segmentation
TRANSCRIPT
Segmentation Benefits
• First, the marketer to become more attuned to the unique needs of customer segments.
• Second, focus product development efforts, develop profitable pricing strategies, select appropriate channels of distribution.
• Third, provides guidelines that are of significant value in allocating marketing resources.
• Selecting a well-defined group of potentially profitable customers.
High-Growth Companies Succeed By
• Focusing marketing resources on acquiring, developing, and retaining profitable customers.
• Developing a distinctive value proposition.
Five Criteria for Evaluating Potential Market Segments
1.Measurability
2.Accessibility
3.Substantiality
4.Compatibility
5.Responsiveness
Common Bases for
Segmentation
By product offered
By industry in which the customer
participates
By size of the customer’s
company
By buying behavior
By technologyused by thecustomer
By size of account
By geographicregion
MeasureabilityCan we understand the size and needs of the market segment?
AccessibilityCan we communicate with the segment so that serving the segment is possible?
SubstantialityDoes the segment desire that values that an offering presents?
ActionabilityCan we create a competitive advantage with respect to the needs of the segment?
Analytic Approach to Segmentation
Analytic approaches need two sets of data:1) Information about segment size and growth
• Standard Industrial Classification (SIC) and North American Industrial Classification System (NAICS) codes are useful.
2) Information about each targeted segments needs and buying behavior.
Technological Environment Assessment
1. Product technology—the set of ideas embodied in the product or service.
2. Process technology—the set of ideas or steps involved in the production of a product or service.
3. Management technology—the management procedures associated with selling the product.
Segmentation Benefits
• First, the marketer to become more attuned to the unique needs of customer segments.
• Second, focus product development efforts, develop profitable pricing strategies, select appropriate channels of distribution.
• Third, provides guidelines that are of significant value in allocating marketing resources.
Common Bases for
Segmentation
By product offered
By industry in which the customer
participates
By size of the customer’s
company
By buying behavior
By technologyused by thecustomer
By size of account
By geographicregion
Bases for Segmenting Business Markets
• Macrosegmentation.• Microsegmentation.
• Macrolevel bases of segmentation are concerned with general characteristics of the buying organization, the nature of the product application, and the characteristics of the buying situation.
Selected Macrolevel Bases of Segmentation
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations
The marketer often finds it useful to divide each macrosegment into smaller microsegments on the basis of the similarities and differences between decision-making units.
Selected Microlevel Bases of Segmentation
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.Developed by Cool Pictures and MultiMedia Presentations
Purchasing Strategies Classifications
1. Satisficers approach a given purchasing requirement by contacting familiar suppliers and placing the order with the first supplier to satisfy product and delivery requirements.
2. Optimizers consider numerous suppliers, familiar and unfamiliar, solicit bids, and examine all alternative proposals carefully before selecting a supplier.
Meaningful Microsegments
Importance of Purchase -- appropriate when the product is applied in various ways by various customers.
Attitudes toward Vendors – an analysis of how various clusters of buyers view alternative sources of supply often uncovers opportunities.
Organizational Innovativeness – some organizations are more innovative and willing to purchase new industrial products than others.
Personal Characteristics – although some interesting studies have shown the viability of segmentation on the basis of individual characteristics, further research is needed to explore its potential as a firm base for microsegmentation.
Attractiveness of SegmentsMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
Market AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•Large and fast growing segments are more attractive than smaller and slow-growing segments•This necessitates accurately predicting future growth.•Other issues include
•Adaptability of market segments,•Existing relationships with the buying center members, and•Available customer’s budget
Competitive AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•What is the likely existence or emergence of competition in the market segment?•Are there barriers to entry facing competitors?•Does being first to market provide an advantage?
Channel AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•It is preferable to target customers already served by well-established marketing channels, or if an existing channel can be adapted, it may serve the segment.•When there is no suitable existing channel, a market view of competition may be necessary.
•How is the existing need being met?•Will customers switch?
Internal AttractivenessMarket
Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•A segment is more attractive when the segment’s needs can be met by the firm’s core competencies.•This is identified through environmental analysis.
Attractiveness – Other Considerations
Market Attractiveness
Competitive Attractiveness
Channel Attractiveness
Internal Attractiveness
Attractiveness – OtherConsiderations
•Other factors that might cause a segment to rated higher or lower include:
•Public policy (excessive government regulation can cause a segment to be downgraded)•Organizational goals (market share goals may make firms more aggressive in targeting)