Case Studies
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Market Segmentation and Strategic Targeting
LEARNING OBJECTIVES After studying this chapter students should be able to understand: 1. Why market segmentation is essential. 2. The criteria for targeting selected segments effectively. 3. The bases for segmenting consumers. 4. How segmentation and strategic targeting are carried out.
CHAPTER SUMMARY Market segmentation is the opposite of mass marketing and is part of the segmentation, targeting, and positioning framework. Segmentation is defined as the process of dividing a potential market into distinct subsets of consumers with a common need or characteristic and selecting one or more segments to target with a specially designed marketing mix. Besides aiding in the development of new products, segmentation studies assist in the redesign and repositioning of existing products, in the creation of promotional appeals, and the selection of advertising media. In order to be a viable target market, a segment must be identifiable (by some criteria such as demographics, lifestyles, or others), sizeable (i.e., large enough to be profitable), stable or growing, accessible (i.e., can be reached economically), and congruent with the marketer’s objectives and resources. Consumer-rooted behaviors and cognitions as well as consumption-specific facts and attitudes can be used to segment consumers. The most common categories used in segmentation are demographics and psychographics (or lifestyles). However, in most cases, hybrid segmentations are used. The primary examples of hybrid frameworks are VALS™ and the PRIZM™ geodemographic clusters. Other consumer-rooted variables used to segment markets are personality traits and sociocultural values and beliefs. The key consumption-specific segmentation factors are usage behavior (including usage rate and situation), benefit segmentation, and brand loyalty and relationship. Behavioral targeting and microtargeting are emerging techniques rooted in marketers’ abilities to
Market Segmentation and Strategic Targeting
LEARNING OBJECTIVES After studying this chapter students should be able to understand: 1. Why market segmentation is essential. 2. The criteria for targeting selected segments effectively. 3. The bases for segmenting consumers. 4. How segmentation and strategic targeting are carried out.
CHAPTER SUMMARY Market segmentation is the opposite of mass marketing and is part of the segmentation, targeting, and positioning framework. Segmentation is defined as the process of dividing a potential market into distinct subsets of consumers with a common need or characteristic and selecting one or more segments to target with a specially designed marketing mix. Besides aiding in the development of new products, segmentation studies assist in the redesign and repositioning of existing products, in the creation of promotional appeals, and the selection of advertising media. In order to be a viable target market, a segment must be identifiable (by some criteria such as demographics, lifestyles, or others), sizeable (i.e., large enough to be profitable), stable or growing, accessible (i.e., can be reached economically), and congruent with the marketer’s objectives and resources. Consumer-rooted behaviors and cognitions as well as consumption-specific facts and attitudes can be used to segment consumers. The most common categories used in segmentation are demographics and psychographics (or lifestyles). However, in most cases, hybrid segmentations are used. The primary examples of hybrid frameworks are VALS™ and the PRIZM™ geodemographic clusters. Other consumer-rooted variables used to segment markets are personality traits and sociocultural values and beliefs. The key consumption-specific segmentation factors are usage behavior (including usage rate and situation), benefit segmentation, and brand loyalty and relationship. Behavioral targeting and microtargeting are emerging techniques rooted in marketers’ abilities to