chapter 3 market segmentation
TRANSCRIPT
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SESSION 3
MARKET SEGMENTATION
Prepared By:
Prof. Nishant Agrawal
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CHAPTER OUTLINE
• WHAT IS MARKET SEGMENTATION?
• BASES FOR SEGMENTATION
• CRITERIA FOR EFFECTIVE TARGETING OF SEGMENTS
• IMPLEMENTING SEGMENTATION STRATEGIES
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MARKET SEGMENTATION
THE PROCESS OF DIVIDING A POTENTIAL MARKET INTO DIFFERENT SUBSETS OF CONSUMERS AND SELECTING ONE OR MORE SEGMENTS AS A TARGET MARKET TO BE REACHED WITH A DIFFERENT MARKETING MIX.
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THREE PHASES OF MARKETING STRATEGY
Phase 2Target Market and Marketing Mix Selection
Phase 3Product/Brand Positioning
Phase 1Market Segmentation
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SEGMENTATION STUDIES
• DISCOVER THE NEEDS AND WANTS OF GROUPS OF CONSUMERS TO DEVELOP SPECIALIZED PRODUCTS TO SATISFY GROUP NEEDS
• USED TO IDENTIFY THE MOST APPROPRIATE MEDIA FOR ADVERTISING
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RYKA PRODUCES SNEAKERS THAT MEET
THE SPECIAL NEEDS OF WOMEN’S
FEET.
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DISCUSSION QUESTION• CONSIDERING THE LARGEST BANK IN YOUR
COLLEGE’S CITY OR TOWN:• HOW MIGHT CONSUMERS’ NEEDS DIFFER?• WHAT TYPES OF PRODUCTS / SERVICE MIGHT MEET
THEIR NEEDS?
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BASES FOR SEGMENTATION
Personal Feature Purchase Behaviors
•Demographic, age, gender, marital status, family life cycle. Income, education, occupation, social class•Geographic location, address
•Usage Rate•Usage Situation•Brand Loyalty•Psychographics factual behaviors
Personality , lifestyles and socio culture value
•Personality traits•Lifestyle, VALS•socio culture value
Attitude and preferences regarding the product
•Benefits wanted•Level of involvement •Awareness of product alternatives•Brand loyalty
Consumer Rooted Consumption Specific
Facts
Cognitions
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BASES FOR SEGMENTATION• FACTS: WHICH CAN BE DETERMINE FROM DIRECT
QUESTIONING AND CATEGORIZED BY SINGLE
OBJECTIVE MEASURE
• COGNITIONS: WHICH ARE ABSTRACT CAN BE
DETERMINED ONLY THROUGH MORE COMPLEX
QUESTIONING AND WHERE MOST OF THE CONSTRUCT
MEASURED HAVE NO SINGLE DEFINITION
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BASES FOR SEGMENTATION
• GEOGRAPHIC• DEMOGRAPHIC• PSYCHOLOGICAL • PSYCHOGRAPHIC• SOCIO CULTURAL
• USE-RELATED
• USAGE-SITUATION
• BENEFIT SOUGHT
• HYBRID
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Table 3.1 Market Segmentation
Occupation
SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESGeographic Segmentation
ClimateDensity of areaCity SizeRegion Southwest, Mountain States, Alaska, Hawaii
Major metropolitan areas, small cities, townsUrban, suburban, exurban, ruralTemperate, hot, humid, rainy
Demographic Segmentation
IncomeMarital statusSexAge Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, femaleSingle, married, divorced, living together, widowedUnder $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over
Education Some high school, high school graduate, some college, college graduate, postgraduateProfessional, blue-collar, white-collar, agricultural, military
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Table 3.1, continuedSEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESPsychological Segmentation
Learning-involvementPerceptionPersonalityNeeds-motivation Safety, security, affection, sense of self-worth
Extroverts, novelty seeker, aggressives, innovatorsLow-risk, moderate-risk, high-riskLow-involvement, high-involvement
Psychographic
Subcultures (Race/ethnic)ReligionCultures
(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers
American, Italian, Chinese, Mexican, French, PakistaniCatholic,Hindu, Moslem, otherAfrican American,, Asian,
Family life cycleSocial class Lower, middle, upper
Bachelors, young married
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation
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SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLESUse-Related Segmentation
Brand loyaltyAwareness statusUsage rate Heavy users, medium users, light users, non users
Unaware, aware, interested, enthusiasticNone, some, strong
Use-Situation Segmentation
LocationObjectiveTime Leisure, work, rush, morning, night
Personal, gift, snack, fun, achievementHome, work, friend’s home, in-store
Person Self, family members, friends, boss, peersBenefit Segmentation Convenience, social acceptance, long lasting, economy,
value-for-the-money
PRIZM NE Geodemographics
“Movers & Shakers,” “New Empty Nests,” “Boomtown Singles,” “Bedrock America”
Demographic/Psychographics
Combination of demographic and psychographic profiles of consumer segments profiles
SRI VALSTM Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors
Hybrid Segmentation
Table 3.1, continued
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GEOGRAPHIC SEGMENTATION
• THE DIVISION OF A TOTAL POTENTIAL MARKET INTO SMALLER
SUBGROUPS ON THE BASIS OF GEOGRAPHIC VARIABLES
(E.G., REGION, STATE, OR CITY) (EX. TEA, DETERGENT, SKIN
CREAM)
• WHERE PERSON LIVES DETERMINES SOME ASPECTS OF
CONSUMPTION BEHAVIOR.
• EX. CLIMATE DETERMINE THE TYPE OF CLOTHING MOST
PEOPLE OWN, LIFE STYLE
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PERSONALITY TRAITS• PERSONALITY TESTS WHICH ARE GENERALLY IN THE
FORM OF QUESTIONS OR STATEMENT PRESENTED TO
THE RESPONDENT RESEARCHER CAN DETERMINE
ONE’S PERSONALITY AND USE IT IN SEGMENTATION.
• EX. CONSUMER WHO ARE OPEN MINDED AND
GENERALLY TAKE LESS RISK THAT OTHERS IN TRYING
NEW THINGS
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DEMOGRAPHIC SEGMENTATION
• AGE• SEX• MARITAL STATUS• INCOME, EDUCATION, AND OCCUPATION
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PSYCHOLOGICAL SEGMENTATION
• MOTIVATIONS• PERSONALITY• PERCEPTIONS• LEARNING• ATTITUDES
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TWO HIGH-END WATCHES FOR DIFFERENT PSYCHOLOGICAL
SEGMENTS
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PSYCHOGRAPHIC/ LIFESTYLE ANALYSIS SEGMENTATION
• PSYCHOGRAPHIC VARIABLES INCLUDE ATTITUDES, INTERESTS, AND OPINIONS (AIO) WHERE INTEREST AND OPINIONS ARE COGNITIVE CONSTRUCT.
• AIOS GIVE AN IN-DEPTH LOOK INTO THE BUYING BEHAVIOUR OF THE SEGMENT.
• IN AIO RESEARCH, THE SUBJECT IS ASKED IF HE OR SHE AGREES OR DISAGREES WITH CERTAIN STATEMENTS DESIGNED TO EXPLORES HIS OR HER ATTITUDES, MOTIVES, NEEDS, AND PERCEPTIONS.
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Instructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement.
I feel that my life is moving faster and faster, sometimes just too fast.
If I could consider the “pluses” and “minuses,” technology has been good for me.
I find that I have to pull myself away from e-mail.
Given my lifestyle, I have more of a shortage of time than money.
I like the benefits of the Internet, but I often don’t have the time to take advantage of them.
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
Agree Completely
Disagree Completely
TABLE 3.6 AIO
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weblink
Opinions and Attitudes
ADBUSTERS Web site is targeted to consumers with a certain attitude toward advertisers
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VALS ( VALUES ATTITUDE AND LIFESTYLE)• RESEARCH METHODOLOGY USED FOR PSYCHOGRAPHIC MARKET
SEGMENTATION. COMBINATION OF LIFESTYLE AND VALUES.
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VALS ( VALUES ATTITUDE AND LIFESTYLE)
• INNOVATOR THEY HAVE THE HIGHEST INCOMES & SUCH HIGH SELF-RESPECT AND RICH RESOURCES . THEY ARE LOCATED ABOVE THE RECTANGLE. SELF IMAGE IS IMPORTANT TO THEM AS AN EXPRESSION OF INDEPENDENCE AND CHARACTER.
• THINKERS THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY IDEALS. THEY ARE MATURE, RESPONSIBLE, WELL-EDUCATED PROFESSIONALS. WELL INFORMED ABOUT WHAT GOES ON IN THE WORLD AND ARE OPEN TO NEW IDEAS AND SOCIAL CHANGE.
• BELIEVERS THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY IDEALS. THEY ARE CONSERVATIVE AND PREDICTABLE CONSUMERS WHO FAVOUR LOCAL PRODUCTS AND ESTABLISHED BRANDS.
• ACHIEVERS THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY ACHIEVEMENT. THEY ARE SUCCESSFUL WORK-ORIENTED PEOPLE WHO GET THEIR SATISFACTION FROM THEIR JOBS AND FAMILIES.
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• STRIVERS / TO STRUGGLE THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY ACHIEVEMENTS. THEY HAVE VALUES VERY SIMILAR TO ACHIEVERS BUT HAVE FEWER ECONOMIC, SOCIAL, AND PSYCHOLOGICAL RESOURCES. STYLE IS EXTREMELY IMPORTANT TO THEM
• EXPERIENCES THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY SELF-EXPRESSION. THEY ARE THE YOUNGEST OF ALL THE SEGMENTS, WITH A MEDIAN AGE OF 25. THEY HAVE A LOT OF ENERGY, WHICH THEY TRANSFER INTO PHYSICAL EXERCISE AND SOCIAL ACTIVITIES. THEY ARE ENTHUSIASTIC CONSUMERS, SPENDING HEAVILY ON CLOTHING, FAST-FOODS AND OTHER YOUTHFUL FAVOURITES.
• MAKERS THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY SELF-EXPRESSION. THEY ARE PRACTICAL PEOPLE WHO VALUE INDEPENDENCE. THEY ARE FOCUSED ON THE FAMILIAR-FAMILY, WORK, AND HAVE LITTLE INTEREST IN THE BROADER WORLD.
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• SURVIVORS. THESE CONSUMERS HAVE THE LOWEST INCOMES. THEY HAVE TOO FEW RESOURCES TO BE INCLUDED IN ANY CONSUMER SELF-ORIENTATION AND ARE THUS LOCATED BELOW THE RECTANGLE. THEY ARE THE OLDEST OF ALL THE SEGMENTS, WITH A MEDIAN AGE OF 61. WITHIN THEIR LIMITED MEANS, THEY TEND TO BE BRAND-LOYAL CONSUMERS.
• CULTURE SEGMENTATION • MARKETERS CAN SEGMENT SOME POPULATIONS ON THE BASIS OF
CULTURE BECAUSE MEMBERS OF THE SAME CULTURE TENT TO SHARE SAME VALUE,
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FAMILY LIFE CYCLE ADVERTISING
Video cameras are often
purchased by young couples with children.
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Target reaches out to the
Latino market.
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DISCUSSION QUESTIONS
• WHAT TYPES OF MARKETERS MIGHT SEGMENT ACCORDING TO SOCIAL CLASS?
• WHAT ETHICAL ISSUES MIGHT MARKETERS HAVE WHEN MARKETING TO DIFFERENT SOCIAL CLASSES?
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CONSUMPTION SPECIFIC SEGMENTATION BASE
• USAGE RATE SEGMENTATION• DIFFERENCE AMONG HEAVY, MEDIUM AND LIGHT USERS AND NON
USERS OF SPECIFIC PRODUCT, SERVICE OR BRAND. • MARKETERS OF MANY PRODUCTS SUCH AS SOUP, LAUNDRY
DETERGENT AND DOG FOOD HAVE FOUND RELATIVE SMALL GROUP OF HEAVY USERS ACCOUNT.
• USAGE SITUATION SEGMENTATION • OCCASION OR SITUATION OFTEN DETERMINE WHAT CONSUMERS
WILL PURCHASE OR CONSUME MARKETERS SOMETIMES USE THE USAGE SITUATION AS SEGMENTATION VARIABLE.
• MANY PRODUCTS ARE PROMOTED FOR SPECIAL USAGE OCCASIONS. LIKE GREETING CARD INDUSTRY
• EX. CHOCOLATE CELEBRATIONS – RAKHI, DIWALI
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High
Low
Consumption
High Low
LoLows(starve)
HiHighs(stroke)
LowHighs(chase)
HiLows(tickle)
SEGMENTING CUSTOMERS BY USAGETABLE 3-8
Current Share
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USAGE-SITUATION SEGMENTATION• SEGMENTING ON THE BASIS OF SPECIAL OCCASIONS OR
SITUATIONS• EXAMPLE STATEMENTS:
• 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.
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BENEFIT SEGMENTATION THE BENEFITS THAT CONSUMERS SEEK FROM
PRODUCT AD SERVICE ARE THE ESSENCE THE BENEFIT SEGMENTATION. Band-aid offers
“flex” as a benefit to consumers.
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HYBRID SEGMENTATION APPROACHES
• PSYCHOGRAPHIC-DEMOGRAPHIC PROFILES• GEODEMOGRAPHIC SEGMENTATION• SRI CONSULTING’S VALS
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SELECTED DEMOGRAPHIC PROFILE OF USA TODAY EXCERPT FROM
TABLE 3-10 USA TODAY USA
TODAY.COMUSA TODAY NETWORK
Men 66% 70% 66%
Women 34% 30% 34%
Age 18-49 62% 73% 64%
Age 25-54 65% 78% 67%
Age 55+ 27% 18% 25%
Average Age 45 43 45
Attended college or beyond
77% 83% 77%
College graduate or beyond
55% 65% 56%
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SELECTED LIFESTYLE PROFILE OF USA TODAY EXCERPT FROM TABLE 3-11
% Comp
Index
Tech Savvy ReadersUse Internet more than once a day 32% 174
Internet access at home 79% 128
Online purchase for business or personal use in past 30 days
40% 182
Household owns a PC 84% 119
Owns digital camera 22% 130
Leisure ActivitiesAttended movies in last 6 months 73% 120
Bought music CD/tapes in last 12 months 46% 126
Book reading 45% 120
Entertain friends or relatives at home in last 12 months 48% 123
Household subscribes to cable 69% 112
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PRESENTATION
CRITERIA FOR EFFECTIVE TARGETING
AND
IMPLEMENTING SEGMENTATION STRATEGIES
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END OF SESSION
“MISTAKES ARE THE PROOF THAT YOU ARE
TRYING”