most attractive ones. There are several factors to consider

here.

• First, look at the profitability of each segment. Which

customer groups contribute most to your bottom line?

• Next, analyze the size and potential growth  of each

customer group. Is it large enough to be worth addressing?

Is steady growth possible? And how does it compare with

the other segments? 

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Thank You