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chapter 5
segmenting
markets
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5-2Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006
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
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5-3Brassington & 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
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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.
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eg business and consumer travel markets
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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)
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B2B Segmentation Bases
Macro
• Size
• Location
• Usage rate
Micro
• Product
• Applications
• Technology
• Purchasing and decision-making processes
• Buyer-seller relationships
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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
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Consumer Segmentation Bases
Geographic
GeodemographicMulti-variable
Behaviour Psychographic
Demographic
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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)
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Demographic Segmentation
• Age
• Gender
• Race
• Income
• Occupation
• Social status
• Family structure
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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
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Psychographic Segmentation
• Lifestyle segmentation
• Categories
– Activities
– Interests
– Opinions
– Demographics Quorn targets vegetarianswith meat substitutes
Source: © Quorn http://www.quorn.co.uk
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eg Lifestyle Orientations in China
• Fashion-orientated
• Tradition-orientated
• Achievement-orientated
• Moderate-orientated
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Lifestyle Orientations in the USA
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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
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Behaviour Segmentation
• End use
• Benefits sought
• Usage rate
• Loyalty
• Attitude
• Buyer readiness
eg usage segmentation in the soup market
•Dinner party starter
•Warming snack
•Meal replacement
•Recipe ingredient
•Easy office lunch
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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
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Figure 5.2 The AIDA Response Hierarchy Model
Awareness
Interest
Desire
Action
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Segmentation Targeting Strategies
Undifferentiated Differentiated Concentrated
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Undifferentiated Strategy
Marketing mix The market
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Differentiated Strategy
Marketing mix 1 Segment 1
Marketing mix 2
Marketing mix 3
Segment 2
Segment 3
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eg Cadbury’s Market Segments
• Immediate eat
• Home stock
• Kids
• Seasonal
• Gift
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Concentrated Strategy
Marketing mix 2 Segment 2
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Criteria for Successful Segmentation
Distinctiveness
Accessibility
Defendability
Tangibility
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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
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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
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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
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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
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Key Terms_5
• _____ segments in B2B markets are defined in terms of detailed organisational characteristics such as management philosophy, decision-making 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
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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
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Key Terms_7
• _____ is the process of deciding how many market segments to aim for and how to do it.
Targeting