Session 8 Segmentation

SEGMENTATION

Session 8 SUBHADIP ROY

Steps in Market Segmentation, Targeting, and Positioning

Questions

• How

can a company identify the segments that make up a market? • What criteria can a company use to choose the most attractive target markets?

Ford’s Model T Followed a Mass Market Approach??????

The Ford Ad

Issues To Begin With  Mass-Marketing

vs. Segmentation  Sector vs. Segment  Flexi-Offerings

• Naked Solution • Discretionary Option

Four Levels of Micromarketing Segments

Niches

Local areas

Individuals

Preference Patterns Homogeneous Diffused Clustered

Bases for Segmenting Consumer Markets  Geographic  Demographic  Psychographic

(Lifestyle, Personality,

Values)  Behavioural (Occasion, User Status, Usage Rate)

Demographic Segmentation Age and Life Cycle Life Stage Gender Income Generation Social Class

Behavioral Segmentation Decision Roles  Initiator  Influencer  Decider  Buyer  User

Behavioral Variables  Occasions  Benefits  User Status  Usage Rate  Buyer-Readiness  Loyalty Status  Attitude

Multi-attribute Bases  Geodemographic  Psychodemographic  Psychobehavioural

Patterns of Target Market Selection

Patterns of Target Market Selection

Patterns of Target Market Selection

Segmenting Industrial Markets Industrial marketers can hardly be blamed for feeling that segmentation is very difficult for them. Not only has little been written on the subject as it affects industrial markets, but such analysis is also more complex than for consumer markets. - Benson P. Shapiro Thomas V. Bonoma HBR, 2001

SEGMENTATION BASES -Shapiro and Bonoma DEMOGRAPHICS OPERATIONAL VARIABLES PURCHASING APPROACH SITUATIONAL FACTORS

PERSONAL CHARACTERISTICS

SEGMENTATION BASES 





DEMOGRAPHICS

• • •

THE INDUSTRY COMPANY SIZE CUSTOMER LOCATION

• • •

COMPANY TECHNOLOGY PRODUCT AND BRAND USE STATUS CUSTOMER CAPABILITIES

• • • •

PURCHASING FUNCTION ORGANIZATIONS POWER STRUCTURE GENERAL PURCHASING POLICIES BUYER-SELLER RELATIONSHIPS

OPERATING VARIABLES

PURCHASING APPROACH

SEGMENTATION BASES Contd. 

SITUATIONAL FACTORS

• • •



URGENCY PRODUCT APPLICATION SIZE OF ORDER

PERSONAL CHARACTERISTICS OF THE BUYER

• • •

PERSONALITY VARIABLES APPROACH TO BUYING LOYALTY

VALS Framework o VALS tries to explain the relations between consumer personality traits and overall consumer behavior. VALS uses psychology to analyze the dynamics underlying consumer preferences and choices. o Developed built by Arnold Mitchell to explain changing U.S. values and lifestyles in the 1970s. VALS was formally inaugurated as an SRI International product in 1978

The VALS People        

Innovators – Sophisticated, high self esteem, upscale and image is important Thinkers – Conservative, practical, income allows many choices, look for value Achievers – Goal oriented lifestyle, image is very important Experiencers – Like “cool stuff,” like excitement and variety’ spend a high proportion of income on fashion Believers – Conservative, like familiar and established brands Strivers – Trendy and fun loving, money defines success, concerned about the opinion of others Makers – Practical people, do it yourself, unimpressed by material possessions, prefer value to luxury Survivors – Few resources, buy at a discount, very modest market, little motivation to buy

Effective Segmentation  Only

when the segment is:

• Measurable • Substantial • Accessible • Differentiable • Actionable

Evaluation of Segments QUALITATIVE METHODS

 DELPHI  PANEL CONSENSUS  HISTORICAL ANALOGY  SALES FORCE COMPOSITE

QUANTITATIVE METHODS TREND PROJECTIONS REGRESSION ANALYSIS CORRELATION ANALYSIS INPUT/OUTPUT ANALYSIS ECONOMETRIC MODELS

Thank You, Class