chapter 5
segmenting
markets
learning objectives_1
• Explain how both B2B and
consumer markets can be broken
down into smaller, more
manageable groups of similar
customers
• Understand the effects on the
marketing mix of pursuing specific
segments
5-2
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
learning objectives_2
• Understand the potential benefits
and risks of segmentation
• Appreciate the role of segmentation
in strategic marketing thinking
5-3
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Segmentation Defined
Segmentation is the art of
discerning and defining meaningful
differences between groups of
customers to form the foundations of
a more focused marketing effort.
5-4
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
eg business and consumer
travel markets
5-5
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Stages of Segmentation for
B2B Markets
• Identify subgroups within the whole
market that share common general
characteristics (macro segments)
• Select target segments from macro
segments based on differences in
specific buying characteristics
(micro segments)
5-6
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
B2B Segmentation Bases
Macro
Micro
• Size
• Product
• Location
• Applications
• Usage rate
• Technology
• Purchasing and decisionmaking processes
• Buyer-seller relationships
5-7
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Consumer Segmentation
• Similar to B2B segmentation, except
– Consumer segments tend to be larger
– More difficult to get close to buyer
– More emphasis on lifestyle and context
5-8
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Consumer Segmentation Bases
Geographic
Multi-variable
Geodemographic
Behaviour
Psychographic
Demographic
5-9
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
eg Geographic Segmentation and
Instant Hot Chocolate
• Ideal for UK market
(homes equipped
with kettles, nice
bedtime drink, or
substitute for tea
• Less so for French
market (kettles
uncommon, norm of
making hot chocolate
with milk rather than
water)
5-10
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Demographic Segmentation
• Age
• Gender
• Race
• Income
• Occupation
• Social status
• Family structure
5-11
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
eg Geodemographic
Segmentation and Mosaic
• The analysis of
people by where
they live
• Micro-targeting
system
• Targets by
neighourhood
Source: Experian Ltd, http://www.experian.com. © 2005 Experian Ltd. All rights reserved. The
word ‘Experian’ is a registered trademark in the EU and other countries and is owned by
Experian Ltd and/or its associated companies
5-12
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Psychographic Segmentation
• Lifestyle
segmentation
• Categories
– Activities
– Interests
Quorn targets vegetarians
with meat substitutes
Source: © Quorn http://www.quorn.co.uk
5-13
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
– Opinions
– Demographics
eg Lifestyle Orientations in China
• Fashion-orientated
• Tradition-orientated
• Achievement-orientated
• Moderate-orientated
5-14
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Lifestyle Orientations in the USA
5-15
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Why Use Psychographic
Segmentation?
• To define a target market
• To create a new view of the market
• To position the product
• To better communicate product attributes
• To develop overall strategy
• To market social and political issues
5-16
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Behaviour Segmentation
• End use
• Benefits sought
eg usage segmentation
in the soup market
•Dinner party starter
• Usage rate
•Warming snack
• Loyalty
•Meal replacement
• Attitude
•Recipe ingredient
• Buyer readiness
•Easy office lunch
5-17
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Loyalty Segments
• Current loyal user, continuing purchase
• Current customer, switching possible
• Occasional user, could become loyal
• Occasional user, switching possible
• Non-user, could become user
• Non-user, unlikely to become user
5-18
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Figure 5.2 The AIDA Response
Hierarchy Model
Awareness
Interest
Desire
Action
5-19
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Segmentation Targeting
Strategies
Undifferentiated
Differentiated
5-20
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Concentrated
Undifferentiated Strategy
Marketing mix
5-21
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
The market
Differentiated Strategy
Marketing mix 1
Segment 1
Marketing mix 2
Segment 2
Marketing mix 3
Segment 3
5-22
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
eg Cadbury’s Market Segments
• Immediate eat
• Home stock
• Kids
• Seasonal
• Gift
5-23
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Concentrated Strategy
Marketing mix 2
5-24
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Segment 2
Criteria for Successful
Segmentation
Distinctiveness
Tangibility
Accessibility
Defendability
5-25
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_1
• Which bases of segmentation groups consumers
in terms of their usage rate, the purpose of use,
or their willingness and readiness to buy?
Behavioural segmentation
• _____ occurs when a consumer consistently
buys the same brand over a long period.
Brand loyalty
5-26
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_2
• _____ stages categorise consumers in terms of
how close they are to making a purchase or a
decision.
Buyer readiness
• Which segmentation base considers the
measurable aspects of population structure, such
as birth rates, age profiles, family structures,
education levels, occupation, income and
expenditure patterns?
Demographic segmentation
5-27
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_3
• _____ is a combination of geographic and
demographic segmentation that can either give
the demographic characteristics of particular
regions, neighbourhoods and even streets, or
show the geographic spread of any demographic
characteristics.
Geodemographics
• Which segmentation base groups customers in
terms of their geographic location?
Differential advantage
5-28
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_4
• _____ means to group consumers on the basis
of psychographic characteristics.
Lifestyle segmentation
• _____ segments in B2B markets are defined in
terms of broad organisational characteristics
such as size, location and usage rates, or in
terms of product applications.
Macro
5-29
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_5
• _____ segments in B2B markets are defined in
terms of detailed organisational characteristics
such as management philosophy, decisionmaking structures, purchasing policies.
Micro
• What term refers to using a number of different
variables to develop a rich profile of a target
group of customers?
Multivariate segmentation
5-30
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_6
• Which bases of segmentation defines
consumers in terms of their attitudes, interests
and opinions?
Psychographics
• _____ are consumers who are not loyal to any
one brand of a particular product and buy two or
more brands within the category.
Switchers
5-31
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
Key Terms_7
• _____ is the process of deciding how many
market segments to aim for and how to do it.
Targeting
5-32
Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006