Javeria Hassan Khan

 Market segmentation is the process of dividing a market

into subsets of consumers with common needs or characteristics.
Each subset represents a consumer group with shared needs that
are different from those shared by other groups.

 Targeting consists of selecting the segments that the company

views as prospective customers and pursuing them.

 Positioning is the process by which a company creates a distinct

image and identity for its products, services, and brands in
consumers’ minds. The image differentiates the company’s
offering from competition by communicating to the target
audience that the product, service, or brand fulfills their needs
better than alternatives.
 Segmentation, targeting, and positioning
are interrelated and implemented
sequentially.
 For example, airlines traditionally offered
three in-flight service choices: first class,
business class, and economy (or coach).
 All consumers are not alike because they
have different needs, wants, and desires, and
different back-grounds, education levels, and
experiences.
 Therefore, marketers must offer alternatives
that correspond to the needs of different
consumer groups or segments.
 Market segmentation, strategic targeting,
and product (or service) positioning are the
key elements of marketing consumer goods
and services.
 They enable producers to avoid head-on
competition in the marketplace by
differentiating their products on the basis of
such features as price, styling, packaging,
promotional appeal, method of distribution,
and level of service.
 Effectively catering to the distinct needs of
consumers by offering them clearly
differentiated products is significantly more
profitable than mass marketing, in spite of
the much higher research, production,
advertising, and distribution costs that
accompany segmentation and strategic
targeting
 Marketers divide consumers into separate
segments on the basis of common or shared
needs by using demographics, lifestyles, and
other factors named “bases for segmentation.”
 Some segmentation factors, such as
demographics (e.g., age, gender, ethnicity), are
easy to identify, and others can be deter-mined
through questioning (e.g., education, income,
occupation, marital status).
 Other features, such as the product benefits
buyers seek and customers’ lifestyles, are
difficult to identify and measure.
 To be a viable market, a segment must
consist of enough consumers to make
targeting it profitable.
 A segment can be identifiable, but not large
enough to be profitable.
 Most marketers prefer to target consumer
segments that are relatively stable in terms of
lifestyles and consumption patterns (and are
also likely to grow larger and more viable in
the future) and avoid “fickle” segments that
are unpredictable.
 To be targeted, a segment must be
accessible, which means that marketers must
be able to communicate with its consumers
effectively and economically.
 Not every company is interested in or has the
means to reach every market segment, even
if that segment meets the four preceding
criteria.
 Behavioral data is evidence-based; it can be
determined from direct questioning (or
observation), categorized using objective and
measurable criteria, such as demographics, and
consists of:
1. Consumer-intrinsic factors, such as a person’s
age, gender, marital status, income, and
education.
2. Consumption-based factors, such as the
quantity of product purchased, frequency of
leisure activities, or frequency of buying a given
product.
 Cognitive factors are abstracts that “reside” in
the consumer’s mind, can be determined only
through psychological and attitudinal
questioning, and generally have no single,
universal definitions, and consist of:
1. Consumer-intrinsic factors, such as
personality traits, cultural values, and attitudes
towards politics and social issues.
2. Consumption-specific attitudes and
preferences, such as the benefits sought in
products and attitudes regarding shopping.
 Demographic segmentation divides consumers
according to age, gender, ethnicity, income
and wealth, occupation, marital status,
household type and size, and geographical
location.
 These variables are objective, empirical, and can
be determined easily through questioning or
observation.
 They enable marketers to classify each
consumer into a clearly defined category, such
as an age group or income bracket.
 All segmentation plans include demographic
data for the following reasons:
1. Demographics are the easiest and most logical
way to classify people and can be measured
more precisely than the other segmentation
bases.
2. Demographics offer the most cost-effective
way to locate and reach specific segments,
because most of the secondary data compiled
about any population consists of demographics
(e.g., U.S. Census Bureau, audience profiles of
various media)
3. Using demographics, marketers can identify
new segments created by shifts in
populations’ age, income, and location.

4. Demographics determine many

consumption behaviors, attitudes, and media
exposure patterns.
 Benefit segmentation is based on the benefits
that consumers seek from products and services.
 The benefits that consumers look for represent
unfilled needs, whereas buyers’ perceptions that
a given brand delivers a unique and prominent
benefit result in loyalty to that brand.
 Marketers of personal care products, such as
shampoos, soaps, and toothpastes, create
different offerings designed to deliver specific
benefits.
 As more and more forms of media emerge, marketers must
study the benefits that consumers seek from adopting these
communication tools, so that they can advertise in these
media effectively.

 In one study, consumers singled out immediacy, accessibility,

and free cost as the most relevant features of digital
newspapers, while identifying writing style and more depth
and details as the key features of traditional newspapers.

 These findings indicate that publishers of traditional

newspapers should position online and paper newspapers as
complementing one another and that the two versions
represent opportunities for somewhat different types of ads.
 Usage rate segmentation reflects the differences
among heavy, medium, and light users, and nonusers
of a specific product, service, or brand.
 Targeting heavy users is a common marketing
strategy and is often more profitable than targeting
other user categories.
 However, catering to this segment requires a lot of
expensive advertising because all competitors target
the same heavy users.
 Some marketers prefer to target light and medium
users with products that are distinct from those
preferred by heavy users.
 Usage rate segmentation also focuses on the
factors that directly affect the usage
behavior.
 The researchers also examined usage
frequency in relation to buyers’ reasons for
purchasing at that chain, levels of
expenditure at the store, travel times to the
store and modes of transportation, and
whether buyers came in from home, a job, or
were simply passing by.
 Rate of usage is strongly related to product
awareness status, which is the degree of a
consumer’s awareness of the product and its
features, and whether or not he or she
intends to buy it reasonably soon.
 A related factor is product involvement,
which reflects the degree of personal
relevance that the product holds for the
consumer.
 Usage occasion segmentation recognizes that
consumers purchase some products for specific
occasions, as expressed in the following
statements:
• “Whenever our son celebrates a birthday, we
take him out to dinner at the Gramercy Tavern”
• “When I’m away on business for a week or
more, I try to stay at the Setai”
• “I always buy my wife candy on Valentine’s
Day”
 Behavioral targeting consists of sending
consumers personalized and prompt offers and
promotional messages designed to reach the
right consumers and deliver to them highly
relevant messages at the right time and more
accurately than when using conventional
segmentation techniques.

 This method is enabled by tracking online

navigation, current geographic location, and
purchase behavior.
Tracking consumers’ navigation online includes:
1. Recording the websites that consumers visit.
2. Measuring consumers’ levels of engagement
with the sites (i.e., which pages they look at, the
length of their visits, and how often they return).
3. Recording the visitors’ lifestyles and
personalities (derived from the contents of
consumers’ blogs, tweets, and Facebook profiles).
4. Keeping track of consumer’ purchases, almost
purchases (i.e., abandoned shopping carts), and
returns or exchanges.
 Smart phones and GPS devices have created
highly effective targeting opportunities.
 Customers’ mobile devices brought upon
problems for brick-and-mortar retailers.
Customers frequently engage in showrooming,
which occurs when consumers use smart phones
to scan the bar codes of products displayed in
physical stores and then check the items’ prices
online in order to purchase them at the lowest
prices.
 In order to combat showrooming, some
physical stores started geofencing, which
consists of sending promotional alerts to the
smartphones of customers who opted into
this service, when the customers are near or
enter the store.