FIGURE 9-1 Market segmentation—linking
market needs to an organization’s marketing
program
WHY SEGMENT MARKETS?
• What Market Segmentation Means
 How Reebok’s Segmentation Strategy
Developed
 Using Market-Product Grids
FIGURE 9-2 Market-product grid showing
how different Reebok shoes reach segments
of customers with different needs
FIGURE 9-3 The five key steps in
segmenting and targeting markets link
market needs of customers to the
organization’s marketing program
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 1: Group Potential Buyers into
Segments
 Criteria to Use in Forming the Segments
• Potential for Increased Profit
• Similarity of Needs of Buyers within a Segment
• Difference of Needs of Buyers Among Segments
• Potential of a Marketing Action to Reach a Segment
• Simplicity and Cost of Assigning Buyers to Segments
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 1: Group Potential Buyers into
Segments
 Ways to Segment Consumer Markets
• Customer Characteristics
 Geographic: Region
 Demographic: Household
 Psychographic: Lifestyle
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 1: Group Potential Buyers into
Segments
 Ways to Segment Consumer Markets
• Buying Situations
 Benefits Sought: Product Features
 Usage/Patronage: Usage Rate
• Frequency Marketing
• 80/20 Rule
FIGURE 9-B Segmentation variables and
breakdowns for U.S. consumer markets
FIGURE 9-C Patronage of fast-food
restaurants by adults 18 years and older:
Simmons Market Research Bureau
NCS/NHCS Spring 2004 Adult Full-Year
Choices System Crosstabulation Report
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 1: Group Potential Buyers into
Segments
 Variables to use in Forming Segments
• Students in Dorms
• Faculty/Staff
• Students in Apartments
• People Living in Area
• Day Commuters
• People Working in Area
• Night Commuters
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 2: Group Products to be Sold
into Categories
• Step 3: Develop a Market-Product Grid
and Estimate Size of Markets
FIGURE 9-5 Selecting a target market for
your Wendy’s fast-food restaurant next to an
urban university (target market is shaded)
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 4: Select Target Markets
 Criteria to Use in Picking the Target Segments
• Market Size
• Cost of Reaching Segment
• Compatibility with the
Organization’s Objectives
• Competitive Position
and Resources
• Expected Growth
 Choose the Segments
STEPS IN SEGMENTING AND
TARGETING MARKETS
• Step 5: Take Marketing Actions to Reach
Target Markets
 Your Wendy’s Segmentation Strategy
• Day Commuters
• Between-Meal Snacks
• Dinner to Night Students
Wendy’s
How can Wendy’s target different market
segments with different advertising programs?
FIGURE 9-6 Advertising actions to reach
specific student segments