MSMK7001 Chap.7 Market Segmentation and Target Selection
Market Segmentation and Target Selection
Why segment at all
Customer-driven strategy starts by selecting customers to serve. Segmentation splits a large, varied market into smaller groups whose needs, traits or behavior differ, alike within each group and different between groups, so that each can be reached more efficiently. Targeting then evaluates the segments and selects which to enter.
The group project requires both, which makes this chapter the core of the plan's strategy section.
Four bases and their trade-offs
Markets can be segmented geographically, demographically, psychographically or behaviorally.
The lecture's examples include regional stock differences at a large retailer, an Asia-specific fit from a sportswear brand, a motorcycle maker courting women riders, lifestyle-led surf and minimalist brands, holiday-shaped sweets and toothpaste variants built on distinct benefits.
Demographic data are easy to get but may not track needs; benefit segmentation tracks needs but costs more to research.
Testing and scoring segments
Segments multiply quickly when variables are crossed, so a segment must be measurable, accessible, substantial, differentiable and actionable. International markets can be segmented by location, economics, politics and culture, or across borders by shared needs.
Candidates are evaluated on size, growth, structural attractiveness and fit with the company's objectives and resources, and the lecture's scoring tool turns those into weighted totals.
How broadly to go
Coverage strategies run from undifferentiated mass marketing through differentiated and concentrated marketing to micromarketing at the local or individual level.
Each has advantages and costs, and the choice depends on company resources, product and market variability, life-cycle stage and competitors' strategies.
What this chapter covers
- 01
Segmentation, targeting, differentiation and positioning
- 02
Geographic and demographic segmentation
- 03
Psychographic and behavioral segmentation
- 04
Why variables cannot all be used
- 05
Five requirements for an effective segment
- 06
International and intermarket segmentation
- 07
Scoring segment attractiveness
- 08
Four target coverage strategies
Worked example · free
Score two segments and show how objectives change the result
- 2Compute the secondary student segment's total.
- 2Compute the working adult segment's total.
- 2Recompute both with the new weights.
- 2Explain what the change shows.
Key terms
- Market Segmentation
- Splitting a market into smaller groups whose needs, traits or behavior differ enough that each may need its own strategy or mix.
- Market Targeting
- Judging how attractive each segment is and choosing which one or more of them the firm will serve.
- Psychographic Segmentation
- Grouping buyers by social class, by lifestyle or by personality traits.
- Behavioral Segmentation
- Grouping buyers by what they know about a product, how they feel about it, how they use it or how they respond to it.
- Concentrated Marketing
- A coverage strategy that chases a big share of a single niche, or a handful of niches, instead of a thin share of a large market.
- Micromarketing
- Fitting products and marketing programs to particular local customer groups or even to individual customers.
Market Segmentation and Target Selection FAQ
What makes a market segment usable?
The course lists five requirements. A segment must be measurable, so its size and buying power can be estimated; accessible, so it can be reached and served; substantial, so it is large or profitable enough; differentiable, so it responds differently from other segments; and actionable, so the firm can design programs for it.
What is the difference between differentiated and concentrated marketing?
Differentiated marketing targets several segments with a separate offer for each, as a hotel group running brands from ultra-luxury to mid-scale does; it aims for higher sales but is expensive. Concentrated marketing pursues a large share of one or a few niches; it lets a firm specialize but carries more risk.
How do I choose weights for the segment attractiveness tool?
Derive them from the company's own objectives and resources, and make them sum to 100. The lecture shows that a firm wanting a large operation should weight segment size heavily, which can reverse the ranking a margin-focused firm would reach. State the reason for each weight, because the ranking is only as defensible as the weights.
Assessment move
Write your group's target segment in one sentence using at least two bases, for example a demographic and a behavioral variable, and check it against the five requirements. Then score it against one rejected segment with the attractiveness tool. Having that comparison ready answers the question audiences ask most often in the presentation: why this segment and not another.
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