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Chapter 10
Identifying Market
Segments and Selecting
Target Markets
by
Dr. Saleh Alqahtani
Kotler on
Marketing
“Don’t
buy market
share. Figure out
how to earn it.”
Dr. Saleh Alqahtani
Levels and Patterns of
Market Segmentation

Levels of Market Segmentation
 Mass marketing
 Micromarketing
 Segment marketing
 Market segment
 Sector
 Flexible market offering
 Naked solution
 Discretionary options
Dr. Saleh Alqahtani
Levels and Patterns of
Market Segmentation
 Niche
Marketing
 Niche
 Local Marketing
 Individual Customer Marketing
 Mass-customization
 Choiceboard
 Customerization
 Segments
 Individuals
Dr. Saleh Alqahtani
Steps in Market Segmentation,
Targeting,and Positioning
Market
Segmentation
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
Dr. Saleh Alqahtani
Market
Targeting
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market
Positioning
5. Identify
possible
positioning
concepts for
each target
segment
6. Select,
develop, and
communicate
the chosen
positioning
concept
Basic Market-Preference
Patterns
Sweetness
Dr. Saleh Alqahtani
(c) Clustered
preferences
Creaminess
(b) Diffused
preferences
Creaminess
Creaminess
(a) Homogeneous
preferences
Sweetness
Sweetness
Bases for Segmenting
Consumer Markets
Geographic
Region, City or Metro
Size, Density, Climate
Demographic
Age, Gender, Family size
and Fife cycle, Race,
Occupation, or Income ...
Psychographic
Lifestyle or Personality
Behavioral
Occasions, Benefits,
Uses, or Attitudes
Dr. Saleh Alqahtani
Bases for Segmenting
Business Markets
Demographic
 Operating Variables
 Purchasing Approaches
 Situational Factors
 Personal Characteristics

Dr. Saleh Alqahtani
Table 10-3: Major Segmentation Variables
for Business Markets
Demographic
1.
Industry: Which industries should we serve?
2.
Company size: What size companies should we serve?
3.
Location: What geographical areas should we serve?
Operating Variables
4.
Technology: What customer technologies should we focus on?
5.
User or nonuser status: Should we serve heavy users, medium
users, light users, or nonusers?
6.
Customer capabilities: Should we serve customers needing many
or few services?
Purchasing Approaches
7.
Purchasing-function organization: Should we serve companies
with highly centralized or decentralized purchasing organizations?
8.
Power structure: Should we serve companies that are engineering
dominated, financially dominated, and so on?
See text for complete table
Dr. Saleh Alqahtani
Effective Segmentation
Measurable
• Size, purchasing power,
profiles of segments can
be measured.
Substantial
• Segments must be large or
profitable enough to serve.
Accessible
Dr. Saleh Alqahtani
• Segments can be
effectively reached and
served.
Differential
• Segments must respond
differently to different
marketing mix elements &
actions.
Actionable
• Must be able to attract and
serve the segments.
Additional Segmentation
Criteria
Ethical Choice of Market Targets
 Segment Interrelationships &
Supersegments
 Segment-by-Segment Invasion Plans
 Intersegment Cooperation

Dr. Saleh Alqahtani
Target Marketing

Target marketing requires marketers to
take three major steps:
 Identify
and profile distinct groups of
buyers who differ in their needs and
preferences (market segmentation).
 Select one or more market segments to
enter (market targeting).
 For each target segment, establish and
communicate the key distinctive benefit(s)
of the company’s market offering (market
positioning).
Dr. Saleh Alqahtani
Market Targeting

Evaluating and Selecting the Market
Segments
 Single-Segment
Concentration
 Selective Specialization
 Product Specialization
 Market Specialization
 Full Market Coverage
 Undifferentiated marketing
 Differentiated marketing
Dr. Saleh Alqahtani
Five Patterns of Target Market
Selection
Single-segment
concentration
Product
specialization
Selective
specialization
M1 M2 M3
M1 M2 M3
M1 M2 M3
P1
P1
P1
P2
P2
P2
P3
P3
P3
Market
specialization
Full market
coverage
M1 M2 M3
P = Product
M = Market
Dr. Saleh Alqahtani
M1 M2 M3
P1
P1
P2
P2
P3
P3
Segment-by-Segment
Invasion Plan
Customer Groups
Product Varieties
Airlines
Railroads
Truckers
Large
computers
Mid-size
computers
Personal
computers
Company A
Dr. Saleh Alqahtani
Company B
Company C