Chapter 3 Market segmentation
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The document outlines market segmentation, detailing its definition, bases, and criteria for effective targeting. It discusses various segmentation types, including demographic, geographic, psychographic, and benefit segmentation, alongside their respective variables. Additionally, it emphasizes the importance of understanding consumer behavior and needs to develop effective marketing strategies.
![Instructions: Please read each statement and place an “x” in the box that best indicates how
strongly you “agree” or “disagree” with the statement.
I feel that my life is moving faster and faster,
sometimes just too fast.
If I could consider the “pluses” and “minuses,”
technology has been good for me.
I find that I have to pull myself away from e-mail.
Given my lifestyle, I have more of a shortage of
time than money.
I like the benefits of the Internet, but I often don’t
have the time to take advantage of them.
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
[1] [2] [3] [4] [5] [6] [7]
Agree
Completely
Disagree
Completely
TABLE 3.6 AIO](https://image.slidesharecdn.com/chapter3marketsegmentation-150905085926-lva1-app6891/85/Chapter-3-Market-segmentation-20-320.jpg)
Chapter 3 Market segmentation
- 1. SESSION 3 MARKET SEGMENTATION Prepared By: Prof. Nishant Agrawal
- 2. CHAPTER OUTLINE • WHAT IS MARKET SEGMENTATION? • BASES FOR SEGMENTATION • CRITERIA FOR EFFECTIVE TARGETING OF SEGMENTS • IMPLEMENTING SEGMENTATION STRATEGIES
- 3. MARKET SEGMENTATION THE PROCESS OF DIVIDING A POTENTIAL MARKET INTO DIFFERENT SUBSETS OF CONSUMERS AND SELECTING ONE OR MORE SEGMENTS AS A TARGET MARKET TO BE REACHED WITH A DIFFERENT MARKETING
- 4. THREE PHASES OF MARKETING STRATEGY Phase 2 Target Market and Marketing Mix Selection Phase 3 Product/Brand Positioning Phase 1 Market Segmentation
- 5. SEGMENTATION STUDIES • DISCOVER THE NEEDS AND WANTS OF GROUPS OF CONSUMERS TO DEVELOP SPECIALIZED PRODUCTS TO SATISFY GROUP NEEDS • USED TO IDENTIFY THE MOST APPROPRIATE MEDIA FOR ADVERTISING
- 6. RYKA PRODUCES SNEAKERS THAT MEET THE SPECIAL NEEDS OF WOMEN’S FEET.
- 7. DISCUSSION QUESTION • CONSIDERING THE LARGEST BANK IN YOUR COLLEGE’S CITY OR TOWN: • HOW MIGHT CONSUMERS’ NEEDS DIFFER? • WHAT TYPES OF PRODUCTS / SERVICE MIGHT MEET THEIR NEEDS?
- 8. BASES FOR SEGMENTATION Personal Feature Purchase Behaviors •Demographic, age, gender, marital status, family life cycle. Income, education, occupation, social class •Geographic location, address •Usage Rate •Usage Situation •Brand Loyalty •Psychographics factual behaviors Personality , lifestyles and socio culture value •Personality traits •Lifestyle, VALS •socio culture value Attitude and preferences regarding the product •Benefits wanted •Level of involvement •Awareness of product alternatives •Brand loyalty Consumer Rooted Consumption Specific Facts Cognitions
- 9. BASES FOR SEGMENTATION • FACTS: WHICH CAN BE DETERMINE FROM DIRECT QUESTIONING AND CATEGORIZED BY SINGLE OBJECTIVE MEASURE • COGNITIONS: WHICH ARE ABSTRACT CAN BE DETERMINED ONLY THROUGH MORE COMPLEX QUESTIONING AND WHERE MOST OF THE CONSTRUCT MEASURED HAVE NO SINGLE DEFINITION
- 10. BASES FOR SEGMENTATION • GEOGRAPHIC • DEMOGRAPHIC • PSYCHOLOGICAL • PSYCHOGRAPHIC • SOCIO CULTURAL • USE-RELATED • USAGE-SITUATION • BENEFIT SOUGHT • HYBRID
- 11. Table 3.1 Market Segmentation Occupation SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size Region Southwest, Mountain States, Alaska, Hawaii Major metropolitan areas, small cities, towns Urban, suburban, exurban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Sex Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, married, divorced, living together, widowed Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Professional, blue-collar, white-collar, agricultural, military
- 12. Table 3.1, continued SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES Psychological Segmentation Learning-involvement Perception Personality Needs-motivation Safety, security, affection, sense of self-worth Extroverts, novelty seeker, aggressives, innovators Low-risk, moderate-risk, high-risk Low-involvement, high-involvement Psychographic Subcultures (Race/ethnic) Religion Cultures (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers American, Italian, Chinese, Mexican, French, Pakistani Catholic,Hindu, Moslem, other African American,, Asian, Family life cycle Social class Lower, middle, upper Bachelors, young married Attitudes Positive attitude, negative attitude Sociocultural Segmentation
- 13. SEGMENTATION BASESEGMENTATION BASE SELECTED SEGMENTATION VARIABLESSELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rate Heavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective Time Leisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money PRIZM NE Geodemographics “Movers & Shakers,” “New Empty Nests,” “Boomtown Singles,” “Bedrock America” Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles SRI VALSTM Innovators, Thinkers, Believer, Achievers, Strivers, Experiencer, Makers, Survivors Hybrid Segmentation Table 3.1, continued
- 14. GEOGRAPHIC SEGMENTATION • THE DIVISION OF A TOTAL POTENTIAL MARKET INTO SMALLER SUBGROUPS ON THE BASIS OF GEOGRAPHIC VARIABLES (E.G., REGION, STATE, OR CITY) (EX. TEA, DETERGENT, SKIN CREAM) • WHERE PERSON LIVES DETERMINES SOME ASPECTS OF CONSUMPTION BEHAVIOR.
- 15. PERSONALITY TRAITS • PERSONALITY TESTS WHICH ARE GENERALLY IN THE FORM OF QUESTIONS OR STATEMENT PRESENTED TO THE RESPONDENT RESEARCHER CAN DETERMINE ONE’S PERSONALITY AND USE IT IN SEGMENTATION. • EX. CONSUMER WHO ARE OPEN MINDED AND GENERALLY TAKE LESS RISK THAT OTHERS IN TRYING NEW THINGS
- 16. DEMOGRAPHIC SEGMENTATION • AGE • SEX • MARITAL STATUS • INCOME, EDUCATION, AND OCCUPATION
- 17. PSYCHOLOGICAL SEGMENTATION • MOTIVATIONS • PERSONALITY • PERCEPTIONS • LEARNING • ATTITUDES
- 18. TWO HIGH-END WATCHES FOR DIFFERENT PSYCHOLOGICAL SEGMENTS
- 19. PSYCHOGRAPHIC/ LIFESTYLE ANALYSIS SEGMENTATION • PSYCHOGRAPHIC VARIABLES INCLUDE ATTITUDES, INTERESTS, AND OPINIONS (AIO) WHERE INTEREST AND OPINIONS ARE COGNITIVE CONSTRUCT. • AIOS GIVE AN IN-DEPTH LOOK INTO THE BUYING BEHAVIOUR OF THE SEGMENT. • IN AIO RESEARCH, THE SUBJECT IS ASKED IF HE OR SHE AGREES OR DISAGREES WITH CERTAIN STATEMENTS DESIGNED TO EXPLORES HIS OR HER ATTITUDES, MOTIVES, NEEDS,
- 20. Instructions: Please read each statement and place an “x” in the box that best indicates how strongly you “agree” or “disagree” with the statement. I feel that my life is moving faster and faster, sometimes just too fast. If I could consider the “pluses” and “minuses,” technology has been good for me. I find that I have to pull myself away from e-mail. Given my lifestyle, I have more of a shortage of time than money. I like the benefits of the Internet, but I often don’t have the time to take advantage of them. [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] [1] [2] [3] [4] [5] [6] [7] Agree Completely Disagree Completely TABLE 3.6 AIO
- 21. weblink Opinions and Attitudes ADBUSTERS Web site is targeted to consumers with a certain attitude toward advertisers
- 22. VALS ( VALUES ATTITUDE AND LIFESTYLE) • RESEARCH METHODOLOGY USED FOR PSYCHOGRAPHIC MARKET SEGMENTATION. COMBINATION OF LIFESTYLE AND VALUES.
- 23. VALS ( VALUES ATTITUDE AND LIFESTYLE) • INNO VATO R THEY HAVE THE HIGHEST INCOMES & SUCH HIGH SELF- RESPECT AND RICH RESOURCES . THEY ARE LOCATED ABOVE THE RECTANGLE. SELF IMAGE IS IMPORTANT TO THEM AS AN EXPRESSION OF INDEPENDENCE AND CHARACTER. • THINKERS THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY IDEALS. THEY ARE MATURE, RESPONSIBLE, WELL-EDUCATED PROFESSIONALS. WELL INFORMED ABOUT WHAT GOES ON IN THE WORLD AND ARE OPEN TO NEW IDEAS AND SOCIAL CHANGE. • BELIEVERS THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY IDEALS. THEY ARE CONSERVATIVE AND PREDICTABLE CONSUMERS WHO FAVOUR LOCAL PRODUCTS AND ESTABLISHED BRANDS.
- 24. • STRIVERS / TO STRUGGLE THESE CONSUMERS ARE THE LOW- RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY ACHIEVEMENTS. THEY HAVE VALUES VERY SIMILAR TO ACHIEVERS BUT HAVE FEWER ECONOMIC, SOCIAL, AND PSYCHOLOGICAL RESOURCES. STYLE IS EXTREMELY IMPORTANT TO THEM • EXPERIENCES THESE CONSUMERS ARE THE HIGH-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY SELF-EXPRESSION. THEY ARE THE YOUNGEST OF ALL THE SEGMENTS, WITH A MEDIAN AGE OF 25. THEY HAVE A LOT OF ENERGY, WHICH THEY TRANSFER INTO PHYSICAL EXERCISE AND SOCIAL ACTIVITIES. THEY ARE ENTHUSIASTIC CONSUMERS, SPENDING HEAVILY ON CLOTHING, FAST-FOODS AND OTHER YOUTHFUL FAVOURITES. • MAKERS THESE CONSUMERS ARE THE LOW-RESOURCE GROUP OF THOSE WHO ARE MOTIVATED BY SELF-EXPRESSION. THEY ARE
- 25. • SURVIVO RS. THESE CONSUMERS HAVE THE LOWEST INCOMES. THEY HAVE TOO FEW RESOURCES TO BE INCLUDED IN ANY CONSUMER SELF- ORIENTATION AND ARE THUS LOCATED BELOW THE RECTANGLE. THEY ARE THE OLDEST OF ALL THE SEGMENTS, WITH A MEDIAN AGE OF 61. WITHIN THEIR LIMITED MEANS, THEY TEND TO BE BRAND-LOYAL CONSUMERS. • CULTURE SEGMENTATION • MARKETERS CAN SEGMENT SOME POPULATIONS ON THE BASIS OF CULTURE BECAUSE MEMBERS OF THE SAME CULTURE TENT TO SHARE SAME VALUE,
- 26. FAMILY LIFE CYCLE ADVERTISING Video cameras are often purchased by young couples with children.
- 27. Target reaches out to the Latino market.
- 28. DISCUSSION QUESTIONS • WHAT TYPES OF MARKETERS MIGHT SEGMENT ACCORDING TO SOCIAL CLASS? • WHAT ETHICAL ISSUES MIGHT MARKETERS HAVE WHEN MARKETING TO DIFFERENT SOCIAL CLASSES?
- 29. CONSUMPTION SPECIFIC SEGMENTATION BASE • USAGE RATE SEGMENTATION • DIFFERENCE AMONG HEAVY, MEDIUM AND LIGHT USERS AND NON USERS OF SPECIFIC PRODUCT, SERVICE OR BRAND. • MARKETERS OF MANY PRODUCTS SUCH AS SOUP, LAUNDRY DETERGENT AND DOG FOOD HAVE FOUND RELATIVE SMALL GROUP OF HEAVY USERS ACCOUNT. • USAGE SITUATION SEGMENTATION • OCCASION OR SITUATION OFTEN DETERMINE WHAT CONSUMERS WILL PURCHASE OR CONSUME MARKETERS SOMETIMES USE THE USAGE SITUATION AS SEGMENTATION VARIABLE. • MANY PRODUCTS ARE PROMOTED FOR SPECIAL USAGE OCCASIONS. LIKE GREETING CARD INDUSTRY
- 30. High Low Consumption High Low LoLows (starve) HiHighs (stroke) LowHighs (chase) HiLows (tickle) SEGMENTING CUSTOMERS BY USAGE TABLE 3-8Current Share
- 31. USAGE-SITUATION SEGMENTATION• SEGMENTING ON THE BASIS OF SPECIAL OCCASIONS OR SITUATIONS • EXAMPLE STATEMENTS: • WHENEVER OUR DAUGHTER JAMIE GETS A RAISE, WE ALWAYS TAKE HER OUT TO DINNER. • WHEN I’M AWAY ON BUSINESS, I TRY TO STAY AT A SUITES HOTEL. • I ALWAYS BUY MY WIFE FLOWERS ON VALENTINE’S DAY.
- 32. BENEFIT SEGMENTATION THE BENEFITS THAT CONSUMERS SEEK FROM PRODUCT AD SERVICE ARE THE ESSENCE THE BENEFIT SEGMENTATION. Band-aid offers “flex” as a benefit to consumers.
- 33. HYBRID SEGMENTATION APPROACHES • PSYCHOGRAPHIC-DEMOGRAPHIC PROFILES • GEODEMOGRAPHIC SEGMENTATION • SRI CONSULTING’S VALS
- 34. SELECTED DEMOGRAPHIC PROFILE OF USA TODAY EXCERPT FROM TABLE 3-10 USA TODAY USA TODAY.COM USA TODAY NETWORK Men 66% 70% 66% Women 34% 30% 34% Age 18-49 62% 73% 64% Age 25-54 65% 78% 67% Age 55+ 27% 18% 25% Average Age 45 43 45 Attended college or beyond 77% 83% 77% College graduate or beyond 55% 65% 56%
- 35. SELECTED LIFESTYLE PROFILE OF USA TODAY EXCERPT FROM TABLE 3-11 % Comp Index Tech Savvy Readers Use Internet more than once a day 32% 174 Internet access at home 79% 128 Online purchase for business or personal use in past 30 days 40% 182 Household owns a PC 84% 119 Owns digital camera 22% 130 Leisure Activities Attended movies in last 6 months 73% 120 Bought music CD/tapes in last 12 months 46% 126 Book reading 45% 120 Entertain friends or relatives at home in last 12 months 48% 123 Household subscribes to cable 69% 112
- 36. PRESENTATION CRITERIA FOR EFFECTIVE TARGETING AND IMPLEMENTING SEGMENTATION STRATEGIES
- 37. END OF SESSION “MISTAKES ARE THE PROOF THAT YOU ARE