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Market Segmentation. Consider. the role of segmentation in marketing strategy types of market segmentation in consumer markets B2C industrial B2B criteria & bases for segmenting consumer markets. the segmentation process & basic strategies positioning & repositioning

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Market segmentation l.jpg

Market Segmentation


Consider l.jpg
Consider

  • the role of segmentation in marketing strategy

  • types of market segmentation in

    • consumer markets B2C

    • industrial B2B

  • criteria & bases for segmenting consumer markets.

  • the segmentation process & basic strategies

  • positioning & repositioning

  • factors behind segmentation strategy choices.


Overview l.jpg
Overview

  • discover needs/wants of consumer groups to develop specialised products to satisfy group needs

  • identify the best media for advertising

  • related concepts (STP)

    • Segmentation (subsets with similar needs)

    • Targeting (which segment to aim for)

    • Positioning (the product in the mind of the customer)


Target market analysis l.jpg
Target Market Analysis

  • What market segments are we choosing to serve

  • Why?

  • How are these segments evolving?

  • What new segments are emerging?

  • Mass marketing?

    • econ of scale

  • Micromarketing

    • clear segment

    • a Niche

    • a Locality

    • an Individual


Concentrated niche micro marketing l.jpg
Concentrated (niche) & micro-marketing

Niche

  • commit all marketing resources to serve a single market segment

  • Attractive to small firms with limited resources and to firms offering highly specialized goods and services

    Micro-marketing

  • target potential customers at a very basic level, such as by ZIP code, specific occupation, lifestyle, or individual household

  • WWW & Internet makes micromarketing more effective



Market aggregation l.jpg
Market Aggregation feet.

  • No segmentation

  • heterogenous customers

  • homogenous product

  • no differentiation

The market


Segmentation l.jpg
Segmentation feet.

  • Segments must be

  • Identifiable

  • Measurable

  • Accessible, reachable

  • Substantial enough

  • Unique enough

  • Durable/stable

...based

on customer-based

characteristics or

product attributes

S-1

Good market segmentation

  • has internally homogenous members and

  • is externally heterogeneous

S-3

S-2


Targeting l.jpg
Targeting feet.

Choice criteria?

  • Focus on segment(s)

  • providing most value

  • Pareto Principle

  • the 20% who

  • provide 80% of

  • sales value

  • Group e.g. by

  • age

  • sex

  • income

  • lifestyle

S-1

S-3

S-2


Value segmentation pareto illustrations l.jpg
Value segmentation – Pareto - illustrations feet.

The 80/20 rule

Revenue/Profits

Loyal

80%

20%

Brand User

20%

20%

Semi-Loyal

Switchers

CompetitiveBrand User

40%

Non User ofCategory

.

20%

Source: Garth Hallberg


Tasks in strategic marketing plans l.jpg
Tasks in Strategic Marketing Plans feet.

  • Before implementing a marketing mix strategy (7Ps), identify, evaluate & select a target market.

    • Who has the purchasing power, authority & willingness to buy?

    • What specific consumer segment is most likely to buy the product?

  • Now target the market, design a programme to fit, implement it


Positioning l.jpg
Positioning feet.

Low Price

premium

B

convenient

Consistent quality

C

Not accessible

A

accessible

Brand conscious

D


Positioning13 l.jpg
Positioning feet.

  • shaping the product & developing a marketing programme so that product is perceived to be (and is) different from competitors’ products.

  • Positioning map: to show differences in consumers’ perceptions of competing products

  • Reposition: marketing strategy to change a product’s position in consumers’ minds relative to positions of rival product


B2c and b2b goods l.jpg
B2C and B2B Goods feet.

  • identify the purchaser + reasons for buying the goods

  • Consumer goods (B2C)

    • products & services bought by the end consumer for personal use.

  • Business goods (B2B)

    • Products/services bought to be used, directly or indirectly, to produce or supply other goods/services or for resale e.g. 5 litre tomato sauce containers for food service operators


Bases for market segmentation l.jpg
Bases for Market Segmentation feet.

  • Psychographic Segmentation

  • Activities

  • Interests

  • Opinions, Attitudes & Values

  • (AIO) surveys for measuring lifestyle. Lifestyles

  • Personality

  • Self-image

Demographic

Gender

Age

Family life cycle

Race/Ethnic group

Social class

Education

Income

Occupation

Family size

Religion

Home ownership

Potential

Markets

  • Behavioural

    actual behavior toward product itself. A good starting point for segmentation

  • Benefits sought

  • Usage rate

  • Brand loyalty

  • User status: potential, 1st-time, regular etc.

  • Readiness to buy

  • Occasions: holidays & events that stimulate purchases

Geographicn

Country

Region

Urban/Suburban/Rural

Population density

City size

Climate

Geo-Demographic – Ethnic .. "birds of a feather flock together"


Decisions affected by segmentation choices l.jpg

Basis feet.

Geographic

Demographic

Psychographic

Benefit

Product Usage Rates

Decisions

sales region

Sales force location

Retail location

Estimate segment size

local distribution channels or catering to different age, income & education groups

Product/service positioning

Advertising themes

Sales training

Product/service design--different models + different features

Advertising themes

Sales training

Special products (sizes and quality) or services

Frequent-user promotions

Special financial terms

Decisions Affected by Segmentation Choices

divides U.S. consumer into 14 groups & 66 segments.

Urban Uptown

Midtown Mix

Urban Cores

Elite Suburbs

The Affluentials

Middleburbs

Inner Suburbs

2nd City Society

City Centers

Micro-City Blues

Landed Gentry

Country Comfort

Middle America

Rustic Living


Main inhabited areas in canada l.jpg
Main Inhabited Areas in Canada feet.

Geographic segmentation - Canada

  • Dividing overall market into homogeneous groups by location

  • Can identify general patterns but not all consumers in a location will make the same buying decision.

  • Major brands get 40-80% of sales from core regions

  • Climate is a segmentation factor e.g.

    • Northerners eat more soup than Southerners

    • Southerners use more swimming pool chemicals than Northerners



Provincial and territorial populations 1981 1991 2001 l.jpg
Provincial and Territorial Populations, 1981, 1991, 2001 feet.

POPULATION (THOUSANDS)

Region

1981

1991

2001

Newfoundland

568

568

513

Prince Edward Island

123

130

135

Nova Scotia

847

900

908

New Brunswick

696

724

729

Quebec

6 438

6 896

7 237

Ontario

8 625

10 085

11 410

Manitoba

1 026

1 092

1 120

Saskatchewan

968

989

979

Alberta

2 238

2 546

2 975

British Columbia

2 744

3 282

3 908

Yukon

23

28

29

Northwest Territories

46

36

37

Nunavut

n/a

21

27

Canada

24 343

27 297

30 007

Source: Statistics Canada Website http://geodepot.ca/English/Pgdb/People/Population/demo05.htm.



Canada s 25 largest metropolitan areas l.jpg
Canada's 25 Largest Metropolitan Areas feet.

Area

2001 Population (Thousands)

1996 Population (Thousands)

4445

3359

1891

1031

852

392

698

677

650

416

403

390

347

313

292

281

222

199

178

167

166

150

144

129

131

4881

3512

2079

1107

972

935

693

685

681

426

432

393

359

319

314

305

231

198

176

159

157

155

142

128

125

Toronto

Montreal

Vancouver

Ottawa-Hull

Calgary

Edmonton

Quebec

Winnipeg

Hamilton

London

Kitchener

St. Catharines-Niagara

Halifax

Victoria

Windsor

Oshawa

Saskatoon

Regina

St. John’s

Chicoutimi-Jonquière

Sudbury

Sherbrooke

Trois-Rivières

Saint John

Thunder Bay

Source: http:www.statcan.ca/english/Pgdb/People/Population/demo05.htm


Population projections by age group l.jpg
Population Projections by Age Group feet.

Demographic segmentation: dividing consumer groups by e.g. sex, age, income, occupation, education, household size & stage in family life cycle


Family life cycle l.jpg
Family Life Cycle feet.

  • young singles

  • young married

  • couples who remain childless,

  • single parenthood

  • parenthood (full nest)

  • post-parenthood (empty nest)

  • dissolution (separated, widowed, or divorced)

  • retirees with children still at home

  • able elderly


Buying patterns for different age groups l.jpg
Buying Patterns for Different Age Groups feet.

Age Name of Age Group Merchandise bought

0 - 5 Young children Baby food, toys, nursery, furniture, children’s wear

6 - 19 School children Clothing, sports equipment, records, (including teenagers) school supplies, food, cosmetics, used cars

20 - 34 Young adults Cars, furniture, houses, clothing,

recreational equipment, purchases for younger age groups.

35 - 49 Younger middle-aged Larger homes, better cars, second

adults cars, new furniture, recreational equipment

50 - 64 Older middle-aged Recreational items, presents for adults young marrieds & infants

65+ Senior adults Medical services, travel, medicines, purchases for younger age groups


Segmenting by age l.jpg
Segmenting by age feet.

  • many firms identify market segments by age

  • design products to meet specific needs of certain age groups e.g.

    • baby food, toothpaste, fashion garments, walking aids

  • sociologists attribute different consumer needs & wants across age groups to a cohort effect

  • tendency among members of a generation to be influenced & drawn together by significant events occurring in formative years e.g. age 17-22


Demographic the grey market l.jpg
Demographic: The Grey Market feet.

  • 40% of UK income, 70-80% of wealth

  • UK population split

    • 16% 50-64 years old

    • 16% 64 +

  • Grey market wealth

    • 20% well off (twice average income)

    • 40% property-rich; income poor

    • 40% poor

      • 1% in UK (15% in US) on incomes 40% lower than national average income

  • Grey market lifestyle groups WOOPIES (Well off older persons)

    • married in two person households, <75yrs, well off, 86% Investment income

    • high home & car ownership

  • OPALS (Old people with affluent lifestyles)

  • JOLLIES - Jet-setting oldies with lots of loot


Ethnic group segmentation l.jpg
Ethnic Group Segmentation feet.

  • USA Census Bureau

    • by 2050, nearly 50% of US population will belong to nonwhite minority groups

    • three largest & fastest-growing racial/ethnic groups African Americans, Hispanics, Asian Americans.


Generalisation l.jpg
Generalisation feet.

… based on studying the impact of household income changes on consumer spending behaviour

As family income increases

1. a smaller % goes on food

2. the % spend on housing & household operations & clothing stays constant

3. % spend on other items (such as recreation & education) increases



Psychographic segmentation lifestyles l.jpg
Psychographic Segmentation - Lifestyles feet.

  • decisions about how to live

  • family, job, social & consumer activities

  • Lifestyles  values & demographics

  • AIO surveys: Activities, Interests, Opinions

  • Why?

    • richer descriptions of potential target markets

    • behavioural profiles to target promotions, price etc

    • detail to match company’s image & offerings with types of consumers likely to buy

  • develop population psychographic profiles using survey instruments – see VALS - “Values and Lifestyles”

  • UK Households 23 million

  • Young NK 29.7%

    • Most affluent 4.8%

    • Mid-high affluent 11.2%

      • Farm & 4x4

      • Future families

      • Rising stars

      • MOR

      • Urbans

      • Trendy upstarts

    • Mid-low affluent 6.3%

    • Least affluent 7.4%

      • High rise hopefuls

      • Hard choices

      • Beer & crisps

      • Hand-to-mouth

  • Families 29.7%

  • Empty nesters 21.1%

  • Retired seniors 19.5%


Geo demographics lifestyle and postcodes l.jpg
Geo-demographics: Lifestyle and postcodes feet.

  • Thriving e.g. 20% of population

    • wealthy achievers (suburbs), affluent greys (rural); prosperous pensioners (retirement areas)

  • Expanding - 12%

    • affluent execs - families

  • Rising - 8%

    • affluent urbanites, better off execs in inner cities

  • Settling - 24%

    • comfortable middle-agers in suburbia

  • Aspiring 14%

    • new home owners

  • Striving (struggling?) 23%

    • older people in less prosperous areas; council estates


Lifestyle vals l.jpg
Lifestyle-VALS feet.

  • Values and Lifestyles (1978)

  • based on the idea that

    • social class, although significant, does not determine all of our values.

    • there are important value differences within a class

      • Fulfilled’s, Achievers, Experiencers all have the same level of resources. Why are they different?

      • see http://www.sric-bi.com/VALS/


Vals tm network l.jpg
VALS feet.TMNetwork

Source: SRI Consulting Business Intelligence http://www.sric-bi.com/VALS/presurvey.shtml



Other lifestyle descriptors mccann erickson men l.jpg
Other lifestyle descriptors: McCann-Erickson Men feet.

  • Avant Guardians

    • concerned with well-being of others rather than possessions. Well educated, self-righteous.

  • Pontificators

    • strongly held, traditional opinions. Very British and concerned with keeping others on the right path.

  • Chameleons

    • want to be contemporary to win approval. Copiers not leaders.

  • Self-Admirers

    • High self-image, young, intolerant of others, motivated by success.

  • Self-Exploiters

    • the “doers” and “self-starters”, competitive, pressured, pessimistic

  • Token Triers

    • always willing to improve their luck, but tend to try and fail.

  • Sleepwalkers

    • actively opt out, contented under achievers.


Behaviour product related segmentation l.jpg
Behaviour/product-related segmentation feet.

  • segmentation according to the different benefits that consumers seek from the product

  • focus on ‘why’ a customer purchases rather than ‘what’

  • Benefits that we seek when we buy

    • attributes we seek in a good or service

    • benefits we expect to receive from that good or service

  • Usage rates for a product e.g.

    • heavy-, moderate-, light-user segments

  • 80/20 principle (“Pareto’s Law”) 80% of a product’s revenues comes from a relative small, loyal % of total customers

  • Consumer brand loyalty toward product e.g. AirMiles, ClubCard points


Slide37 l.jpg

Band-Aid offers “flex” as a feet.

benefit to consumers.


Benefit segmentation applied to yogurt l.jpg

Individually packaged feet.

With

fruit

High-

priced

Mild

Organic

Contains

bio-bifidus

Low

fat

Low-

priced

BENEFITS SOUGHT FROM YOGURT

Provides choice

for family members X X

Convenient to use X

Tastes good X X

Good quality X X X X

Healthy X X X X

Helps digestion X

Helps diet X

Spend less money X

Benefit Segmentation Applied to Yogurt

Attributes of Yogurt

Source: Adapted from Marco Vriens and Ter Hofseted, “Linking Attributes, Benefits, and Consumer Values,” Marketing Research,

Chicago, Fall 2000, V. 12(3) pp. 4-10. Reprinted with permission by the American Marketing Association.


Other segmentation categories l.jpg
Other segmentation categories feet.

  • Buyer-readiness segmentation:

    • ignorance, awareness, knowledge, preference and conviction

  • Interaction segmentation:

    • different channels, payment methods, promotions & communications

  • Occasion segmentation:

    • time of day, festivals, births, marriages, deaths etc.

    • examples:

      • Whenever our daughter Jamie gets a raise, we always take her out to dinner.

      • When I’m away on business, I try to stay at a suites hotel.

      • I always buy my wife flowers on Valentine’s Day.

  • Internet usage


Market matching strategies 1 of 2 l.jpg
Market Matching Strategies feet.(1 of 2)

1908 Early 2000s 1955 Early 2000

Market Single-Offer Multi-Offer Single-Offer Multi-Offer

Segment Strategy Strategy Strategy Strategy

General-Purpose Cars

Small Model T Focus Beetle Polo

Medium Model T Taurus Golf

Large Crown Victoria Passat

Sporty Cars

Low-Priced ZX2 Escort new Beetle

GTI

Medium-Priced Cougar Cabrio

Mustang Audi TT

Boxster

High-priced Jaguar XK8 Porsche

Aston Martin DB7 911

PRODUCT OFFERINGS

Ford Motor Company Audio/Volkswagen/Porsche


Market matching strategies 2 of 2 l.jpg
Market Matching Strategies feet.(2 of 2)

1908 Early 2000s 1955 Early 2000s

Market Single-Offer Multi-Offer Single-Offer Multi-Offer

Segment Strategy Strategy Strategy Strategy

Luxury Cars

Medium-priced Lincoln Continental Audi A4

Lincoln Town Car

High-priced Jaguar S-Type Audi A6 Audi A8

Vans Windstar EuroVan

Econoline

Trucks

Small Model T (Truck) Ford Ranger

Medium Ford “F” series

Sport Utility Vehicles Explorer

(SUVs) Expedition

Excursion

Lincoln Navigator

Ford Motor Company Audio/Volkswagen/Porsche


Segmentation for industrial markets l.jpg

Product feet.

Segmentation

Geographic

Segmentation

Potential

Industrial

Markets

End-Use

Application

Segmentation

Account Size

and Potential

Segmentation

Segmentation for Industrial Markets

  • Organizational Demographics

    • industry size, location, company age

  • Operating Variables

    • Technology, process

  • Purchasing Approach

    • Organization & DMU structure

  • Situational Variables

    • Order size, routine vs. customized, urgency of order

  • Personal Characteristics of Buyers

    • attitude to risk, champions


Radio broadcast segmentation l.jpg
Radio Broadcast segmentation feet.

The Total Market for Radio

This matrix is too simple.

How would we classify today?

The Market Segment for Radio by Age & Benefit

Age

Benefit

Teens

Young

Adult

Middle

Adults

Senior

Information

Entertainment

Companionship


Hypothetical middle adult segment for radio l.jpg

Middle Adults feet.

Early

Retiree

Professional

Hourly

Employee

Business

Owner

Information

X

X

X

Entertainment

X

X

Desired Benefit

Companionship

X

Hypothetical Middle Adult Segment for Radio


Hypothetical middle adult segment for information radio l.jpg
Hypothetical feet.Middle Adult Segment for Information Radio

Middle Adults

Early

Retiree

Professional

Hourly

Employee

Business

Owner

Breaking news

X

X

Political

commentary

X

X

Financial market

commentary

X

X

X

Desired Information Focus

Advice

X

X

Weather

X

X

Call-in

X

Gossip

X


Hypothetical positioning map cbc versus commercial radio l.jpg
Hypothetical Positioning Map: CBC versus Commercial Radio feet.

Entertaining

Commercial

Talk Radio

Commercial

Talk Radio

*As it Happens

*This Morning

CBC local*

After Hours*

Informational

Music

*CBC News

Disc Drive*

Take 5*

*Ideas

Challenging


Positioning of soap l.jpg
Positioning of Soap feet.

High

moisturizing

  • Tone

  • Zest

7

4

  • Lever 2000

  • Dove

2

5

  • Safeguard

  • Lux

8

Nondeodorant

Deodorant

3

1

  • Lava

  • Dial

“Product Space”Representing Consumers’ Perception for Different Brands of Bar Soap

  • Lifebuoy

6

Low

moisturizing


Plot these cars on this positioning map l.jpg
Plot these cars on this Positioning Map feet.

Expensive Inexpensive Conservative Sporty

  • Honda Accord

  • Jaguar

  • Toyota Yaris

  • VW Golf

  • BMW 300 series

  • Skoda Fabia

  • Porche

  • Place other cars on the map

  • What other criteria would we add to improve the map's usefulness?

Expensive

Inexpensive

Conservative

Sporty


Construct a competitive positioning map l.jpg
Construct a Competitive Positioning Map feet.

  • for the clothing areas of the following retailers

    • Next

    • Marks and Spencer

    • Primark

    • Miss Selfridge

    • Asda (George)

    • H&M

    • La Senza

    • Coast


Non profit market segmentation l.jpg
Non-profit market segmentation feet.

  • Is segmentation for nonprofit marketers of more, less, or the same importance than for profit-oriented marketers?

  • Examples ?


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