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Brief introduction to marketing:
Marketing (or advertising) is the process by which companies advertise products or services to potential customers. ." It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Marketing is used to create the customer, to keep the customer and to satisfy the customer. With the customer as the focus of its activities, it can be concluded that marketing management is one of the major components of business management. The evolution of marketing was caused due to mature markets and over capacities in the last decades. Companies then shifted the focus from production to the customer in order to stay profitable. The term marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors. WHAT IS MARKETING IF IT IS NOT ABOUT SEGMENTATION? Satisfying people’s needs and making a profit along the way is the purpose of marketing. However, people’s needs differ and therefore satisfying them may require different approaches. Identifying needs and recognizing differences between groups of customers is at the heart of marketing. We cannot do everything, we cannot satisfy everybody; resources do not stretch that far. This means we have to be clever in targeting our offers at people who really do want and need them, and we have to be strong in setting aside those who do not. This early observation is fundamental, as it requires us to think as hard about where we don’t want to sell our product as where we do. This brings us to the consideration of the difference between marketing and selling. Selling focuses on the product in hand and our pressure to get rid of it, almost regardless of the needs of the customer. It is clear that brutal selling may leave a customer with a product they wish they had never bought and therefore, they may never return as a customer again. Marketing takes a longer-term view. The matching of customers’ needs and suppliers resources may take more time and effort but the customer is more likely to be comfortable with their decision and be loyal. The fundamentals of marketing are the same fundamentals of segmentation. Know your customers, know how they differ, and have a clear proposition that lights their fire. We will return to these issues but first we will examine the differences between consumer and business-to-business markets, as our challenge is to arrive at a business-to-business segmentation. THE DIFFERENCE BETWEEN CONSUMER & BUSINESS-TO-BUSINESS MARKETS Business-to-business markets are characterized in a number of ways that makes them very different to their consumer cousins. The number of customers supplied by a chemical company
is likely to number in the hundreds or small number of thousands in contrast to consumer companies that ultimately address markets of many thousands or millions. Business-to-business customers range wide in their consumption of products. A few customers dominate followed by a long tail of customers with a comparative miniscule consumption. Private individuals have physical limitations in the amount of product a single person can consume. Companies, by comparison, do not. The selection of a supplier in business-to-business markets is more complicated. Since people are buying on behalf of their organization rather than themselves, there is (at face value) a greater pressure to be objective and rational about their decision. In business-to business markets the buyers and specifiers may well know as much about the products purchased as the companies that supply them. In a business-to-business situation it is unlikely that just one person will make the buying decision. A specifier may test and approve the product; a production manager may run it through trials; a board of directors may impose an overriding structure on the source of supply; a buyer will almost certainly negotiate the price. Compare this with an item of clothing or personal care or food where an individual will have most sway, occasionally influenced by another member of the family. The aim of segmentation in consumer markets is to bring the focus on to manageable groups of like-minded individuals who have a high disposition for a product. Coca-Cola has customers who want low cost drinks for consumption at home. It has customers who want a mixer or a non-alcoholic drink in a bar. It has customers who are hot and thirsty and want a cool refresher outside the Duomo in Florence. The same consumers may at various times join one of the segments and when they do, they will see the product in a different light and value it in a different way. In business-to-business markets the aim of segmentation is similarly to arrive at clusters of likeminded companies. There is a very strong pressure to use segmentation in business-to-business markets to win a competitive advantage as there is often little to differentiate one product from another. Segmentation therefore links strongly with a strategy to achieve a sustainable differentiated position.
Marketing concept emphasized the importance of understanding customers since they are the reason an organization is in business. With customer knowledge in hand, it is now time to turn our attention to the process of addressing customers’ needs through actions undertaken by the marketer. What is Marketing? Major decisions in marketing include: 1. Selecting Target Markets 2. Developing Products/Services 3. Creating Promotions 4. Arranging Distribution 5. Setting Price 6. Adding Support Services
segmentation is alll concerned about - how marketers determine which groups of customers to target. This is number one step in marketing decisions.This is a critical point in marketing planning since all additional marketing decisions are going to be directed toward satisfying the markets selected. For those new to marketing, selecting target markets may seem like a relatively easy decision to make. In fact, many inexperienced marketers will simply conclude that “We will just sell to whoever wants to buy.” However, this mind-set is both ineffective and inefficient as the marketer is likely to drain resources in their quest to locate those willing to buy. Using a target market approach an organization attempts to get the most from its resource by following a planned procedure for identify customers that appear to be the best candidates to respond to the marketer’s message. What is a Market? The simplest way to define a market is to think of it as consisting of all the people or organizations that may have an interest in purchasing a company’s products or services. In other words, a market comprises all customers who have needs that may be fulfilled by an organization’s offerings. Yet just having a need is not enough to define a market. Many people may say they have a need for a California mansion that overlooks the Pacific Ocean but most would not be considered potential customers of a real estate agent who is attempting to sell such a property. So other factors come into play when defining a market. The first factor is that markets consist of customers who are qualified to make a purchase. Qualified customers are defined as those who: • Seek a solution to a need, and • Are eligible to make a purchase, and • Possess the financial ability to make the purchase, and • Have the authority to make the decision. A customer must meet ALL factors listed above, though for some markets the customer may have a surrogate who will handle some of these qualifications for a targeted customer. For instance, a market may consist of pre-teen customers who have a need for certain clothing items but the actual purchase may rest with the pre-teens’ parents. So the parents could possibly assume one or more surrogate roles (e.g., financial ability, authority) that will result in the pre-teen being a qualified customer. A second factor for defining a market rests with the company’s ability to service the market. To an organization a market can only exist if the solutions sought by customers are ones that the company can satisfy with their offerings. If a company identifies a group of customers who are qualified to make purchases they only become a market for the company once the company is in a position to execute marketing activities designed to service those customers. Thus, a market is defined as a group of customers who are qualified to make purchases of products or services that a marketer is able to offer. However, even if an organization can offer products and services to a market, not all markets will fit an organization’s goals and objectives.
With this in mind, we now turn our attention to examining the process marketers follow to choose which markets are best to target with their marketing effort.
III. Target Markets and Market Segmentation:
Because people are different and seek different ways to satisfy their needs, nearly all organizations, whether for-profits or not-for-profits, industrial or consumer, domestic or international, must use a Market Segmentation approach to target marketing. This approach divides broad markets, consisting of customers possessing different characteristics, into smaller market segments in which customers are grouped by characteristic shared by others in the segment. To successfully target markets using a segmentation approach, organizations should engage in the following three-step process. 1. Identify segments within the overall market 2. Choose the segment(s) that fits best with the organization’s objectives and goals 3. Develop a marketing strategy that appeals to the selected target market(s) Step 1: Identify Market Segments The first step in targeting markets is to separate customers who make up large, general markets into smaller groupings based on selected characteristics or variables (also referred to as bases of segmentation) shared by those in the group. General markets are most often associated with basic product groups, such as automobile, beverage, footwear, home entertainment, etc. The purpose of segmentation is to look deeper within the general market in order to locate customers with more specific needs within the product group (e.g., seek hybrid automobiles) AND who also share similar characteristics (e.g., college educated, support environmental issues, etc.). When grouped together these customers may form a smaller segment of the general market. By focusing market research on these smaller segments the marketer can learn a great deal about these customers and with this information can begin to craft highly targeted marketing campaigns. we take the approach that the variables used to segment markets can be classified into a three-stage hierarchy with higher stages building on information obtained from lower stages in order to reach greater precision in identifying shared characteristics. Yet, the more precise a marketer wishes to be with their segmentation efforts the more this process requires sufficient funding and strong research capabilities. For instance, a marketer entering a new market may not have the ability to segment beyond the first two stages since the precision available in Stage 3 segmentation may demand an established relationship with customers in the market. The three-stage segmentation process presented below works for both consumer and business markets (e.g., manufacturers, reseller, etc.), though, as one might expect, the variables used to segment these markets may be different. Each segmentation stage includes an explanation along with suggestions for variables the marketer should consider. This is not meant to be an exhaustive list, as other variables are potentially available, but for marketers who are new to segmentation these will offer a good starting point for segmenting markets.
and understanding local conditions that could impact purchase decisions.g. news media). international). moving beyond Stage 1 segmentation offers a rich amount of customer information that will allow marketers to more effectively and efficiently target customers’ needs. retailer..g. established adults).. international). such as surveying the market.. While Stage 1 segmentation does not offer the segmentation benefits available with higher-level stages. sales volume. Information at this stage includes learning what options customers have chosen to satisfy their needs. wholesaler). manufacturer. growth. income growth... However. may find out brands most frequently purchased) but most of these variables require the marketer to engage in at least casual contact with customers in the market. teens.. location issues) and financial information.g.. gender... young growth. size (e. age (e. young outlets). national. Geographics urban/suburban/rural.Stage 1: Segmentation Variables segmentation consists of variables that can be easily identified through demographics (i. Segmentation Variables Consumer Markets Segmentation Variables Business Markets Demographics type (e. purchasing research reports from commercial research firms or hiring consultants to undertake research projects.g.e. regional. number of retail age group (e.. To segment using Stage 2 variables marketers must use market research techniques that help gain insight into customers’ current purchase situation and the environment in which the customer operates. For both consumer and business segmentation this information focuses mostly on easy to obtain data from such sources as government data (e. especially companies with limited funds or those who feel they need to move quickly to get their product to market. climate ownership (e. financial condition (e.. credit rating. mature) income. This can be done through primary research methods. ethnicity. private versus public. The cost and time needed to acquire this . having sales personnel contact customers..g. will stop the search for segmentation variables at the Stage 1 level.g. trade associations and financial reporting services. geographics (i. regional. retirees.g. cash flow) Stage 2 Segmentation Variables Some firms. Business Arrangement urban/suburban/rural. Marketers might locate some of this information through the same sources used in Stage 1 (e. what circumstances within customers’ environment could affect how purchases are made. census information).g. social class. climate location (e. education level.g.e.g. statistics that describe a population). national.. occupation. the marketer benefits from accomplishing the segmentation task in a short time frame and at lower cost. new.g. Demographics industry. independent versus chain). stock price. marital Geographics status location (e. examining secondary data sources (e.
legal Stage 3 Segmentation Variables Marketers choosing to segment at the Stage 3 level face an enormous challenge in gathering useful segmentation information but. specific feature. psychological) with marketers with whom they are not familiar. many customers are unwilling to share certain personal information (e. situation when . etc. Product Usage how used. property. marketers who already serve the market with other products may be able to use primary research such as focus groups.g. political. Segmentation Variables Consumer Markets Benefits Sought price. observation research and other high level market research techniques. service. in-depth interviews. etc. However to reach the reward the marketer must invest significant time and money to amass the detailed market intelligence needed to achieve Stage 3 segmentation. Segmentation Variables Consumer Markets Segmentation Variables Business Markets Current Purchasing Situation brands used. purchase frequency. Product Usage how used (e. for those who do commit to segmenting at this level. Purchase Conditions Segmentation Variables Business Markets Benefits Sought price. component product. ease-ofuse. current suppliers Purchase Ready possess necessary equipment. segmenting on Stage 3 variables is often not an option for marketers new to a market unless they purchase this access via other means (e. Consequently. Additionally much of what is needed at Stage 3 is information that is often well protected and not easily shared by customers. political.g. promotional assistance. the rewards may include gaining competitive advantage over rivals whose segmentation efforts have not dug this deep. In fact. major selling item at retail level). knowledge and skill sets Local Environment cultural. etc.information may be significantly greater than that of Stage 1 segmentation. profit margins. overall value. purchase frequency..g. To get access to this information. legal Customers Served by the Business identify the business’ market Business’ Perceived Image identify how targeted businesses are perceived by their customers Current Purchasing Situation brands used. situation when used. knowledge and skill sets Local Environment cultural. hire a consultant who knows the market to undertake customer research). specific feature. property.. overall value. raw material.. services. current suppliers Purchase Ready possess necessary equipment.
• Does the company have the necessary skills. influencers on purchase decision. • Undifferentiated or Mass Marketing – Under this strategy the marketer attempts to appeal . • Does the segment meet the mission of the company? The segment should not extend too far beyond the direction the company has chosen to take. makeup of key influencers. etc. set product specifications. etc. bid pricing. how purchase is made. number of members. Characteristics of Individual Buyer purchase experience. Step 3: Develop Marketing Strategy The results of analyzing market segments leads the marketer to consider one of the following target marketing strategies. Step 2: Choosing Market Segments The second step in selecting target markets requires the marketer to critically evaluate the segments identified in Step 1 in order to select those which are most attractive. willingness to assume risk. Purchase Conditions length of sales cycle. So they are often left with using their own intuition or judgment to determine which segments are the most promising. product handling. the results may identify the segments that are primary candidates for current marketing efforts and also present segments that are future targets for the company’s offerings. In determining whether a segment is worthy of being a target market. For small firms this step may not be very involving since they may lack the resources needed to do it effectively. For companies with the time and money to commit to this step. importance of purchase Psychographics personality.time of day/month/year when purchased. • Is the segment showing signs of growth? One of the worst situations for a marketer is to enter a market whose growth is flat or declining. etc. the marketer needs to address the following questions: • Is the segment large enough to support the marketer’s objectives? This is an especially critical question if the marketer is entering a market served by many competitors. and lifestyle combined with demographics used. trade-in option. especially if competitors already exist. credit terms. Once one or more segments have been identified the marketer must choose the most attractive option(s) for their marketing efforts. credit terms. trade-in option. attitudes. otherwise they may face a significant learning curve in understanding how to effectively market to a segment. Characteristics of Buying Center purchase experience. knowledge and expertise to service the segment? The company should understand and be able to communicate with the customers in the segment. At this point the choice becomes the firm’s target market(s).
It has developed over the years into a worldwide multi-billion dollar industry. 90's and today. For most of the twentieth century. Mass marketing is used to effect attitude change to as wide an audience as possible. The underlying concept is that bigger markets can be divided into many sub-markets and an organization chooses different marketing strategies to reach each sub-market it targets. are subject to mass marketing. fizzy drinks and personal computers. Often this would take the form of selling a product like toothpaste. Due to this. These trends are due to corresponding upswings in mass media. major consumerproducts companies held fast to mass marketing..g. since only one product is marketed. Segmentation marketing will be discussed henceforth in detail which is our main topic ..mass producing. Ford Model-T). While this approach offers advantages in terms of lowering development and production costs. Typically. footwear).g. Mass marketing is the opposite of niche marketing. mass distributing and mass promoting about the same product in about the same way to all consumers. Background of mass marketing: Mass marketing or undifferentiated marketing has its origins in the 1920s with the inception of mass radio use. Other products of mass marketing are furniture. which leads to the lowest costs. Mass marketing creates the largest potential market. Even "products" like politicians and services from professions such as law. • Differentiated or Segmentation Marketing : Marketers choosing this strategy try to appeal to multiple smaller markets with a unique marketing strategy for each market. The goal is when a consumer has the option to select a tube of toothpaste that the consumer would remember the product which was marketed. few companies now view this as a feasible strategy. It slowed during the anti-capitalist movements of the 60's and 70's before coming back stronger than before in the 80's. running shoes. the parent of mass marketing. chiropractic and medicine.. artwork. Although sagging in the Great Depression it regained popularity and continued to expand through the 40s and 50s. basketball shoes) within a larger product category (e.to one large market with a single marketing strategy. Most large consumer products firms follow this strategy as they offer multiple products (e. . residential communities. Toothpaste isn't made specially for one consumer and it is sold in huge quantities. While this approach was very popular in the early days of marketing (e. there are few markets in which all customers seek the same benefits. where a product is made specially for one person or a group of persons.g. This gave corporations an opportunity to appeal to a wide variety of potential customers. . things which are perceived to be necessary/essential to the consumer are subject to mass marketing. variety marketing had to be changed in order to persuade a wide audience with different needs into buying the same thing. A company or individual who manufactures toothpaste wishes to get more people to buy their particular brand over another. automobiles.
Online niche marketing:An often used technique for affiliate marketers is Internet-based niche marketing." but still profitable. sports channels like STAR SPORTS. It is primarily used by smaller marketers who have identified small sub-segments of a larger segment that are not served well by larger firms that follow a segmentation marketing approach. increasing competition and thus. referred to as niches..• Concentrated or Niche Marketing – This strategy combines mass and segmentation marketing by using a single marketing strategy to appeal to one or more very small markets. Some are too obscure and may have very few or even no clicks per month. "undiscovered. product vendors and trade businesses are commonly referred as mainstream providers or narrow demographics niche market providers (colloquially shortened to just niche market providers). The concept of niche marketing can be well understood by the following example: A number of television channels cater to the need of a particular niche.g. money saving. This technique is then repeated across several other niche websites until a desired income level is achieved. for example. planet environment conscience. and therefore not much use to target. reduceing the slice of the pie available to each competitor. &c. • Customized or Micro-Marketing This newest target marketing strategy attempts to appeal to targeted customers with individualized marketing programs. and TENS SPORTS target a niche of sports lovers.). This approach requires extensive technical capability for marketers to reach individual customers and allow customers to . a website can be developed and promoted quickly to uniquely serve a targeted and usually loyal customer base. for example). One solution is to find smaller. practicability. These lower cost keywords are called long-tailed keywords. STAR CRICKET. Small capital providers usually opt for a niche market with narrow demographics as a measure of increasing their gain margins. usually by searching out the best keywords to target. A bigger niche is harder to market to as the expense of online advertisements increases according to the popularity of the keywords used (on Adwords. By appealing to smaller segments of larger markets. Some niches may become saturated with marketers. allow customers to “build-their-own” products. In practice. it is associated more with the specific needs that the product is aimed at satisfy and in some cases with brand recognition with which the vendor wants to be associated (e. as in the long tail of secondary keyword phrases that usually follow the main keyword in popularity of number of searches conducted by internet users. ESPN. giving the affiliate a small but regular income stream. In these situations a smaller company can do quite well marketing a single product to a narrowly defined target market. according to the economic law of supply and demand. niches. Nevertheless. to some degree. power. expensiveness. prestige. the final product quality (low or high) is not dependant on the price elasticity of demand. For micro-marketing segmentation to be effective the marketer must.
It requires a great deal of technical capability and the Internet has been a catalyst in the development of this strategy. IV Product Positioning: No matter which target marketing strategy is selected.e. To position successfully the marketer must have thorough knowledge of the key benefits sought by the market. The goal of positioning is to convince customers to believe the marketer’s offerings are different in some way from its competitors on an important benefit sought by the market. the marketer must: 1) tailor marketing efforts to ensure their offerings satisfy the most sought after benefits. reached Stage 3) the more likely they will know the benefits sought by the market. As more companies learn to utilize the Internet micro-marketing is expected to flourish. In particular. but in one market the emphasis is on styling while in another market the . The Internet has been the catalyst for this target marketing strategy. "Micromarketing" was first implemented in the real estate industry and remains imbedded in small personal service based businesses. For instance. Positioning is concerned with the perception customers hold regarding a product or company. build and grow their own brand. Obviously the more effort the marketer expends on segmentation (i. 2) communicate to the market in a way that differentiates the marketer’s offerings from competitors. Micromarketing was a term coined in 1988. Once known. by Ross Nelson Kay.interact with the marketer. segmentation marketing). "Micromarketing" remains the most effective technique for small business users to sustain. For firms that seek to appeal to multiple target markets (i. positioning strategies may differ for each market. it relates to marketing decisions an organization undertakes to get customers to think about a product or company in a certain way compared to its competitors. if a customer has discovered she has a need for an affordable laptop computer. a marketer may sell the same product to two different target markets. a company such as Dell may come to mind since their marketing efforts position their products as offering good value at a reasonable cost. as a marketing technique used to describe a form of "Target" marketing that was more precise and focused than typical "Niche" Marketing techniques. For example. The process of customizing pricing policies at the individual store level is known as micromarketing.e.. Standard pricing policy ignores the differences in customer segments of specific stores within a regional chain of stores.This marketing strategy tries to appeal to specific customers or customer segments. the overall marketing strategy should involve the process of positioning the firm’s offerings in ways that will appeal to targeted customers. "Micromarketing" became functionally viable with the proliferation of affordable home computers capable of "tablizing" data in a format that could be tracked and altered by a single user..
One group within the market may be identified by gender. For businesses: • Strategic . For example. as is income level and education level. accounting. These subgroups of consumers can be identified by a number of different demographics. Marketing campaigns are often designed and implemented based on this type of customer segmentation. Examples might be. The purchase decision for this category of offering will be made by the prospect's top level executive management. depending on the purposes behind identifying the groups. an employee insurance plan or a corporate wide communications system. etc. • Functional . The following classifications may help. Location is another common component in market segmentation. One of the main reasons for engaging in market segmentation is to help the company understand the needs of the customer base.your offering is in some way important to the enterprise mission. manufacturing.your offering deals with a specific function within the enterprise such as data processing. Market segmentation is a strategy that involves dividing a larger market into subsets of consumers who have common needs and applications for the goods and services offered in the market. there will be at least a few established customers who fall into more than one category. while another group may be composed of consumers within a given age group. but marketing strategists normally allow for this phenomenon. human resources. plant maintenance. Uncovering these other ideas for use of goods and services may help the company target a larger audience in that same demographic classification and thus increase market share among a specific sub market base.emphasis is on ease-of-use benefits. engineering design. Generally. This is the most likely domain for a product or . Often the task of segregating consumers by specific criteria will help the company identify other applications for their products that may or may not have been self evident before. • Operations . This purchase decision will be made by the prospect's top level operations management. a service that helped evaluate capital investment opportunities would fall into this domain of influence. Market segmentation strategies can be developed over a wide range of characteristics found among consumers.your offering affects the general operating policies and procedures. Category of Need: The first thing you can establish is a category of need that your offering satisfies. objectives and operational oversight. inventory control. The important point is that the overall market strategy must be evaluated for each target market since what works well in one market may not work as well in another market.
This purchase decision will be made by the prospect's functional management. • Functional . . f)Improved employee working conditions/benefits Prospects might be businesses where potential employees are in short supply. breakfast cereal or lawnmower.service. businesses that have recently experienced depressed earnings or individuals with large families. Segmentation of Needs: Then you should establish what the need is and who is most likely to experience that need. businesses that have traditionally high inventory costs or individuals that live in expensive urban areas. For the individual consumer: • Social Esteem or Pleasure . e)Improved service delivery Prospects might be service businesses in highly competitive markets. Your segmentation will be determined by a match between the benefits offered by your offering and the need of the prospect. g)Improvement in market share/competitive position Prospects might be new entrants to a competitive market. d)Improved manufacturing quality Prospects might be businesses with complex.your offering meets a functional requirement of the consumer such as a broom. businesses that have products in the mature stage of their life cycle or individuals with credit rating problems. b)Improved cash flow Prospects might be businesses that have traditionally low profit margins. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well). product businesses requiring considerable post-sale support or individuals in remote or rural areas. Examples are a mink coat or a diamond ring. Some "need" categories for segmentation include: a)Reduction in expenses Prospects might be businesses that are downsizing (right sizing). but you must recognize that the other domains may also get involved if the purchase of the product or service becomes a high profile decision. multi-discipline manufacturing processes.your offering satisfies a purely emotional need in the consumer. c)Improved productivity Prospects might be businesses that have traditionally low profit margins.
etc. requires significant resources or provides greater value based on volume. or individuals who believe in say 'no' to drugs. For businesses: a)Industry by SIC code This is especially beneficial for vertical market offerings. c) Climate Examples of offerings might be dehumidifiers in areas near the ocean or snow plows in northern areas.revenues. locations In general if your offering is highly sophisticated. economy. etc. i)Involvement with social trends Prospects might be businesses concerned with environmental protection. j)Specific . comfort. etc. then the target should be the larger enterprises.relating to product/service characteristics Prospects might be businesses or individuals interested in safety. employees. There are literally thousands of ways to segment a market. Size .h)Need for education Prospects might be businesses or individuals looking for books on business planning. . security. etc. employee security. or seminars on Total Quality Management. Factors that segment prospects Having determined the more general segmentation characteristics you can proceed to a more detailed analysis of the market. speed. e)Language An example of a language specific service is a Spanish TV channel. quality. but the following are some of the more typical segmentation categories. f)Status in the industry You might want to target businesses that are the technology leader or revenue leader or employee satisfaction leader. b)Job position/responsibility Examples of offerings might be planning software for managers or cleaning agents for maintenance managers. durability. d)Time related factors Some services in this category are vacation related industries in summer and tax planners in the spring. anti-crime.
g)Accessibility To minimize promotion and sales expense you may want to target urban rather than rural or local rather than national prospects. k)Need for customization Offerings such as police cars. i)Ability to make a quick purchase decision Targeting individual purchasers versus business committees can significantly reduce marketing expense and increase the probability of a quick close. etc. etc. Jurassic Park T-shirts. j)Access (or lack of access) to competitive offerings Cable TV business's significant investment in their service delivery system has allowed a near monopoly for some time. e)Demographics/culture/religion Ethnic products would fall into this category. physical fitness. accounting. fur coats in Alaska. d)Time related factors You may be able to target vacationers in summer. impulse buyers during the holidays or commuters at 7AM. busses for municipalities and specialized computer systems fall into this category. b)Creation of or response to a fad Examples are hula hoops. For Individual Consumers: a)Physical Size Offerings might be big men's clothing. human resources and plant maintenance. c)Geographic location Marketers take advantage of location by selling suntan lotion in Hawaii. golf clubs for shorter players. l)Product or service application to a business function Examples are data processing. . etc. pet rock. h)Future potential A good example is how Apple Computer supplied products to schools at all levels to condition students graduating into the marketplace. IBM's service reputation insured minimal competition during the mainframe days.
m)Access (or lack of access) to competitive offerings Due to high investment capital requirements or timing of market entry you may be able to capture a significant market share in a specific geographical area. jewelry for women. j)Avocation This could include products for hunting. etc. people who read Wall Street Journal. l)Accessibility Because the individual is more difficult to reach you may want to segment by urban versus rural. Examples might be a trash service. fashion wear. carpenter's tools. etc. q)Degree of a product/service ingredient Segmentation based on prospect preferences is common. etc. knitting. art work. etc. jazz music collectors. p)Need for quality. train commuters. light chocolate for others. A product might be books on how to start a business or a service might be seminars on how to quit smoking. . k)Special Interests You could target cat lovers. etc. An example is dark chocolate for some tastes. ties for men.f)Gender Product examples are scarves for women. o)Need for customization Product/service examples are home decoration. h)Social status This could include country club memberships. science fiction readers. personal portraits. durability Product examples are mountain climbing gear. g)Age Product examples are toys for children. emergency medical support. etc. philanthropic contributions. i)Education Product and service examples are encyclopedias. golf. n)Need for specific information Based on features or content of your offering you can target a market segment. etc. fishing. etc. scientific calculators. etc. learning to read tools and financial counseling.
the more difficult the sale. Some of these are: a)Preference for channel of distribution Many prospects prefer to buy through a specific distributor or wholesaler. then you can consider more subtle influences on the purchase decision. c)Financial strength of the prospect Less affluent prospects may desire time payments versus a cash purchase and Chevrolets instead of Cadillacs. Car purchases are more complex because the purchase decision normally involves a husband and wife. equipment. A business often has a preference so they can have a single communication point for all purchases. but not a lot. personnel and complementary products/services. b)Number of decision makers When selling to consumers or businesses. facilities. d)Quantity/volume requirements Restaurants will want large jars of pickles while individuals want small jars. This also often results in lower purchase prices. the more individuals or groups involved in the purchase decision. g)Brand awareness/users Examples are prospects who ask for IBM compatible PC's or Pitney Bowes mailing machines or Winnebago R. an individual prospect may immediately think of Wal-Mart or Home Depot when considering an offering like yours. resources or money by the customer then the target should be prospects who 'really need' the offering rather than prospects who get some.V. as well as. The prospect should have knowledge and resources such as time.s . Marketing costs for selling bread can stay low because one person normally makes the purchase decision. economic reasons. f)Commitment required If the offering requires a high commitment in terms of time. For individuals this may be due to subtle.Purchase decision influencers: Once you have isolated a specific segment of the market on which to focus. of benefits. Businesses use large amounts of electricity at predictable times. For example. e)Ability to use the offering Trying to sell to a prospect who lacks either the knowledge or resources to properly benefit from your offering will result in a 'no sale' situation or an unhappy customer. Business sales to committees often require months to achieve a decision.
c)Customer service capabilities Prospects like to know that they can depend on post sale support from the product or service provider. If an enterprise could say. franchisors. a)Unique employee skills. entrepreneurs. If you can determine the characteristics your prospects most value in an enterprise they purchase from. I want a car with a 'solid' feel. you can identify those your organization possesses and promote them to the prospect. IBM computers. AMA. "We have more service outlets in New Hampshire than any competitor" will help secure sales.S. attorneys. . etc. j)Experience with other products/services your enterprise has offered You are looking for a reaction like "I liked your first product so I'll try your second. For example if an enterprise could sat. the XYZ video stores give us more shelf space than any competitor" prospects will likely respond positively. large print playing cards. b)Special relationships with distribution channels Product or service accessibility is a critical factor in sales success. i)Attitude toward price versus value For example. IEEE. Chamber of Commerce. A statement like. etc. l)After sale support expectations It is often beneficial to target prospects who have enough expertise that they will require a minimum of after sale support. Seller Characteristics that can influence purchase decision: Another form of influence is how the prospect perceives your offering and/or enterprise. doctors. purchasers of collectors items aren't price sensitive while purchasers of commodity items are price sensitive. fast cars. knowledge Extensive experience with a specific market segment or field of scientific inquiry can be a powerful promotional tool. etc. "Due to a unique relationship." Prospect bias Examples are. 'Buy USA'. Michael Jordan tennis shoes. sweet wines. pastors. "Our scientists knows more about corn silk genetic structures than anyone in the world" they would have a strong sales statement.h)Attitude toward a personality or enterprise Reputation helps sell AT&T long distance service. k)Affiliation with other organizations Such as the U.
Ultra Conservative . given the characteristics of your offering.don't rock the boat. what type of decision maker will most likely be interested in purchasing from you.d)Unique product forms Credible uniqueness such as. "Our product is the only one that offers dynamic digi-whirling" is appealing to the market. "We are the only enterprise that can manufacture molecular engineered widgets". • They are most likely interested in products/services that are improvements to existing offerings rather than something new. but will gravitate to best known offering with lowest risk decision. a point to consider is. • Cost effective offerings are only of interest if they don't disturb the status quo.are willing to change. More likely to purchase improvements to existing offerings. • Negative to neutral when considering technically complex offerings or offerings requiring extensive user education. whatever they purchase must be consistent with their current way of doing things. • Very negative to technically complex offerings or offerings requiring extensive user education. • Will consider new products/services but only if related concept has been proven to be effective. if your sales personnel are sensitive to these characteristics it can strongly influence your sales strategy.Regularly looking for new solutions. f)Longevity Reliability is important. but only in small increments and only in a very cost effective manner. • They are likely to react positively to any volume purchasing opportunities. • Strongly influenced by cost effective offerings and/or 'best price' opportunities Liberals . so you can count on us to be there when you need us" is usually a strong selling point. • Will probably want to review competitive offerings. A statement like. g)Purchase Decision Makers classification Finally. e)Manufacturing expertise The market is always interested in purchasing from the "best". "We have been in business for 50 years. they have created an image of being the "best". It may be beneficial to rank your prospects based on the following classifications. Conservatives . • Once established as a customer they are seldom inclined to review alternatives. While you may not be able to make this classification of the prospect prior to the first contact. willing to make change (even major change) if the . If an enterprise can confidently state.
even if there is some risk involved. but is not interested in offerings just because they use a certain technology. Self Helpers . but the related concept must have been proven to be effective. likes to acquire tools that help in the innovation process. • Will usually consider new products/services. • Positive to fanatic when considering technically complex offerings even when requiring extensive user education. . even if they are not the most cost effective. • Neutral to positive when considering technically complex offerings or offerings requiring extensive user education. • Consider themselves technically competent and will expect leading edge use of technology. • Often are on social trend bandwagons so react positively to offerings that address these needs. • Usually consider new products/services even if the related concept has not yet been proven to be effective. but will usually choose the one offering the most effective 'do it yourself' features. • Will always want to review competitive offerings. • Wants offerings that make effective use of technology. • Usually concerned with keeping employees informed and educated. so will often consider educational offerings. even if there is some risk involved.consistently defines/designs solutions to their problems. • Often consider just because they use a certain technology.benefit can be shown. • Often consider just because they use a certain technology that is relevant to the development program they have underway. but will usually choose the one offering the greatest benefit. • Will always want to review competitive offerings. but will usually choose the one offering the most hi-tech features. • Strongly influenced by offerings that most closely deliver the 'end results' desired. • Not particularly concerned with keeping employees informed and educated. • Strongly influenced by offerings that most closely deliver the 'end results' desired. but only if the potential benefits can be specified and understood. Technical Liberals . even if they are not the most cost effective.enamored with the benefits provided by high tech solutions and any purchase decision will be biased by the technical content of the offering. so educational offerings are not of great interest. • Will usually consider new products/services even if the related concept has not yet been proven to be effective. • Will always want to review competitive offerings. • Conversion costs usually not a major concern if technical benefits are there.
so educational offerings are of interest. business.• Usually consider themselves technically competent and will expect very effective use of proven technology. integrated approach to brand intelligence combines the best of qualitative methods. • Usually concerned with keeping employees informed and educated. and retention. profitability. Segmentation Studies for consumer. offerings. and health care markets Market Segmentation Services provides fresh. • Conversion costs usually not a major concern if offering promises potential for innovation. but thought provoking. selection. and advanced quantitative analytics to provide you with actionable real world results that can be used to add customer value across your entire enterprise. perspectives for increased customer identification. . • Not especially inclined toward technically complex offerings. would rather have user friendly.
Café • H&LS . is a measure of market segmentation.Financial Services Sector • HoReCa .Information & Communication Technology • RPO . Home Office • VSB . is a comparative measure of the degree of monopoly power in two distinctive markets for products that have the same marginal costs.Business Process Outsourcing • Comms . greater is the degree of monopoly power in that market and therefore higher is the degree of market segmentation.Recruitment Process Outsourcing Market Segmentation Index: Market Segmentation Index or Celli Index of Market Segmentation. C is the Market Segmentation Index (MSI).Fast Moving Consumer Goods • FSS . which measures the degree of segmentation of the producing country in .The degree of market segmentation is defined as the degree of monopoly power of the producing firm or exporting country.Lifestyle of voluntary simplicity • SAM .Very Large Enterprise Market/product segments • BPO .Do It Yourself market • FMCG .Segmented Addressable Market • VLE .Values Attitude and Life-Styles • LOHAS .Very Small Business • SMB . named after the Italian economist Celli G.Hotel.Communications Sector • DIY . GianLuca. Restaurant.Double income no kids • SOHO .Terms for market segments: some market segments are referred to by acronyms List of abbreviations for market segments Customer segments • DINKY .Small Office.Small Medium Business / SME . Higher is the average unit value (AUV) of the same product sold in the primary market compared to the benchmark market.Small and medium enterprise • VALS .Lifestyles of Health and Sustainability • LOVOS . p ≠ s (1) Pp and Ps are respectively the prices the producing country set in the primary market (primary market or market of interest) Mp and the secondary market (benchmark) Ms.Health and Life Sciences • ICT . Pp/Ps = C. This Index.
This result confirms the validity of the Market Segmentation Index. Proposition 2 If C < 1 then a monopolist country has an lower degree of monopoly power in segment Mp than segment Ms and therefore this country has a greater incentive to specialize in Ms. Proposition 3 If C ≈ 1 then a monopolist country experience no difference in the degree of monopoly power between segment Mp and segment Ms and therefore this country has no monopolistic incentive to specialize in either markets. The MSI was extrapolated from the Lerner Index of market power in the form L=(P-MC)/P in the case of multiple market segments. which is a comparative measure of the degree of monopoly power in two distinctive markets for products that have the same marginal costs. From Learner Index to Market Segmentation Index (MSI) Assumption 1: Marginal costs for the monopolist firm are the same for every market segment Applying Lerner index L=(P-MC)/P to two distinctive market segments we get the degree of monopoly power in market segment Ms as Ls=(Ps-MC)/Ps and Mp as Lp=(Pp-MC)/Pp.the two markets. for segments to be practical they should be evaluated against the following criteria: . Requirements of Market Segments In addition to having different needs. Propositions • 1 Proposition 1 • 2 Proposition 2 • 3 Proposition 3 Proposition 1 If C > 1 then a monopolist country has a higher degree of monopoly power in segment Mp than segment Ms and therefore this country has a greater incentive to specialize in Mp. The result says that when the price in the primary market is strictly greater than the price in the secondary market then the Lerner's Index is higher in the primary market and therefore the Market Segmentation Index would also be higher for the primary market. Ps is the price charged in Ms while Pp is the price charged in Mp.
It is often defined by age. and dislikes.• Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified. • Accessible: the segments must be reachable through communication and distribution channels. types of communities. may also be interested. It is essential to become familiar with your target market.) A certain combination. (ex: teenagers. or target group is the primary group of people that something. • Substantial: the segments should be sufficiently large to justify the resources required to target them. marital status. • Unique needs: to justify separate offerings. to know exactly who you are marketing to and the specific fondness of that market. geographic scale. work force . Without knowing the target audience. Target audience: In marketing and advertising. Market Targeting is the process in which intended actual markets are defined. and as different as possible between segments. Target Market: A 'target market or target Audience is the market segment which a particular product is marketed to. likes. Target Audiences are set to focus on different groups: Adults. usually an advertising campaign. tweens and children. gender. teens. locality. although not the main focus. etc. To better become acquainted with the ins and outs of your designated target market legend a market analysis must be completed. like men from twenty to thirty is often a target audience. a target audience. assortment. A target audience can be people of a certain age group. and in the different types of merchandise sold and because of the many variations included in a market it is essential. is aimed at appealing to. • Durable: the segments should be relatively stable to minimize the cost of frequent changes. as similar as possible within the segment. a company's advertising and the selling efforts can become difficult and very expensive. etc. single people. behaviors. Other groups. since you cannot accommodate everyone’s preferences. their habits. females. purchase. that is. Markets differ in size. Discovering the appropriate target market(s) to market a product or service to is one of the most important stages involved with market research. A market analysis is a documented examination of a market that is used to enlighten a business’s preparation activities surrounding decisions of inventory. analyzed and evaluated just before the final decision to enter is made. gender and/or socio-economic grouping. A good market segmentation will result in segment members that are internally homogenous and externally heterogeneous. the segments must respond differently to the different marketing mixes.
Customer behaviour study is based on consumer buying behaviour. Social functions can be categorized into social choice and welfare functions. describe your preferred target market. both individually and in groups. sociology. promotional activities. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. facility expansion. purchasing. It also tries to assess influences on the consumer from groups such as family. and disposing of products and services so as to satisfy their needs and desires'. It blends elements from psychology. selecting. with the customer playing the three distinct roles of user. payer and buyer. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. why. Belch and Belch define consumer behaviour as 'the process and activities people engage in when searching for. and society in general. and to improve daily operations and many other aspects of a business. customisation and one-to-one marketing. Consumer behaviour: Consumer behaviour is the study of when. Once you have done your market analysis. how. personalisation. Your description should include the information you have gathered during your market analysis. It attempts to understand the buyer decision making process. in detail. customer relationship management.' Contents [hide] • 1 Black box model • 2 Information search • 3 Information evaluation • 4 Purchase decision • 5 Postpurchase evaluation • 6 Internal influences • 7 External influences Black box model ENVIRONMENTAL FACTORS Marketing Stimuli Product Price Place Promotion Environmental Stimuli Economic Technological Political Cultural Demographic Natural BUYER'S BLACK BOX Buyer Characteristics Attitudes Motivation Perceptions Personality Lifestyle Knowledge Decision Process BUYER'S RESPONSE Problem Product choice recognition Brand choice Information search Dealer choice Alternative Purchase timing evaluation Purchase amount Purchase decision .expansion/contraction. and where people do or do not buy products. friends. A greater importance is also placed on consumer retention. evaluating. reference groups. purchases of capital equipment. social anthropology and economics. using.
motives and experiences . . in which it is assumed that the buyer has recognized the problem. and interprets information to create a meaningful picture of the world' The selective perception process Stage Description . selects.  Information search Once the consumer has recognised a problem. Sources of information include: • Personal sources • Commercial sources • Public sources • Personal experience The relevant internal psychological process that is associated with information search is perception. attitudes. The buyers black box contains the buyer characteristics and the decision process.  Purchase decision Once the alternatives have been evaluated. political and cultural circumstances of a society. they search for information on products and services that can solve that problem. Perception is defined as 'the process by which an individual receives. and select which sources of information are more effective for the brand. However. The marketing stimuli are planned and processed by the companies. organises. based on the economical. which determines the buyers response. Belch and Belch (2007) explain that consumers undertake both an internal (memory) and an external search. rational decision process. consumer characteristics. whereas the environmental stimulus are given by social factors. but the relation between the stimuli and the response of the consumer.CV  Information evaluation At this time the consumer compares the brands and products that are in their evoked set. . The black box model considers the buyers response as a result of a conscious. The marketing organization needs to understand what benefits consumers are seeking and therefore which attributes are most important in terms of making a decision.Selective comprehension consumer interpret messages in line with their beliefs.Selective exposure consumers select which promotional messages they will expose themselves to. in reality many decisions are not made in awareness of a determined problem by the consumer.Post-purchase behaviour The black box model shows the interaction of stimuli. the consumer is ready to make a purchase decision.Selective attention consumers select which promotional messages they will pay attention to . where the focus is not set on the processes inside a consumer. How can the marketing organization increase the likelihood that their brand is part of the consumer's evoked (consideration) set? Consumers evaluate alternatives in terms of the functional and psychological benefits that they offer.Selective retention consumers remember messages that are more meaningful or important to them The implications of this process help develop an effective promotional strategy. The black box model is related to the black box theory of behaviourism. decision process and consumer responses. It can be distinguished between interpersonal stimuli (between people) or intrapersonal stimuli (within people).
ethnicity.) because the ". royalty. beliefs. and feelings. especially in sales and marketing. insurance firms. The marketing organization must facilitate the consumer to act on their purchase intention.cost of retaining an existing customer is far less than acquiring a new one. most businesses create their own segmentation scheme to meet their particular needs. is a business term used to describe loss of clients or customers. Then after having made a purchase. and alarm monitoring services. Customer attrition Customer attrition. but is likely to switch brands next time. EBITDA. motivation.. Internet service providers. it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. or a sales promotion such as the opportunity to receive a premium or enter a competition may provide an incentive to buy now. psychographics (lifestyle). knowledge. locality." Companies from these sectors often have customer service branches which attempt to win back defecting . pay TV companies. may feel that an alternative would have been preferable.Sometimes purchase intention does not result in an actual purchase. Further complications include role of financing. consumer behaviour concern with consumer need consumer actions in the direction of satisfing needs leads to his behaviour behaviour of every individuals depend on thinking process  External influences Consumer behaviour is influenced by: culture. The provision of credit or payment terms may encourage purchase. family. and market mix factors. telephone service companies. also known as customer churn. attitudes.  Internal influences Consumer behaviour is influenced by: demographics. While government agencies and industry associations use standardized segmentation schemes for statistical surveys.it is not effected by advertisement. Market segmentation for differnent types od products: Industrial market segmentation Industrial market segmentation is a scheme for categorizing industrial and business customers to guide strategic and tactical decision-making. segmenting industrial markets is different and more challenging because of greater complexity in buying processes. personality. In these circumstances that customer will not repurchase immediately. reference groups. and the complexity of industrial products and services themselves. having bought a product. the customer should be encouraged that he or she has made the right decision. contracting. or customer defection.. etc. often use customer attrition analysis and customer attrition rates as one of their key business metrics (along with cash flow. social class. Banks. buying criteria. The customer. customer turnover. and complementary products/services. This arises from a concept that is known as “cognitive dissonance”. To manage the post-purchase stage. lifestyle.sub-culture.  Postpurchase evaluation It is common for customers to experience concerns after making a purchase decision. While similar to consumer market segmentation. The relevant internal psychological process that is associated with purchase decision is integration.
high growth developing markets such as India and China are experiencing churn rates between 3% to 4% per month..." The argument is that to build an ". one may apply statistical methods to develop nonlinear attrition causation models. because customer retention is an essential part of most financial services' business models. Customer attrition merits special attention by mobile telecom service providers worldwide. Some companies want to prevent their good customers from deteriorating (e. customer attrition could be better managed to stem the significant revenue loss from defecting customers. This is due to the low barriers to switching to a competing service provider especially with the advent of Mobile Number Portability (MNP) in several countries. By deploying new technologies such churn prediction models coupled with effective retention programs. including retailing. and other factors into account. and customer referrals..effective customer retention program. by falling behind in their payments) and becoming less profitable customers. the higher volume of service consumption. Research on customer attrition Scholars have studied customer attrition at European financial services companies. and investigated the predictors of churn and how the use of customer relationship management (CRM) approaches can impact churn rates. The International Customer Service Institute has developed The International Customer Service Standard to strategically align organizations so they focus on delivering excellence in customer service. One researcher notes that ". One of the main objectives of modeling customer churn is to determine the causal factors.. so that the company can try to prevent the attrition from happening in the future.identify the customers with high risk of leaving" by accurately predicting customer attrition. so they introduced the notion of partial customer churn. Other sectors have also discovered the power of predictive analytics.. whilst at the same time providing recognition of success through a 3rd Party registration scheme .why customers leave" and "... Research on customer attrition data modeling may provide businesses with several tools for enhancing customer retention.. This model can take demographic characteristics.. environmental changes. While mature markets with high teledensity (phone market penetration) have churn rates ranging from 1% to 2% per month. Using data mining and software.retaining existing customers is more profitable than acquiring new customers due primarily to savings on acquisition costs. Several studies combine several different types of predictors to develop a churn model. This allows customers to switch to another provider while preserving their phone numbers. because recovered long-term customers can be worth much more to a company than newly recruited clients.clients. telecommunications and pay-TV operators." managers have to come to an understanding of ". Industry applications of customer attrition ndustry applications Financial services such as banking and insurance use applications of predictive analytics for churn modeling.g.  Reducing customer attrition There are organizations that have developed international standards regarding recognition and sharing of global best practice in customer service in order to reduce customer attrition .
at least in part. They need it in their work and therefore are willing to pay a price. NOKIA: Nokia cell phones have been arranged into four different categories. it would prioritize connectivity (as in internet connections.nz/ • Canada: http://www. examples of different types of segmenatation 1. National census information is available from. counties. Business phones can be distributed in slightly different ways than normal.gov.statistics.gov/ • United Kingdom: http://www.gov.au/ • New Zealand: http://www. The four categories are Multimedia. need etc. Each of these units caters to a different market segment and has a different target audience.govt.census. WAP. in suburbs. each of these units sets out from a different starting point. appearance or functionality. according to use. Bluetooth etc. price. and so on.Geographic segmentation: It is well known that people with similar demographic and psychographic characteristics tend to live nearby. Here for this exercise. Business. developing the functions that business users use is more important for the E-series product development than the N-series. I shall evaluate these different business units in relation to the 4Ps model of marketing. for example.uk/ • Australia: http://www.statcan. but when choosing which they want to pay for. The business unit phones are most likely to be priced according to the value-based method. by the employer which allows for a bit higher price. That is not to say that business users are not interested in the appearance of their phone. even if it is higher. states.stats. Lifestyle and Connect and each category contains several different phone models.ca/ . • National census data: National census includes various demographic and psychographic information on residents of geographical segments: median income. Segmenting markets along geographical boundaries can lead to more specialized and focused marketing approaches.) and time management applications such as the calendar. countries.abs. age. education.. 1) In what way are the 4P issues different in Nokia's different mobile phone business units? The business units were created as a means of product segmentation. shires. environment. This is in part due to similarities in demographic and psychographic characteristics of residents. People living within the same geographical boundaries often exhibit similar buying patterns. This phenomena is further enforced by local weather. The business phone development unit would not consider appearance and fashion-forwardness as its first priority. Also often business phones are paid for. etc. and cultural differences. because most of these users are not buying it for status or psychological reasons. Geographic segmentation can use the following information. which is targeted at an audience of young users who want to use their phones to connect to the "wireless world" and also as a multimedia unit which allows seamless use between the phone and the pc.Market segmenatation by differnent manufactures. Concerning product development.. • United States: http://www. Therefore. regions. they choose functionality. to make working easier.
Certain geographic information may be used in segmentation.net/ • Geographic Information Systems (GIS): These are digital mapping systems containing geographic data allowing manipulation of data. • Customer Profiling Profiling customers (or equivalents) can be used to identify geographic segments. Segmentation can also reveal information for advertisement media. and so on. • Catalog sales: In catalog sales direct marketing. average temperature. survey may be used to collect profiles. • Neural Clustering .) The sole purpose is to identify geographical segments that have similar properties as the ones that sell well. Replacing the "Segment" variable with geographic regions. • Shop outlets: Locations for new shop outlets can be identified. Geographic Segmentation Techniques and Methods Geographic segmentation is mainly used for mass marketing.censusindia. develop profiles from customer profiles. military can find new recruits more efficiently. Trend Analysis and Monitoring for Geographic Segmentation Geographical segmentation can be applied to Trend Analysis and Monitoring. First. sales revenue trends by geographic segments can be monitored. • Advertising: Areas for advertisement can be identified. If there is no customer profile database readily available. Focusing on geographic segments with such profiles. rainfalls. past purchasing behaviors. as opposed to one-to-one marketing. Introducing different products for different geographic segment can bring more sales! • Military recruitment: Military recruits have certain demographic attributes. generally demographic information of customers is not available. customer profiling and neural clustering techniques can be applied. The followings are geographic segmentation examples. • Product selection: Different geographic segments have differing consumption patterns. Then use the profiles to identify cities and suburbs from census and GIS systems. and products they bought can be added to geographical segmentation processes. For example.• India: http://www. Examples of Geographical Segmentation Geographical segmentation can be used for various purposes. Census information derived from geographic data can be used to develop better customer segmentation and predictive models. (Note that one-to-one marketing techniques are described in Database Marketing and Direct Marketing. For example. the following report shows segment trends for profits and revenues. More important use of GIS system is plotting results of geographic segmentation on a map so that important geographical clusters can be identified. To this end. • Customer behavioral information: Customer density.
films. Then combined information can be used to neural clustering tools to obtain geographic segmentation. We have also seen the introduction of unisex cosmetic products like CK1 which works on the similarities between the two genders. clothing and magazine industry. Gender segmentation is commonly used within the cosmetics. cars. since they have the similar properties as the one that sell well! Demographic Segmentation Demographics originates from the word ‘demography’ which means a ‘study of population’.maxim-magazine. and family lifecycle amongst other variables. for example. toys for children. some organisations develop specific products aimed at particular age groups for example nappies for babies. The population can be divided into age. All Bar One within the UK have developed their bars to attract the female audience. zip code. gender. income.uk) a male lifestyle magazine covering male fashion. taking opportunity of the rise in the number of women who now enjoy ‘social drinking’. (www. Age & lifecycle segmentation: As people age their needs and lifestyles . sports and technology. In the UK we have also seen the introduction of Maxim.co. Geographic segments that belong to the same clusters with the ones that sell well. As people age their needs and wants change.Census and customer data can be merged along geographic variables. will be the segments for marketing focus. clothes for teenagers and so on.
psychographic variables are any attributes relating to personality.those who buy one brand all or most of the time . behavioral variables (such as usage rate or loyalty).are valuable customers.which means that customers need to be recruited again every year. Behavioural segments can group consumers in terms of: Occasions When a product is consumed or purchased. Stores like Harrods. JMC and First Choice have very low levels of customer loyalty . Harvey Nicohals are predominantly aimed at the affluent market. niche operators such as Laskarina which has customers who have traveled with the brand in each of the last 15-20 years. They can be contrasted with demographic variables (such as age and gender). An excellent example is the toothpaste market where research has found four main "benefit segments" . Airtours. For example. and social research in general. medicinal. the 18-30's singles. attitudes. More recently.economic. Compare this with specialist. and firmographic variables (such as industry. Activities. Daewoo aim their vehicles at price sensitive buyers who require a bundle of benefits for the price. cosmetic and taste. Benefit segmentation requires Marketers to understand and find the main benefits customers look for in a product. Psychographic In the field of buzzwords. values. They are also called IAO variables (for Interests. market segmentation . medium and heavy user groups Loyalty Loyal consumers . In today's globally competitive environment brands are specifically developed and positioned within particular income segments inorder to maximise turnover. seniority and . opinion research. Benefits Sought An important form of behavioural segmentation. use or know of a product. demographics. and Opinions). Many companies try to segment their markets into those where loyal customers can be found and retained compared with segments where customers rarely display any product loyalty. The holiday market is an excellent example of this. Income segmentation is another strategy used by many organisations. Usage Some markets can be segmented into light. marketing. Products and services are also aimed at different lifecycle segments. interests. The "mass-market" overseas tour operators such as Thomson. or lifestyles. Holidays are developed for families. cereals have traditionally been marketed as a breakfast-related product.change. anytime snack food. Kelloggs have always encouraged consumers to eat breakfast cereals on the "occasion" of getting up. and for those in their 50's.behavioural segmentation Behavioural segmentation divides customers into groups based on the way they respond to. they have tried to extend the consumption of cereals by promoting the product as an ideal.
While all other generations are defined by psychographic variables. The traditionally defined "Baby Boom Generation" has been the subject of much criticism because it uses demographic variables where it should be using psychographic variables. • Doctors & Healthcare identifies two consumer groups: those who regularly go to the doctor… and those who do not. proprietary segmentations can also be custom-designed based on a marketer's unique needs. Psychographics are often confused with demographics. Some categories of psychographic factors used in market segmentation include: • Activity.functional area). Marketers can also partner these segmentations with demographic and behavioral data to refine marketing strategies and campaigns. This confusion can create fundamentally flawed definitions. Marketers can use these consumer segmentations to fine-tune their targeting. • Eating & Nutrition explores the relationships consumers have with food and how it fits into their daily lives. • Interest in Automobiles identifies automotive enthusiasts. MRI’s 22 psychographic segments include: • Banking Methods looks at four styles of transactions with banking institutions. When a relatively complete profile of a person or group's psychographic make-up is constructed. • Cooking & Food Shopping looks at the cooking of food and the shopping that goes along with it. Psychographic profiles are used in market segmentation as well as in advertising. • Greenevaluates the values. or uncover new growth opportunities. Through MRI. • Diet Control groups consumers based on their various approaches to diet. attitudes and behaviors underlying consumers’ relationship with the environment. For example. • Buying Styles focuses on different methods and styles of shopping. Media Mark intelligence group(MRI)MRI offers twenty-one consumer segmentations – derived from the Survey of the American Consumer – which provide marketers with actionable insight into consumer attitudes and behavior. the old Boomer definition is based on a demographic variable—the fertility rates of its parents. MRI's segmentations cluster consumers into distinct groups based on their answers to corresponding batteries of attitudinal questions. and cultural touchstones.the people other people come to . Interest. personality formation. • Civic & Political Engagement helps marketers understand the dynamics and motivations of American adults not just as consumers--but also as citizens. • Consumer Innovators identifies early adopters of new products. enhance their customer profile. this is called a psychographic profile. historical generations are defined by psychographic variables like attitudes. Opinion (AIO) • Attitudes • Values Psychographics can also be seen as an equivalent of the concept of "culture" as used most commonly in national segmentation.
Christmas cards. by political affiliation. Some products are sold only at certain times of the year (e. You are only limited by your marketing imagination. • Vacation Preferences focuses on the different ways people approach “enjoyment” while on vacation. values. • Travel Planning explores how different groups of travelers plan their trips.. by universities attended. • Responsiveness to Ads Across Mediaclassifies consumers according to their interest in advertising across different media. and life stage. to pet stores under another brand name. • LeisureStyles looks at the different ways people use their personal time. or a hair shampoo sold only through upscale beauty salons. Media Segmentation While not common. and baseball in the spring and summer (or at least this used to be the pattern). and to veterinarians under yet another brand name. by sports team loyalties. • Money Borrowing identifies consumers based on their attitudes toward borrowing money. If a brand pours all of its budget into one media. to mass merchandisers under another brand. magazines. In addition to the foregoing. • Newspaper Readers looks at the different ways American consumers use newspapers in their daily lives. Distribution Segmentation Different markets can be reached through different channels of distribution. • Technology focuses on the different ways consumers relate to technology. cranberry sauce). This type of distributional segmentation is common. newspapers. media segmentation is sometimes a possibility. radio. For example. basketball in the winter and spring. fireworks. markets can be segmented by hobbies. • Market Involvement & Savings examines consumers’ attitudes toward money.g. by special interest groups. it . Department stores sometimes schedule midnight promotional events. especially among small companies that grant each channel a unique brand to gain distribution within that channel. Chili is marketed more aggressively in the fall. Some stores stay open later than others. • LifeMatrix groups consumers according to lifestyle. and hundreds of other variables. • Preferred Automotive Characteristics isolates consumers based on their attitudes towards automotive characteristics. and the Internet. Time Segmentation Time segmentation is less common but can be highly effective. or stay open on weekends. by religion. The Olympics come along every two years. turkeys. a company might segment the “tick and flea collar” market by selling the product to supermarkets under one brand name. with the onset of cooler weather. Other examples of distributional segmentation would be an upscale line of clothing sold only in expensive department stores. It is based on the fact that different media tend to reach different audiences. • Medicine & Drugs groups consumers based on their approach to medical treatment and remedies.for advice about cars. The time dimension can be an interesting basis for segmentation. • Media Attitudes groups consumers based on how they value various medium – television. Football is played in the fall.
You must then study the segments and the attitudes/statements that make up each segment to make sure they make sense and hang together.e. some statements might be much more important than others in explaining consumer behavior in a particular product category. the statements that tend to explain or cause specific consumer behaviors). Unfortunately. these statements become the inputs to the final segmentation analysis. does not always apply to psychographic or lifestyle segmentation (since most of us hold many overlapping and/or conflicting beliefs and attitudes). If the segmentation results don’t make sense. in truth. Both of these segmentation “solutions” should be crosstabulated by the original questionnaire variables to identify which type of solution yields the most meaningful (and actionable) market . Then. Many different methods can be used to “cluster” or group the statements at this point.e. some mediumpriced ones. Cluster analysis routines ignore the pattern of respondent ratings and rely primarily upon the proximity of respondent ratings. it is wise to develop two distinctly different segmentation solutions: one based upon mutually exclusive segments and one based upon overlapping segments. however. Analytical Methods Most segmentation analyses are based upon various types of “cluster analysis. Variation in household incomes creates an opportunity for segmenting some markets along a price dimension. Another limitation of clustering approaches is that all statements are treated as equal. or market segments. Media segmentation is most often practiced by companies that have some control over the media and can somehow discourage competitors from using that media. Too often this leads to clusters. whereas. Nonmutually Exclusive Segments Virtually all segmentation work. The final step is to attach a segment code to each market segment identified and then crosstab all of the questionnaire variables by the segments. cluster analysis (regardless of its many types and forms) has inherent limitations and seldom yields coherent market segments.can possibly dominate the segment of the market that listens to that radio station or reads that magazine. has been based upon the assumption of mutually exclusive market segments. change some of your assumptions or methods.” a set of well-defined statistical procedures that group people according to the proximity of their ratings. rerun the analysis. Chevrolet. A better way to achieve a good psychographic segmentation is to first identify the statements that are more important (i.. then a company should offer some cheap products. the reasoning goes. Oldsmobile. these techniques can help you identify the most important statements (i. Directly and indirectly. historically. then you have to go back. Therefore. and repeat the crosstab exercise to apply the “common sense” validity check. and Cadillac varied in price (and status) along a clearly defined spectrum to appeal to successively higher income groups. Pontiac. attitudes. If personal incomes range from low to high.. This type of price segmentation is well illustrated by the range of automotive brands marketed by General Motors historically. values). Factor analysis is also a powerful technique to identify the statements and groups of statements that account for much of the variance in the attitudinal data set. Correlation analysis and regression can be used for this purpose. that don’t seem to make much sense when crosstabulated against the original segmentation variables. Price Segmentation Price segmentation is common and widely practiced. and some expensive ones. perceptions. Buick. The mutually exclusive model.
The Market Segmentation Theory tries to describe the relation of the yield of a debt instrument with its maturity period. which lies in the minds of the general public as they wait for the first . It tries to bring forth the excitement. Market Segmentation Theory Facts In the United States of America the yield curve of the dollar was reversed in the later stages of 2005 and early period of 2006. Marketing Segmentation strategies used by Cadbury's and Titan CADBURY’S DAIRY MILK Right now Cadbury’s new advertisement campaign is doing the rounds over the television. Choices of Investors The choices of investors are an important part of the Market Segmentation Theory. “Meetha hai khana. The fact that the yields of short-term debt instruments are lower than that of the long-term debt instruments could be understood from this explanation. The yield from the same would be relatively low. The short term debt instruments provide them with that luxury. The Market Segmentation Theory explicates the reasons behind the prominence of normal yield curves over the other forms of yield curves. This means that the demand as well as supply of debt instruments having long term periods and short term periods in the financial markets is ascertained separately. As per the Market Segmentation Theory if a particular debt instrument has higher demand it is supposed to cost more. This could be explained by the Market Segmentation Theory.aaj pehli tareek hai” is the tagline that the chocolate-giant has come out with. As per the Market Segmentation Theory the investors might have preferred the long term debt instruments over the short term debt instruments and this could have contributed to the higher yields of short-term debt instruments over long-term debt instruments. The yields of the short-term debt instruments were more than that of the long-term debt instruments. It has been seen that the investors normally want to invest in debt instruments that have shorter term periods. The main reason behind this is that the investors like to have investment portfolios that have a certain amount of liquidity.segments. According to this theory the investors need to make their choices beforehand. Contention of Market Segmentation Theory According to the Market Segmentation Theory the financial instruments that have separate term periods cannot be replaced with one another. Market Segmentation Theory The Market Segmentation Theory is one of the various theories that are associated with the yield curve. Thus according to the Market Segmentation Theory the financial market that deals in debt instruments of shorter terms would experience more demand. It is also known as the “segmented market hypothesis”.
at a time when HMT watches were enjoying a monopoly-situation.Perk(wafer ingredient) and éclairs(toffee segment).Bournvita(health drink)Deserts. However. Both helped them crawl their ways through into hearts of the rural population of the country. dressed up as a villager. Cadbury’s Dairy Milk has come out with such memorable ad-campaigns. . It originated from a town in the United Kingdom. which had an untapped and astounding potential. The treats for passing exams were now a Cadbury instead of a mithai. Those days they steered the market and took control over the company’s major market share. we knew Cadbury’s was now a desert craving as well as a popular giftitem for festivals such as Raksha Bandhan and Diwali.date of each month on the calendar. As the Cadbury’s official web site suggests. Meetha did to Cadbury’s what thanda had done for Coco-Cola. The monthly salary stashed in their hands enables them to celebrate and rejoice by spending it on Cadbury’s Dairy Milk. In the early 1990s. The venture took birth from the TATA group and today is India’s market leader in wristwatches and the sixth-largest watchmaker in the world. It made sure that the festive and jubilant moods of the society that had paved the way for kilos and kilos of mithai. Later came the campaigns of “Pappu paas ho gaya” acknowledged the market potential for collegegoing youth. It now catered from children to adults and from chocolate to mithai. proudly announcing that his “daughter-figure” won beauty contests for cattle. As the tagline goes “Khane walon ko kahne ka bahana chahiye”. the strategy changed by letting out the secret that “everyone has a child inside “ and thus everyone craves for the taste of chocolate. which settled into the hearts of everyone. now made way for a large number of Cadbury’s. The hole-in-one for the company was when it identified sweets to be a very integral part of the Indian culture. its journey in India has been an eventful one.Crackle. With Kuch Meetha Ho Jaye. brought out the laughs and struck a chord with the same segment of people. TITAN wristwatches Titan entered the Indian market of wristwatches in 1984. Fruit and Nut(variations of the Dairy Milk). The story starts with “Once upon a time in 1948…” when Cadbury entered the Indian market. it tried to cater to the sweet tooth of the children. Bournville(also the name of its recently launched high-end chocolate) in 1905. Cadbury strategies went through a considerable change. Cadbury’s also diversified its range of products with Wowie(with Disney characters for kids). The advertisement campaign of Amitabh Bachchan. Cadbury’s today holds 30 per cent markets share in the confectionaries industry and sells around 1 million bars a day.
475-1200 for the basic consumers. Market segmentation is the process of splitting customers. said Mr. Initially when the mechanical technology was the norm. It brought out the Aqua. This was a significant move as the women were now more liberal in the society and the corporate culture was establishing its roots in India. or potential customers . the two new post-paid plans were for women and senior citizens with tailor-made features as per their specific requirements. Segmentation strategies used by airtel: Focusing its attention towards youth. It has also appointed Mahendra Singh Dhoni(himself belonging to Ranchi) as the brand ambassador of its Sonata collection to reach out to the rural population. Today the company has a model for every price segment and every market. The plan also offers women the option to club the monthly bills with that of their spouses. Mr. Fastrack for the cool and funky fetishes of the youth while Insignia. Bharti Cellular Ltd. the "Ladies Special" plan was to allow more and more women to use mobile phones that had become a necessity today. cellular service provider Airtel today unveiled its new market segmentation strategy by introducing new pre-paid and post-paid plans. the company said while "Friendz" pre-paid plan was focused at younger generation. Mr. Raga was for the sophisticated Indian woman. On the other hand. The needs of women throughout the nation were changing and the brand was aimed to cater these very needs. Bindal. Similarly.The constant innovation and effective market segmentation has been the great boon of the company. Styling was not a factor initially with the Indian watch industry but Titan was there to make a difference and gave a fresh breath of life to the age-old rusty style of wristwatches. And for those who are above 60 years of age. Seniors. The new plans offer lower call rates. Titan went against the tide and built-up its line with Quartz. Chief Marketing Officer and Director (Mobility). more value-added services and attractive payment plans. adding that the new scheme would give them special discounts. According to Atul Bindal. Dash for the kids segment. Besides. Segmentation stratagies used by nike: . It is because not all customers have the same requirement and a market strategy which does not recognize this fact will result business failure.. where subscribers get discount on one STD number and one local Airtel number. Steel and Nebula were all aimed at the luxury watches segment. women and senior citizens. Bindal added. Hoping that the new plan would add to its revenue and further increase its penetration in new segments of mobile users. Its price range starts from Rs. subscribers of this plan would get special discounts for health check-ups and would have a facility to club bills with that of their children. a trendy collection for the youth.Market segmentation is an essential part in today's business world. the new offerings were being introduced in 20 circles. Airtel has new post-paid plan. Titan is also capturing the rural market very efficiently. Bindal said "Friendz" pre-paid connection would attract those between 15-19 years of age that had several interesting features. his counter-part Aamir Khan was capturing the minds of the urban segments. Sonata for the masses and the budget-conscious.
every market will be unsegmented . . or those who are willing to spend on expensive items. Hence . This is because of the current state of Indian automobile market...within a market into different groups. In the car market also. Nike has been successful in market segmentation for selling their soccer boots.. we had the market dominated by the family segment. Nike's footwear is said to be an expensive goods today.. Price is not a major factor for them when choosing a pair of soccer boots. Sedan. an offroader( or a truck) and a sedan . who emphasis much on brand and identity is more likely to choose Nike. SUV. which resulted in a significant market share in that particular product category in recent years. So the ranking of the professional and amateur soccer players are high on the KCV table. Indian car market is predominantly family oriented. cars are a luxury rather than a mode of transportation.. we can see different family members owning different types of cars.The price of the boots showed that Nike's major target customer groups are those on a high income level.Professional soccer players include all the players playing football as their career... The market is still evolving . Still for most of us.. Marketers devise new methods /variables to segment the market. Our market is still to evolve to that stage. They need soccer boots which can enhance their performance: comfortable when running on the field and playing football and provide them with good ball control. B segment. This segment is ranging from the players in the top of the world to those who are hardly recognized by people. .. Consumers like the young people. because they are either having a high salary or they are sponsored by their clubs or even the manufacturers of soccer boots. Market segmenatation of cars: in india:Marketing Practice Reader Krishnan asks this question : "Is Indian automobile market (car) driven by family ? Is family influence more when someone buys a small car or a sedan ?" The answer to the first question is both Yes & No. Hatchback . Young people is also a main target customer group for Nike because the brand has been developed into a famous one and it is well-known for it high price and style. So we have A segment. The first attempt to segment was by Tata Sierra which tried to bring in the SUV segment. within which customers have the same or similar requirements satisfied by a distinct marketing mix. The need of a pair of good quality soccer boots in the two groups is high and price is not their major considerations. What they need is a pair of high quality soccer boots which is a combination of well design and good materials. most probably the highest in the market. here the primary segmentation was based on the price of the car and also the nature of the car. But the market was not ready to accept that product. Their needs for soccer boots is high. One of my colleagues say that a typical American family will have a small car/office car . D segment etc and segments like MUV. In the developed market. . or segments.. The major segment in the Indian car market is driven by family. But as the market matures.small car etc . During the initial stages . segments evolve.
I know families which own more than 3 different types of cars to serve different purposes. Read through the listing of the segments first and then consider the mind map that you will find in this paper. And cars may move from a luxury product to a mode of transportation.. the Business market or for the Private market? We can further segment the market in terms of the kind of car are we selling: a mini. As we will see. we can segment the British car market in terms of whether the car being sold is a new or a used (second hand) car. we would need to take into account a whole series of variables and factors. In the case of such affluent family. a lower medium sized car .The dominant segment ( small car/ hatchback) is driven by family.. The buoyant economy and the emergence of neo-rich class has changed the dynamics at the upper end of the market. cost of maintaining like mileage . price. In briitish: f we wished to segment the British car market. type of car etc. So the entire family takes part in deciding the purchase of the car. The major determinants being the size of the family. Now even middleclass can afford to have more than one cars. but don’t forget to come back here if you need to! Overall: British Car Market Segment 1 New Used Segment 2 Fleet Business Private . brand . My feeling is that the launch of Tata Nano will also see some change in the way Indian car market is segmented. some of those variables and factors. a supermini. whether the car is being provided for the Fleet market. The first part of this paper shows in list (linear) form. the purchase considerations are different. If you are unsure of what a mind map is there is a page on this site relating specifically to them: go to the paper and have a read. The second part of the paper is concerned with presenting the car market information in mind map format.
Mitsubishi Shogun Segment 4: Domicile of manufacturer Home Import Segment 5: Manufacturers BMW Fiat Ford GM Mercedes Nissan Peugeot Citroen Renault Rover Toyota Volkswagen Other Segment 6: Retailers Franchise Independent Large Medium Small market segmenTATION of nescafe: Power root . Nissan Primera Mercedes 190. Lexus LS400 Porsche 911. GM Calibra Renault Espace. VW Polo Alfa 33. Renault 19 Peugeot 405. Fiat Cinquencento Ford Fiesta.Segment 3: Classification Examples Mini Supermini lower medium upper medium Executive Luxury Sports utility & other Rover Mini. Honda Legend BMW 7 Series.
what is their approach to the situation: The have a one now one nescafe campaign .it used the celebrity endorsements (local stars and singers . It would seem that the promotional mix was also a key factor that allowed Ali Cafe / Power Roor to catch up with the market leader and establish itself as a true Malay based company . Now if we look at the market leader . The Power root company has used a powerful marketing mix that decided to focus on the Malay (largest segment in Malaysia) by introducing a host of products that uses the Tongkat Ali and Kacip Fatimah ingredients to differentiate themselves from the Market Leader Nestle with thier flagship product Nescafe.can coffee drink +host of others that just to complicated to go on with .Malay Male and Malay Female .very very cheap).It would seem that a Chinese company has managed to corner the Malay coffee market indicates the power of segmentation.coffee powder + original +mocha +gold +premium .aimed at catching the teens .excellent move.3 in 1 coffee mixes .lost cause since the cost involved does not generate the loyalty required. especially since the younger generation now consider Nescafe is an older generation drink (same situation faced by Coke-Cola when Pepsi attacked it) The range of new products that have been launched under the nescafe brand name . The had also decided to FOCUS on 2 segment only . The kickstart campaign .very catchy but then it tells people to drink coffee since nescafe is another name for coffee now.
You know why this always happen to the leader .+rich +light + breakfast +++ Now this is getting pretty confusing to the customers already. You don't take a Ferrari to race in the Paris-Dakkar championship .Aik Choong Coffee is using tradition to win back the Chinese market segment in a big way From my point of view the marketing guys in Nestle are really hoping that the Brand is the power behind thier success .the brand is the car. the driver is the marketeer. Nescafe is going to loose thier leadership in the market as the smaller players break the market into smaller chunks and eat away. I suppose that in the long run. The Dallas-based company's "Total Mobile Access" service adds a mobile component to online . Market segMENTATION used by pizza hut: Pizza Hut Inc.NOPE its the marketing peoples skills in promoting an idea that is important not the brand .EGO based decisions rather then using PURE MARKETING KNOWLEDGE.you get the right car for the the right road = Get the right brand for the right segment. What else is happening to our leader? They are being beaten by tradition . has become the first pizza chain to offer both text messaging and mobile Web ordering options on a nationwide basis.
As expected. rom online ordering to text and mobile access.S. The Chicago company was last year awarded a patent for its Favorder one-click ordering technology -. digital marketing director for Pizza Hut. . the mobile site has a simple menu with a popular orders listing and a store locator.com to create their Pizza Playlist." Pizza Hut is using Internet ordering software and service firm QuikOrder Inc. They also enter their payment information.via Web sites." he said.pizzahut.ordering. That site will be automatically modified to fit a phone's screen." Mr. American pie The Internet is the starting point for Total Mobile Access. a low-priced pie for $5 that is topped with whole milk mozzarella cheese with a hint of cheddar and sauce from California tomatoes on dough made from Great Plains flour. consumers. "We have an extensive infrastructure in place that recognizes customers' cell phone numbers and attaches that number to their online registration. Those with a Web-enabled mobile phone can order directly from the Pizza Hut mobile site.Amazon has a patent for one-click online checkout -. Consumers simply text an order to 749488 (749HUT) and then receive a confirming text from Pizza Hut. The Pizza Playlist can also include Pizza Hut's latest offering -. which is already one of the most popular segments of Pizza Hut's business. "It's critically important for Pizza Hut to be where our customers are. consumers are increasingly seeking faster and more flexible ways to access our restaurants. The news comes less than two weeks after rival Papa John's announced a texting promotion for the Super Bowl. The text message process requires a couple of steps. mobile phones and PDAs. a compilation of up to four favorite orders. "It's important for us to offer new and exciting ways for our customers to order from Pizza Hut.Pizza Mia. they can order either through text or mobile Web. Once registered. a major pizza-consuming occasion (see story). Pizza Hut has worked out how to route mobile orders to the local Pizza Hut restaurant for fulfillment.'s ClickOrder product to help with its mobile efforts. Consumers log on to the site at www. Acoca said." said Bernard Acoca. Total Mobile Access is currently offered to U.
Acoca said.Papa John's currently offers national text ordering and national online ordering.encompassing online. In determining. "Our audience wanted a mobile option that was user-friendly and convenient. "Pizza Hut's Total Mobile Access -.does just that. for otherwise the segments cannot grow? A company cannot be in more than one segment." WILL THE SEGMENTATION WORK? By whatever means the segmentation is arrived at. delivery buyers and whatever else suits.e. price fighters. be it by judgement. Market research supported Pizza Hut's latest foray. by classifying the database or by statistical techniques. but not the nationwide text option. This is unlike consumer segments where one week I may fit into an airlines business class segment and another week fit into low cost. Can companies be easily positioned in one or other of the segments. Domino's offers national mobile Web ordering and national online ordering. range buyers. they will require too much resource and energy. Are the segments big enough? If they are not. the segments must pass a three-question test: Are they truly different in a meaningful way? If not then they are not a segment and should be collapsed into one of the others." Mr. but not the nationwide mobile Web option. . The name will ultimately become the shorthand description used in the company that immediately identifies the customer typology. especially new and potential customers. it is helpful to give each a characterising nickname i. if and how segments differ from one another. text and mobile ordering -.
and Understand consumer-provider interaction by addressing the following questions: What is the socioeconomic and demographic profile of those who depend on the public versus the private sector for their family planning (FP) needs? Who supplies contraceptives to whom? Do the nonpoor benefit from free public sector services? Does use of the two sectors vary by age (i. market segmentation analysis helps to do the following: • • • Identify consumer groups and the characteristics that define them. education. Specifically. significant proportions of better-off clients obtain subsidized contraceptives from Ministry of Health (MOH) facilities rather than pay out of pocket in the commercial or NGO sector. work status.. identifies current roles of different sectors. especially in the face Profile of MOH Family of declining contraceptive donations and scarce public Planning Clients in Nicaragua sector resources. and helps determine how those roles need to change to achieve contraceptive security.Market Segmentation Analysis What is Market Segmentation Analysis? Market segmentation analysis provides a comprehensive examination of the contraceptive market. and helps determine how roles need to change to achieve contraceptive security. residence.g. are youth more likely to use private sector services)? What are the methods used by those who obtain contraceptives from the private versus public sector? For example. The reliance of able-to-pay consumers on subsidized products poses a severe challenge to Figure 1: Socioeconomic achieving contraceptive security. and social marketing programs). In particular. identifies current roles of various sectors with respect to consumer groups. Define provider groups (e.e. A market segmentation analysis is a necessary first step toward this end—it provides a complete analysis of the contraceptive market. nongovernmental organizations (NGOs). such as age. parity. Reducing better-off consumers’ dependence on the public sector and ensuring that the needs of vulnerable and priority populations are met in the absence of donor assistance requires targeted public sector services and greater involvement of the commercial sector in the contraceptive market. the public sector. socioeconomic status. .. is the public sector the primary provider of re-supply methods? - Why Is Contraceptive Market Segmentation Analysis Important? In many countries. contraceptive users—regardless of their ability to pay—rely heavily on free or subsidized products made available by the public sector. the commercial sector. and health insurance coverage.
as Figure 1 from a recent market segmentation analysis shows. For example. by contrast. the MOH needs to consider ways to shift the responsibility for serving eligible clients back to social security health providers. Social security institutes need to play a more significant role in the provision of contraceptives. 45 percent of social security beneficiaries receive their contraceptives from the MOH. It is essential to mobilize the private sector to serve current and potential users. with user-friendly graphs and tables. . key issues that a country needs to address to move toward contraceptive security. and providers. • • Figure 2: Sources of Contraceptives for Social Security Beneficiaries: Peru How is a Contraceptive Market Segmentation Analysis Conducted? The market for FP services includes contraceptive methods. Able-to-pay clients should be redirected to the private sector. only 30 percent of its clients are poor. 45 percent of those who receive contraceptives from the MOH in Nicaragua belong to the fourth and fifth socioeconomic quintiles. family planning users with social security coverage currently rely disproportionately on the MOH. consumers. However. Such issues and supporting data may include the following: • Public sector resources benefit those who can afford to pay. for example. as contraceptive donations decline. It highlights. In Nicaragua. Using market segmentation data to make the case to both the MOH and social security institutes can be effective for advocacy purposes.Why Is Contraceptive Market Segmentation Important in Advocating for Contraceptive Security? A market segmentation analysis yields clear and concrete information and data about problems and deficiencies in the contraceptive market. only 30 percent of MOH clients belong to the two lowest quintiles. In Nicaragua. As Figure 2 from the Peru market segmentation analysis shows. such as populations in remote rural areas and the indigent and poor. • The public sector needs to target its scarce resources to the most vulnerable groups. at least 45 percent of MOH clients are in the top two income quintiles and should therefore be redirected to the NGO and commercial sectors to free up MOH resources to serve the poor and needy. The MOH should focus its efforts on increasing the proportion of poor clients that it serves.
(2) comparing method use and provider sources across the SLI quintiles to determine the extent of differences across groups. For example. Honduras. The analysis also identified significant leakage of benefits. television. such as electricity. Household data are then used to divide the population into five SLI quintiles. roof material. have conducted market segmentation analyses. 2005). What Countries Have Conducted Market Segmentation Analyses? Many countries. Paraguay. Philippines. method use. and Ukraine.Contraceptive methods include both modern and traditional methods. radio. with the poorest group consisting of women from households with the fewest assets and the richest group comprising women from households with the most assets. Nicaragua. and (3) creating market segments based on socioeconomic characteristics. the U. The information from the market segmentation analysis also helped the MOH advocate successfully with the Ministry of Finance to increase contraceptive financing such that the MOH budget for contraceptives saw a substantial increase in 2002. and place of residence across the five SLI quintiles. A workshop on public-private partnerships helped integrate the private sector into a policy dialogue about the contraceptive financing challenge and encouraged pharmaceutical companies to view the public sector’s supply needs as a new market. Bolivia. Madagascar. and provider sources across quintiles by urban and rural areas. and partners. including those using a modern contraceptive method and those with an unmet need for family planning. Turkey. Kenya recently completed a contraceptive market segmentation analysis (POLICY/Kenya presentation. which requires creation of a standard of living index (SLI) that allows households to be ranked from poorest to richest. The way in which the various components of the FP market fit together is referred to as the FP market structure. Peru. The majority of the poorest relied on the public sector for contraceptive services and supplies. Jordan. Findings showed that only about 12 percent of urban and rural clients from the lowest income group use modern contraceptives as compared with over 40 percent among the wealthiest clients. The SLI is defined in terms of whether or not a household possesses certain assets and household amenities. An important element of the analysis calls for establishing households’ ability to pay for family planning services. and other amenities. The analysis identified current and potential market niches for the private sector. Romania. Factor analysis is the quantitative method used to create the SLI. Morocco. parity. wall material. with two out of every five . Ethiopia. education. Egypt.S. Agency for International Development (USAID). Turkey conducted a market segmentation analysis with support from the MOH. automobile. refrigerator. including Bangladesh. Kenya. These groups provide the basis for (1) tabulating socioeconomic and demographic characteristics such as age. Providers are defined as government and private for-profit (commercial sector) and not-for-profit (NGO) entities. Consumers are defined as women of reproductive age (15 to 44 years).
you . The Directional Policy Matrix Used To Select (and De-Select) Segments Segmentation is the first crucial step in marketing. don’t preordain the results by sampling restrictions. Go for the whole hog. Some of the most common mistakes: 1. In other words. Overlooking the “universals.to 24-year-olds who live in Vermont and buy brand XYZ. the heck with segmentation. In the example below it may be thought that the price fighters offer no margin and are not worth targeting. but rarely are the resulting segments of any value. including members of the new government.” Many attitudinal statements in the questionnaire will not show up in the final segments. If you create more than four or five market segments. 3. this tiny sliver can be segmented. However. The market should be broadly defined for a segmentation analysis to be most effective. Variables have to move up and down for the multivariate analysis to work.among the wealthiest obtaining their contraceptives from the public sector. the traditionalists may be worth working on to see if they can be moved north and east to join a more attractive segment such as the range buyers. There is a practical limit to the size of segments that companies can effectively target. In this way it is possible to identify targets that justify resources in targeting and development. promotion and place (route to market). The two factors that influence this decision are the attractiveness of the segment against the supplier’s competitive position within that segment. If you find something unique that appeals to everyone. The highest rated variables. equally important. because they are just too small. are likely to fall out of the multivariate analyses. quality fanatics or delivery buyers. The Kenya analysis will be used in policy dialogue among key partners and stakeholders. Creating too many segments. including all age groups. the client is asking that a tiny sliver of the market be segmented. Statements that everyone agrees with. The grouping together of customers with common needs now makes it possible to set marketing objectives for each of those segments. General rule: segment the whole market. price. Common Mistakes Segmentation studies tend to be large and complicated. strategies can be developed to meet the objectives using the tactical weapons of product. or everyone disagrees with (we call them “universals”) cannot explain much in the multivariate analyses. Segmenting a segment. True. someone might want to segment the market for widgets among 18. CHOOSING SEGMENTS TO WORK WITH By plotting the different segments on an X Y grid it is possible to determine which are worth targeting and. However. Once the objectives have been set. Any one of them might be the basis for a positioning or a strategy that would appeal to everyone. even though they form a large segment. As is evident. and the lowest rated. because they tend to be the same across all segments. so it’s easy for errors and mistakes to be made. you should always look at these universal statements. to build commitment to reform and to implement the country’s existing waiver and exemption policies for more effective targeting to the neediest sectors of the population. 2. which are not. For example.
No one ever opens up the crosstabs and looks at the answers to the hundreds of questions asked. But. at least by mass media. it is very difficult to target multiple segments because of media “spillover. advertising campaigns. but a small part of the market. . Often. and you can identify the addresses that belong to each segment. not just the number of people in the segments. 7. 5. then you can attack all segments (assuming your product is relevant to all segments). 6. rocket-science multivariate analyses attract everyone’s attention. It is easy to get lost in this treasure trove of answers and come up with confusing and baffling results. or new products. Always look at the dollar potential of market segments. The dazzle and glitter of the advanced.” What you say to one segment will be muddled and confused by the different messages targeted to other segments. with enormous amounts of data. Overlooking the basics. So you have carefully subdivided your target market into five mutually exclusive psychographic segments. This is not always true.run the risk that the resulting segments will be too small to target. Segmentation studies are large and complicated. If all of your marketing is direct mail. but it is a good rule of thumb. A market segment might represent a large percentage of the population. Targeting all segments. if you use broadcast media in marketing your product. Rarely does anyone analyze this basic data. Confusing the results. and your boss tells you to develop a marketing plan to attack each segment. 4. hidden in plain view in the plain old crosstabs are tremendous findings that could form the basis for new or improved marketing strategies. Targeting people instead of dollars. however.
Third. targeting via advertising message. A great deal of money is wasted on psychographic segmentations that never lead to any marketing actions. That is. Go forth and segment. Second. the segmentation can define opportunities for new products targeted to each psychographic segment. if you find that 15% of the U. there are several essential uses of the segmentation: first. .Final Thoughts The concept of market segmentation is sound. the advertising message is the way to reach the psychographic segment (rarely can a psychographic segment be defined by demographics or geography). For example. If you segment the market by psychographics. It’s a way to apply greater marketing energy or force to a subset of the market. That is. you are positioning your brand in relation to a market segment. positioning assumes. or takes place in relation to. target your brand to the largest segment with relevant brand fit (or even target two closely related segments) by media advertising and message. the market segments can be a template for new product development. a target market segment. So psychographic segmentation’s greatest value lies in positioning. segmentation can provide the guide rails for brand positioning. then you can design and build the safest car in the world to target this segment.S. That is. and defining new product opportunities. population belongs to a “safety first” segment when it comes to buying cars.
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