Transcript Segmentation

Customer behavior
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Quiz
Explain the ABC model of Consumer attitudes by means
of a diagram.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
ABC model of Attitude
Affective
(Feelings)
Behavior
Stimuli
(Actions)
Cognition
(Beliefs)
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Attitudes
Segmentation
What is segmentation?
Subdivision of the market into different groups based on their similar or
common needs!
The process of dividing a market into identifiable groups of similar
consumers (Consumers; Arnold et al)
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Everybody pick a number between 1 – 10.
Older than 35, younger than 35
Blue bulls supporters, the rest
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Why do we Segment a market?
Not everyone wants the same thing!
(Consumer; Arnold et al)
Proposition that once you discover the most useful ways of segmenting
a market, you have produced the beginnings of a sound marketing
strategy
(Yankelovich; HBR 1964)
By Segmenting a market we have a better chance of satisfying a
customer’s need and adding value
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation helps us….
Focus resources on the most profitable sections of the
market.
Design a Distribution channel that satisfy the demands of
the market and especially those highly lucrative sections
that can be missed.
Catch the first signs of changing trends and allows us
time to adjust before the competition
Generate more cost and time appropriate advertising
(Adopted from Yankelovich 1964)
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation approaches
All customer
needs
Definition of
Product
solutions
Some
common
Needs
Match to
Common
Customer
needs
One broad
product
market
Define
Target
markets
Narrow Target markets
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Criteria for segmentation
Homogenous (Similar) – Similar in likely responses to marketing mix variables
Heterogeneous (Different) – Different in likely response to other segments
Substantial - Large enough to be profitable
Operational – Segmenting dimensions should be useful in a practical sense
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Dimensions for segmentation
Geographic / Demographic
Psychographic
Income
Sex
Age
Family Size
Family life cycle
Occupation
Education
Ethnicity
Region
City
Social class
Lifestyle
Subculture
Personality
Behavioral
Occasions
Benefits
User Status
Loyalty status
Stage of the Buying process
Attitude
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Geographic / Demographic
segmentation
Customer cultures vary by region
Afrikaans speaking Pta and English speaking JHB
Climate, Topography, History, Jobs/industries differ from
one region to another.
Heavy industry in EC, Travel / Film industry in Cpt, Big Business
in JHB
Cuisine preferences differ from region to region
Pap/Vleis in FS, International/Mediterranean cuisine in CPT,
Indian cuisine in KZN
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Psychographic Segmentation
Divides consumers into groups on the basis of differences in lifestyle
Lifestyle – how people live, their activities, interests and opinions
AIO - activities, interests, opinions
All-Bran®
Every serving of Kellogg’s®
All-Bran® provides at least
three times* more dietary fiber
than the leading supplement.
That’s 40 percent or more of
your daily recommended
intake.
Froot Loops®
Kellogg’s® Froot Loops®
breakfast cereal is fortified
with 11 essential vitamins
and minerals and is low in
fat. These colorful loops
give kids a sweet and fruityflavored start to the day
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Behavioral segmentation
Consumers divided into groups on the basis of their knowledge, attitude, use or
response to a product.
Benefit segmentation
Divided according to the benefit they seek from a product
Very popular method.
Hugo van Zyl
083-629 2069
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Marketing 1B
Customer behavior
Benefit segmentation
Life is better in the sun
When the sun shines, life feels better, brighter colors,
warmth on our skin, freedom to be outside and
importantly a healthy color that makes us look and feel
better
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Clarins has made Sun Protection a priority. As
a leading Skin Care authority, we consider it
essential to safeguard sun exposed skin
because the sun is both a pleasure and a risk.
Smart sun protection is without question,
imperative.
Usage rate segmentation
Segmenting the market by the amount of product used.
Favorite Sales Representative approach – My most important customer,
why?
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Occasion segmentation
Segment the market according to when they use or acquire the product.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
“Purchase process” segmentation
Segment according to which phase the customer is in:
Need awareness
Info gathering
Evaluation of alternatives
Purchase
Purchase evaluation
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Characteristics of market.
Watches
Pay lowest price and
discard if stops working
Value watches for long
life, quality, material etc.
Willing to pay
•Most expensive watches are bought by high
and low income earners.
•Portion of high income earners buy cheap
throw away watches intentionally.
•Other upper income earners buy watches for
specific occasions
Look for not only useful
features but for
meaningful emotional
qualities
Yankelovich HBR 1964
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Perfumes
Characteristics of market.
•Analysis of what the purpose of the
purchased object is for.
Perfume adds to
what nature has
supplied.
Perfume cancels
what nature has
supplied
Yankelovich HBR 1964
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Packaged goods
Convenience food
Easy to use
Shortcut to creative
cooking
Cleaning agents
Cleans preventively
Cleans therapeutically
Air fresheners
Remove odors
Adds odors
Characteristics of market.
•The “convenience” in convenience food can
mean many things to consumers
•The Positioning statement formulation
becomes a tricky process.
•Packaging differentiation is key in Multi
purpose goods
•Who needs are reason to drink beer?
Beer
Taste
Price/Quality
Consumption level
Yankelovich HBR 1964
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Segmentation
Computers
Characteristics of market.
Those that know how to
evaluate a computer
Those that don’t know
how to evaluate a
computer
•Only around 20% believe they know how to
evaluate a computer
•That leaves 80% to be educated before they
will buy.
Those that believe
progress is inevitable
Those that don’t believe
progress is inevitable
Yankelovich HBR 1964
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Diffusion of innovation
Hugo van Zyl
083-629 2069
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Marketing 1B
Customer behavior
Diffusion of innovation
3
4
5
6
7
Time of adoption innovation
Hugo van Zyl
083-629 2069
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Marketing 1B
Customer behavior
8
Laggards
2
Late majority
Early Majority
1
Early Adopters
50
45
40
35
30
25
20
15
10
5
0
Innovators
Cumulative % of adoption
Diffusion curve
9
10
11
Innovators
+ - 3 % of total adopters
No pattern to show who will be innovators, but…
Venturesome
Less risk averse
Younger
Higher incomes
Better educated
Active info seekers
Low loyalty levels
Key role in diffusion process
Spreads the word to other consumers
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Early adopters
Between 10% - 20% of adopters
Opinion leaders within local reference groups
Highly involved with trends in specific product categories
Key role in diffusion process
Responsible for the start of the growth phase of the PLC
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Early majority
Deliberative decision makers
Adopt innovation faster than their social group.
Rely on interpersonal info source and not impersonal media.
Key role in diffusion process
Responsible for prolonging the growth phase of PLC
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Late majority
Represents 30% of adopters
Skeptical consumers
Very risk aware and averse
Demands extensive product education before making the purchase
decision.
Adopt due to social pressure and not due to recognition of benefits
Key role in diffusion process
Sizeable portion of consumer base
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Laggards
Less than 20% of consumer base
Traditionalists, locally orientated and generally less educated than
consumer group.
Often older households and consumers.
Starts purchasing when PLC decline phase starts
Not to be confused with non adopters
Key role in diffusion process
Not dependant on high levels of Marketing noise
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Purchasing process
The Purchasing process is the foundation that supports the need for a Strategic
analysis.
The PP is fundamentally a “Problem solving process”
Individual and Environmental influences affect and control the process
Individual influences
Environmental influences
•Motives
•Reference groups
•Perceptions
•Social influences
•Learning
•Marketing influences
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Stages of the P.P.
Awareness
Info search
Evaluate
alternatives
Purchase
Evaluate
Purchase
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Step 1 - Awareness
A consumer becomes aware of a need.
I/E influences start playing a role
Perceptions, social influences etc.
Blocking mechanisms tell us otherwise
I don’t have money for this now…
Awareness may be subconscious or conscious
Hunger or New Golf club
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Awareness of a need…..
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Step 2 – Info Search
Once recognition of the need has taken place……
You start gathering info on the possible solutions.
Could be a complex process ( buying a new Laptop) or simple (What
fuel station to stop at)
Source of info may be Internal or External
Internal source
External source
•Past experiences
•Reference groups
•Learning
•Marketing
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Info search …….
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Step 3 – Evaluation of
alternatives
Now the Consumer weighs up all the possible solutions that they
have gathered.
Direct solutions or alternatives
Cost (not just price) becomes a big factor.
At this point the “influences” plays the largest role.
Individual or Environmental
Availability or access to is key to the pending decision
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Evaluation of alternatives….
Vs.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Step 4 - Purchase
The final decision hinges on the perceived risk involved.
A first purchase might be a trial purchase (Sample size)
All sales and marketing activities need to focus on minimizing the
perceived risk.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Purchase……
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Step 5 – Post purchase
evaluation
Evaluation of the purchase decision by the consumer:
Internally – Risk vs. Benefit
Externally – Peer, social, family group perception.
Feedback in 2 forms:
Verbal – In both + or --. Normally with “blame shift”
Behavior – Repeating a purchase and becoming brand loyal or returning
product if dissatisfied.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior
Post purchase dissonance
The guilty feeling after a purchase
The higher the initial perceived risk the greater the chance of PPD
Marketers need to address PPD in their campaigns as its often a
cause for failed Repeat purchases.
Motor maintenance plans
2 year warranties.
Hugo van Zyl
083-629 2069
[email protected]
Marketing 1B
Customer behavior