Chapter 7: Segmenting and Targeting Markets

Market: People or organizations with wants and needs, the ability and willingness to buy, and the authority to purchase.
Market Segment: A subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs.
Market Segmentation: The process of dividing a market into meaningful, relatively similar, and identifiable groups to enable tailoring of marketing mixes to specific customer needs and allocating resources effectively.

Substantiality: A segment must be large enough to justify the development and maintenance of a specialized, profitable marketing mix.
Identifiability and Measurability: Marketers must be able to identify segment members and measure segment size.
Accessibility: Members of targeted segments must be reachable with customized marketing mixes.
Responsiveness: A market segment must respond differently to a marketing mix compared to other segments.

Geographic Segmentation: Based on region, market size, market density, or climate.
Demographic Segmentation: Based on age, gender, income, ethnic background, or the family life cycle (FLC).
Psychographic Segmentation: Based on personality, motives, lifestyles, and geodemographics.
- VALS: Tool developed by SRI International categorizing consumers across two dimensions (resources and self-orientation) into $8$ segments: Actualizers, Fulfillers, Believers, Achievers, Strivers, Experiencers, Makers, and Strugglers.
Benefit Segmentation: Grouping customers based on the specific benefits they seek from a product.
Usage-Rate Segmentation: Dividing a market by amount purchased or consumed (former, potential, first-time, light, medium, and heavy users).
- $80/20$ Principle: Heuristic stating that $20\%$ of all customers generate $80\%$ of the demand.

Macrosegmentation: Dividing markets based on general characteristics, including geographic location, customer type, customer size, and product use.
Microsegmentation: Dividing markets based on the characteristics of decision-making units within macrosegments, including:
- Key purchasing criteria (quality, delivery, technical support, price).
- Purchasing strategies:
- Satisficers: Order from the first familiar supplier to meet product and delivery requirements.
- Optimizers: Solicit bids and analyze options across numerous familiar and unfamiliar suppliers.
- Importance of purchase.
- Personal characteristics of buyers.

Select a market or product category for study.
Choose a basis or bases for segmenting the market.
Select segmentation descriptors.
Profile and evaluate segments (including size, growth rate, frequency, loyalty, and profit potential).
Select target markets.
Design, implement, and maintain appropriate marketing mixes.

Undifferentiated Targeting: A mass-market philosophy viewing the market as one single entity with no individual segments, using a single marketing mix.
Concentrated Targeting (Niche): Focusing marketing efforts on a single, well-defined segment or niche using a specialized marketing mix.
Multisegment Targeting: Serving two or more distinct market segments with separate marketing mixes for each.
- Risk: Cannibalization, where sales of a firm's new product cut into sales of its existing products.

Positioning: Designing a specific marketing mix to influence potential customers' overall perception of a brand, product line, or organization relative to competitors.
Position: The place a product or brand occupies in consumers' minds relative to competing offerings.
Product Differentiation: A positioning strategy intended to distinguish a firm's products from competitors via real or perceived differences.
Perceptual Mapping: Displaying or graphing product or brand positions across two or more dimensions in consumers' minds.
Repositioning: Changing consumers' perceptions of a brand relative to competing brands.

Follows the same fundamental tasks as local marketing segmentation.
Involves balancing two divergent trends: global marketing standardization versus global micromarketing.
Differs primarily in the variables utilized for market analysis and the volume of resources required.