Transcript Special Topic: Segmentation

Market
Segmentation
Special Topic
Mktg 633
Objectives
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Definition
Reasons for segmentation
Bases of segmentation
Applications
Product Positioning
Definition
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The process of dividing all possible
users of a product into groups that
have similar needs the products might
satisfy.
Historical Development
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50s & 60s: Mass Marketing
90s: Breaking Up Into Smaller
Groups
Extensive Segmentation and
targeting smaller consumer groups
necessarily produces higher
marketing costs
Criteria for Segmentation
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Know Your Customers (Scanner
Data)
Make What Customers Want. Offer
many variations on a single
product.
Reach Target Customers. Ex:
“smart” cash registers.
Segmentation Approaches
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A Priori Approach
Post Hoc Approach
Market Segmentation
Analyze the Consumer/Product
Relationship
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Essence of developing effective marketing
strategies is understanding the special
relationship that consumers have with
products and/or brands. Concerns how
consumers perceive a product as relevant
for their lifestyle, salient consequences and
values, and self-concepts.
Market Segmentation
Determine Segmentation Bases
 Geographic
 Demographic
 Sociocultural
 Affective
and Cognitive
 Behavioral
Using VALS 2 in Marketing
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Who your consumers are?
What are they buying?
Where are they? (geodemographic)
How to effectively communicate with
customers?
Why? Relate consumers underlying
psychological values to their lifestyles and
buying behavior
http://www.sric-bi.com/VALS/l
Sample Questions from VALS 2
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I am often interested in theories
I like outrageous people and things
I like a lot of variety in my life
I love to make things I can use everyday
I follow the latest trends and fashions
Just as the Bible says, the world literally was created in six
days
I like being in charge of a group
I have more ability than most people
Measured on a 4-point
I must admit that I like to show off
scale from Mostly
Disagree to Mostly
Agree.
I like trying new things
VALS I
Typology
VALS 1
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Classifies the American population into 4 general
consumer groups
 Need-Driven
(Sustainers and Survivors)
 The poor and uneducated (11%)
 Outer-Directed (Achievers, Emulators and Belongers)
 Lifestyles directed by external criteria (67%)
 Inner-Directed (Societally Conscious, Exeriential and I-AmMe)
 Motivated by personal needs than by expectations of
others (20%)
 Integrated
 Those who are able to combine the best of both outerand inner-directed values (2%)
VALS 2
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Classifies the American population into 3 general
consumer groups and then subdivides into 8 distinctive
subgroups
 Principle-Oriented
 motivated
in their choice by their beliefs, rather than by
desire for approval
 Status-Oriented
 guided
by actions, approval, and opinions of others
 Action-Oriented
 propelled
taking
by a desire for social or physical, variety, and risk-
Example of VALS 2
Segment: Principled
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35-64 years, Married
College graduate
11% of U.S. adult
Well informed, “info junkie”
Value education and travel
Practical consumers
Prestige, image unimportant
Watch TV news
Market Segmentation
Select Segmentation Strategy
 Do
not enter
 Mass market (mass market strategy)
 One segment (concentrated strategy
 More than one segment, separate
marketing mix for each (differentiated
strategy)
Product Positioning
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Determining how to differentiate one’s
product from those of competitors in the
minds of consumers
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Position on product attributes
• Ex: price (Budget Car Rental)
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Position on benefits
• Ex: Close-Up’s benefit of fresh breath
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Position on usage
• Ex: Michelob: special occasion beer
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Position on user category
• Ex: Wheaties as the “breakfast of champions”