Segmentation Ch 3

8/3/2019 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

IN

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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

Documents

Segmentation Ch 3