Market Segmentation and Targeting (1)

Identifying Market Segments and Targets

Presented by: Doç. Dr. Hayat AYAR SENTÜRK

Understanding Market Segmentation

Market segmentation is the process of dividing a broad consumer or business market into sub-groups of consumers based on shared characteristics. This process allows companies to target specific groups effectively, ensuring their marketing efforts resonate well with the intended audience.

Importance of Market Segmentation

In today's highly competitive landscape, companies cannot effectively reach all customers within large or diverse markets without a tailored approach. Effective marketing involves not only identifying segments that companies can serve well but also deeply understanding consumer behavior patterns. Success in this arena lies in the ability to uniquely satisfy the right market segments, leading to enhanced brand loyalty and customer retention.

Benefits of Market Segmentation


  • Improved Customer Satisfaction:By targeting smaller customer groups that share specific characteristics or needs, companies can deliver products and services that more effectively fulfill those needs, thereby enhancing overall customer satisfaction.


  • Targeted Value Proposition:Companies can craft value propositions that are specifically tailored to meet the distinct needs or preferences of different customer segments, maximizing the effectiveness of their marketing messages.


  • Resource Efficiency:Market segmentation helps prioritize customer groups, ensuring that marketing resources are allocated efficiently to the segments that are most likely to yield profitable results.


  • Competitive Advantage:Identifying and targeting specific segments enables companies to differentiate themselves from competitors, increasing their chances of securing a competitive edge in crowded markets.


  • Customer Loyalty:A well-defined customer segment can lead to stronger loyalty as customers feel that their unique needs are understood and catered to effectively.


  • Better Media Choices:Segmentation facilitates better media and promotional choices, allowing marketers to select the most effective channels to reach their target segments.

Difficulties in Market Segmentation

While market segmentation is critical, several challenges arise during the process:


  • Selection Criteria:Determining appropriate criteria for segment division can be complex. Segments should be distinct and mutually exclusive to ensure targeted marketing efforts are clear.


  • Measurement Issues:Accurately measuring segment sizes is essential, yet companies may struggle with data collection and analysis, which hampers their ability to make informed targeting decisions.


  • Profitability Assessment:Ensuring that identified segments are large enough to generate significant profit is a key consideration that requires careful analysis and strategy.


  • Value Proposition Alignment:There must be a clear fit between the value propositions being offered and the characteristics of the target segments to guarantee effective outreach.


  • Communication and Reach:Evaluating and identifying the most effective channels to communicate with and reach these segments is vital for a successful marketing strategy.

Target Market Identification

Key Customer Segments

Distinct groups such as job seekers, advertisers, and corporate recruiters represent unique target markets with varying needs and expectations. Effective marketing necessitates an understanding of these distinctions.

Effective Target Marketing Steps


  1. Market Segmentation:Identify and profile distinct buyer groups characterized by different needs and wants.


  2. Market Targeting:Select one or more segments for market entry after identifying potential opportunities.


  3. Market Positioning:Establish and communicate key benefits specifically tailored for each target segment to carve out a unique space in the marketplace.

Defining Market Segment

A market segment consists of a group of customers who share similar needs and wants, which marketers need to identify before deciding which market segment to target.

Bases for Segmenting


  1. Geographic Segmentation:Dividing a market based on geographical variables such as regions, cities, and climate, which impacts customer preferences and behavior.

    • Strategies should be adapted to suit local market characteristics.


    • Grassroots Marketing Example:Activities that engage directly with individual customers, such as sponsoring local teams, hosting clinics, and donating equipment.


  2. Demographic Segmentation:This approach considers demographic variables including age, gender, family size, occupation, income, and education.


    • Age and Life Cycle Considerations:As consumers age, their wants and abilities typically change, and different life stages influence consumer needs and behaviors.


    • Gender Differences in Marketing:Marketers must understand differing attitudes and behaviors based on gender and tailor strategies accordingly.


    • Income Segmentation Insights:It is important to note that income does not always directly correlate with a customer’s suitability for specific products.


  3. Psychographic Segmentation:This involves dividing buyers based on lifestyle, personality traits, and values. A diverse range of psychographic profiles often exists within a single demographic group.


    • VALS Framework:This categorization helps marketers understand consumers based on their resources and motivations. It includes:

      • High Resource Groups: Innovators, Thinkers, Achievers, Experiencers.

      • Low Resource Groups: Believers, Strivers, Makers, Survivors.


  4. Behavioral Segmentation:Grouping customers based on their knowledge, behavior, and engagement with products. Key considerations include:

    • Occasion-based segmentation

    • User status (first-time users, regular users, etc.)

    • Loyalty status and usage rates, which can bring clarity to target market dynamics.

Case Studies

For instance, in the chocolate industry, brands like Cadbury, Ferrero Rocher, and Godiva employ varied strategies to target different market segments ranging from students to premium consumers. This illustrates the breadth of market segmentation in action.

Niche Marketing Insights

Niche marketing targets narrowly defined groups often leading to premium pricing due to specialization, which demands a focused approach.

Effective Segmentation Criteria

To execute successful segmentation, several criteria must be met:


  • Measurable:The size and characteristics of segments must be quantifiable.


  • Accessible:It is vital that segments are reachable through marketing efforts.


  • Substantial:Identified segments should be large enough to generate profit.


  • Differential:Segments must exhibit varied responses to different marketing mixes, indicating distinguishable needs.


  • Actionable:Campaign design must attract and effectively serve the targeted segments.

Market Coverage Strategies

Various coverage strategies exist:


  • Full Market Coverage:Efforts to serve all customers (e.g., Microsoft, Coca-Cola).


  • Undifferentiated Marketing:Marketing one offer to the entire market without differentiation.


  • Differentiated Marketing:Distinct offerings are tailored for different market segments.


  • Selective Specialization:Focusing specifically on selectively attractive segments.


  • Single Segment Concentration:Marketing exclusively to a targeted segment with a singular offering, as seen in brands like Porsche, which caters specifically to the sports car market, or teen cosmetics that focus on niche markets.