Download - Segmentation Ch 3
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MarketMarket
SegmentationSegmentation
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MEANING
The process of dividing a potential marketThe process of dividing a potential market
into distinct subsets of consumers andinto distinct subsets of consumers and
selecting one or more segments as a targetselecting one or more segments as a targetmarket to be reached with a distinctmarket to be reached with a distinct
marketing mix.marketing mix.
It is the process of dividing heterogeneousIt is the process of dividing heterogeneous
market into homogeneous submarket into homogeneous sub--units.units.
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Three Phases of MarketingThree Phases of Marketing
StrategyStrategy
Phase 2
Target Market and Marketing Mix Selection
Phase 3
Product/Brand Positioning
Phase 1
Market Segmentation
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Product Positioning & Product
Differentiation
Through Product Positioning an organization
influences how consumers perceives a brands
characteristics relative to those of competitiveofferings.
Product Differentiation is the process of
manipulating the marketing mix to position abrand so that consumers perceive meaningful
differences between it and its competitors.
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BENEFITS OF MARKET
SEGMENTATION
Early detection of trends in a rapidly changing market.
Help designing products that truly meet the demand of
the market Determine the most effective promotional appeals
Help selecting right media for the maximum
effectiveness.
Schedule promotional efforts during the time when
responsiveness is likely to be the highest
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STEPS IN A TYPICAL SEGMENTATION
Determine the uses to be made of research (objectives)
Selecting the segmentation basis
Describe the segmentation basis
Select a representative sample of consumer population
Collect data on segment descriptor from the sample of
consumers
Form segments based on chosen consumer descriptors
Establish profiles of segment
Translate the results into marketing strategy
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CRITERIAFOREFFECTIVE TARGETING
OF SEGMENTATION
Identification (identifiable& measurable)
Sufficiency (size)
Stable and/or growingAccessibility (can be reached without hurdles)
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Bases for Market SegmentationSEGMENTATION BASESEGMENTATION BASE
Occupation
SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Climate
Density of area
City Size
Region Southwest, Mountain States, Alaska, Hawaii
Major metropolitan areas, small cities, towns
Urban, suburban, exurban, rural
Temperate, hot, humid, rainy
Demographic Segmentation
Income
Marital status
Sex
Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+
Male, female
Single, married, divorced, living together, widowed
Under $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, postgraduate
Professional, blue-collar, white-collar, agricultural, military
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continuedSEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Psychological Segmentation
Learning-involvement
Perception
Personality
Needs-motivation Shelter, safety, security, affection, sense of self-worth
Extroverts, novelty seeker, aggressive, innovators
Low-risk, moderate-risk, high-risk
Low-involvement, high-involvement
Psychographic
Subcultures (Race/ethnic)
ReligionCultures
(Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts,
status seekers
American, Italian, Chinese, Mexican, French, PakistaniCatholic, Protestant, Jewish, Moslem, other
African American, Caucasian, Asian, Hispanic
Family life cycle
Social class Lower, middle, upper
Bachelors, young married, full nesters, empty nesters
Attitudes Positive attitude, negative attitude
Sociocultural Segmentation
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SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES
Use-Related Segmentation
Brand loyalty
Awareness status
Usage rate Heavy users, medium users, light users, non users
Unaware, aware, interested, enthusiastic
None, some, strong
Use-Situation Segmentation
LocationObjective
Time Leisure, work, rush, morning, night
Personal, gift, snack, fun, achievementHome, work, friends home, in-store
Person Self, family members, friends, boss, peers
Benefit Segmentation Convenience, social acceptance, long lasting, economy,
value-for-the-money
Geodemographics Movers & Shakers, New Empty Nests, Boomtown
Singles,
Demographic/Psychographics
Combination of demographic and psychographic profilesof consumer segments profiles
SRI VALSTM Innovators, Thinkers, Believer, Achievers, Strivers,
Experiencer, Makers, Survivors
Hybrid Segmentation
continued
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Hybrid Segmentation
Socio-Economic profile Income & Social class
Geo-demographic segmentation
This is based on the notion that people who live close to
one another are likely to have similar financial means,
tastes, preferences, life style & consumption habits.
Psychographic-demographic segmentation
Gender & life style, Occupation & Personality,
Education & Life-style, Values & Life-style etc.
Life Style & Psychographics
VALS1 & VALS 2
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Life Style & psychographic Segmentation
Life style denotes how people live, how do they spend their
money and how do they allocate their time.
Psychographic is employed to assess consumers life styles
by analyzing their Activities, Interests & Opinions (AIOs)
A= how people spend their time engaging in activities
I = what is of the most interest/importance to them in their
immediate surroundings.
O = their opinions & views about themselves & the world around
them
Application of life style segmentation
Segmentation based on general life style characteristics
Segmentation based on product specific life style characteristics..
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VALS1 (Values & Lifestyle)Developed By Stanford Research Institute in late 70s
According to this consumers are moving througha series of stages, they call a Double Hierarchy,
which consists of four general categories of
people
The need driven person
The outer directed person
The inner directed person
The integrated person
Based on these four basic categories of people,
we may have nine categories of consumers
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VALS1 (Double Hierarchy)
INTEGRATED
PERSON
AchieverSocially
Conscious
Emulator Experiential
I am- meBelonger
Sustainer
Survivors
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NEED DRIVEN
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Characteristics of Segments The need driven group
Survivors: marked by poverty, old age, poor health & poor education
Sustainer: marked by poverty but feel left out of things, more self confident The outer directed group
Belongers: middle class, middle age or older, cherish the institutions offamily, country or religion.
Emulators: intensely striving to get ahead by imitating achievers.
Achievers: high achiever, Rich, self employed professionals The inner directed group
I-am-me: young, unmarried and marked by major shifts in emotions,feelings & view points.
Experiential: highly involved in activities, independent, self reliant,
innovative & having moderate income . Socially Conscious: small, successful, mature, concerned groups.
The integrated group Comprising 2% of the population, mature, self actualized, balanced people
who have managed to put together the best of the characteristics of theinner & outer directed personalities.
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DESCRIPTION OF VALS2 CONSUMER SEGMENTS
ACTULIZERS: Enjoy the finer things, receptive to new products,technologies,distribution. Skeptical of advertising, readers of variety publications, light TVviewers
FULFILLERS: Little interest in image/prestige, above average consumers.
ACHIEVERS: attracted to premium products, prime target for variety ofproducts, average TVwatchers, read business news.
EXPERINCERS: Follow fashion & fads, spend much of disposable income on
socializing, buy on impulse, attend to advertising. BELIEVERS: BuyAmerican, slow to change habits, look for bargains, watch
TVmore than average; read retirement, home and garden and general interestmagazines.
STRIVERS: Image conscious, limited discretionary income, but carry creditbalances spend on clothing and personal care products, prefer TV to reading.
MAKERS: Shop for comfort, durability, value. Unimpressed by luxuries. Buythe basic, listen to radio. Read home mechanics, fishing, outdoor magazines.
STRUGGLERS: Brand loyal, use coupons and watch sale. Trust advertising,watch TVoften.Read tabloids and womens magazines
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Implementing Segmentation StrategiesImplementing Segmentation Strategies
Differentiated Marketing:Differentiated Marketing:
Targeting several segments using individual marketing mixTargeting several segments using individual marketing mix
Concentrated marketing:Concentrated marketing:
Targeting just one segment with unique marketing mixTargeting just one segment with unique marketing mix
C
ounter segmentationC
ounter segmentation Sometimes companies find that it is beneficial to recombineSometimes companies find that it is beneficial to recombine
some segments into a new single segment that could besome segments into a new single segment that could betargeted with an individually tailored product or promotionaltargeted with an individually tailored product or promotionalcampaign.campaign.
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Limitations of Demographic Segmentation
Narrowing differences in income education and
occupational status
It fails to explain and predict consumer behaviour
Faulty techniques of measuring demographic variables
Lack of richness in describing consumers
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Benefit SegmentationBenefits that people are seeking from a product are the basic
reason for purchase & therefore, effective basis for segmentation.
Typical Benefit Segmentation of Toothpaste Market
Benefit Sought Consumer
Characteristics
Consumer
Groups
Economy Value oriented
Rural background
Adult men &women
Medicinal
Hypochondriac
(health conscious)
Medium sized
families
Cosmetic High sociability,Active, Smokers
Teenage, youngadults
TasteHigh selfinvolvement
Children
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BandBand--aidaid
offers flexoffers flex
as aas abenefit tobenefit to
consumers.consumers.
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High
Low
Consumption
High Low
LoLows
(starve)
HiHighs
(stroke)
LowHighs
(chase)
HiLows
(tickle)
Segmenting Customers by UsageSegmenting Customers by Usage
Current Share