Phillip Kevin Lane

Kotler • Keller
Marketing Management • 14e
Identifying Market
Segments and Targets
Discussion Questions
1. What are the different levels of market
segmentation?
2. In what ways can a company divide a market
into segments?
3. What are the requirements for effective
segmentation?
4. How should business markets be segmented?
5. How should a company choose the most
attractive target markets?
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 Target Marketing Requirements
1. Identify and profile distinct groups of
buyers (market segmentation).

2. Select one or more market segments to

enter (market targeting).

3. For each, establish and communicate

benefits of offering (market positioning).

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Bases for Segmenting Consumers

Geographic

Demographic

Psychographic Behavioral
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Geographic Segmentation

Geoclustering

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Demographic Segmentation

Age and Life-cycle Stage

Life Stage
Gender
Income
Generation
Race and Culture

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Age and Life-Cycle Stage

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Life Stage

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Gender
Women:
Influence 80% of consumer purchases
Make 75% of new home decisions
Purchase 60% of cars

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Income

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Generation

Gen X (1964-1978)
Baby Boomers (1946-1964)
Silent Generation (1925-1945)

Millennials (Gen Y) – (1979-1994)

-78 Million people
-$187 annual spending power

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U.S. Generation Cohorts
Cohort Size Defining Features

Millennials Raised in affluence, tech savvy,

78 m
(1979-1994) perceived immunity from marketing

Gen X Parents relied on day care, accepts

50 m
(1964-1978) diversity, pragmatic and individualistic

Control 3/4th of the wealth in the U.S,

Baby Boomers 76 m seek fountain of youth (hair color, hair
(1946-1964)
replacement), home exercise equipment

Silent Generation 42 m Lead vibrant lives, spend money and

(1925-1945) time on grandchildren.

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Race and Culture

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Multicultural Market Profile

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Psychographic Segmentation

• Personality traits
• Lifestyle
• Values

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 VALS Segmentation System

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Behavioral Segmentation
Usage occasions
Initiator
User status
User Influencer
Usage rate

Buyer-readiness
Buyer Decider Loyalty status
Decision Roles User and Usage

Needs and Benefits

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 Brand Funnel

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Consumer Attitudes

Enthusiastic Positive Indifferent Negative Hostile

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 Behavioral Segmentation

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Bases for Segmenting B2B Markets

Demographic Industry, company size, location

Operating Variables Technology, user status, customer capabilities

Purchasing Approach Power structure, nature of existing relationship

Situational Factors Urgency, specific application, size of order

Personal Characteristics Buyer-seller similarity, loyalty, risk attitude

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Market Targeting

Effective Segmentation Criteria

Measurable
Substantial
Accessible
Differentiable
Actionable

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 Market Targeting
Porter’s Five Force
Substitute Buyer
Products Power

Supplier
New Power
Entrants
Rivals
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Evaluating and Selecting Segments

Multiple segment
specialization

Full market coverage

Single-segment
concentration Individual marketing
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 Levels of Segmentation

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