Marketing Management

By Philip, Kevin Lane Keller, Abraham Koshy, Mithileshwar Jha

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SUMMARY by

Chapter 8
Identifying Market Segments
and Targets
This chapter deals with one of the quintessential concepts of Marketing: STP i.e.
Segmentation, Target and Positioning. It explains different levels of Market Segmentation,
bases for Segmenting Consumer Markets, choosing target Markets & finally analyses the
various requirement for effective segmentation.

Mass Steps in market segmenta

segmentation,
tion, targeting and
positioning
Marketing: 1. Market •Identify
Identify bases for segmenting the market

The seller engages Segmentation •Develop

Develop segment profiles

in mass •Develop
Develop measure of segment attractiveness
2. Target Marketing •Select
Select target segments
production, mass
distribution and •Develop
Develop positioning for target segments
3. Market Positioning •Develop
Develop a marketing mix for each segment
mass promotion
of one product for
all buyers Levels of Market Segmentation: Micromarketing
marketing: Dividing a market into distinct groups with distinct needs,
A. Segment marketing
characteristics, or wants who might require separate products or marketing mixes.
Segment Marketing offers key benefits over Mass Marketing as the company can
offer better design, price, disclose and also can fine-tune
fine the marketing program to
better reflect competitors marketing.
Marketing: A niche is a more narrowly defined customer group seeking a
B. Niche Marketing
distinctive mix of benefits. Marketers usually define niches by dividing segments into
sub segments.
egments. For e.g. Ezee, the liquid detergent from Godrej is a fabric washing
product for woolen clothes.
Chapter 8 - Identifying Market Segments and Targets
C. Local Marketing: Target marketing that involves marketing programs tailored to the
needs and wants of local customer groups in trading areas, neighborhoods and even
individual stores is called as Local Marketing. E.g. Many Banks in Kerala have special
‘NRI Branches’ to cat
cater
er to the needs of customers whose relatives remit money from
abroad.
D. Individual Marketing: This is the ultimate level of marketing that leads to “segments of
one”,” customized marketing” or “one
“one-to-one
one marketing”. Customerization empowers
customers to de
design
sign the product and service offering to their choice. For e.g. Asian
Paints retailers facilitate customers to mix and match colors of their choice from a
catalogue.

Bases for Segmenting Consumer Markets

A. Geographic Segmentation: Division of the Market into different geographical Units
such as nations, cities, states, regions, neighborhoods etc
• Region: South India, Western Region, North, East
• City: Class
Class-I cities, class-II cities, Metro cities etc
• Rural, urban , semi urban areas
B. Demographic Segmentation: The market is divided on the basis of variables such as
age, family size, family life cycle, gender, income, occupation, education, religion etc.
Demographic variables are easy to measure and are directly associated with customer
needs and wants

FAMILY LIFE CYCLE STAGES

Stage1: Bachelorhood •Single,Focus
Single,Focus of expenditure on self
Stage2: Honeymooners •Young
Young married couple without kids,focus on building
home and relation

Stage3: Parenthood
•Full Nest-I,1
I,1 child less than 6 yrs old
•Full Nest-II,youngest
II,youngest child under 6
•Full Nest-III:
III: all adult children

•Children
Children not living with parents
Stage4:Post
Stage4:Post-ParentHood •Empty Nest1 :Working
•Empty
Empty Nest2: Not Working
•One spouse dies
Stage5: Solitary Survivor(SS) •SS-I: Working
•SS-II: Not Working

C. Psychographic Segmentation: Here buyers are divided into different groups on the
basis of psychological/personality traits, lifestyles or values.
• Lifestyle: Culture-oriented,
oriented, sports oriented, outdoor oriented. Classification is
done on three parameters: AIO-Activities,
Activities, Interests and Opinions.
• Personality: Compulsive, gregarious ,authoritarian ,ambitious
D. Behavioral segmentation: Buyers are divided on the basis of their knowledge of,
attitude toward, use of, or response to a product. The behavioral variables are as
follows:
Chapter 8 - Identifying Market Segments and Targets
• Usage Rate: Light, Medium, Heavy
• Loyalty Status: None, medium, strong, absolute
• Readiness Stage: Unaware, aware, informed,
med, interested, desirous, intending to
buy
• Attitude towards Product: Enthusiastic, positive, indifferent, negative, hostile

Requirements for Effective Segmentation

Evaluating and Selecting Market Segments

Five patterns of target market selection that can be followed are:
• Concentration:: Concentrated Marketing where the firm gains a
Single Segment Concentration
strong knowledge of segments needs and acquires a strong market presence
• Specialization:: a firm selects a number of segments. Each objectively
Selective Specialization
attractive and appropriate, there may be little or no synergy between the segments
segme
• Product Specialization: The firm makes a certain product that it sells to several
different market segments.
• Market Specialization: The firm concentrates on serving many needs of a particular
customer.
• Full Market Coverage: The firm attempts to serve all
a customer groups with all
products they may need. E.g. Coca Cola (non
(non-alcoholic
alcoholic beverage segment), Microsoft
(Software Market) etc.

P = Product
M = Market