Transcript ch04 segmentation

OHT 4.1
Segmenting markets
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© Pearson Education Limited 2005
OHT 4.2
Defining potential customers
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What they want.
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What they will accept.
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What kind of distribution will be most convenient to
them.
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The communication channels that can be used to reach
them.
Brassington and Pettitt: Essentials of Marketing
© Pearson Education Limited 2005
OHT 4.3
Segmentation the concept
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Customer orientated concept - based on understanding
customers.
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Practical - breaking large markets down into
manageable parts or groups.
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Proactive part of developing a marketing strategy.
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Consumer markets and B2B markets segmented
differently.
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OHT 4.4
B2B macro segmentation bases
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Based on the characteristics of organisations and the
broader purchasing context in which they operate.
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Bases for macro segmentations tend to be observable or
obtainable from secondary information.
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Can be divided into different organisational
characteristics.
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OHT 4.5
The three organisational characteristics
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Size of the organisation.
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Location, e.g. geographical concentration.
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Usage rate, e.g usage of products.
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OHT 4.6
B2B micro segmentation bases
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Micro segments may exist within a macro segment.
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A detailed understanding of individual members of the
macro segment needed (management philosophy,
decision making structures, purchasing policies, etc.).
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Starting with broad characteristics then developing
increasingly fine detail (from understanding the industry
to an organisation’s operating variables, purchasing
approach, and finally personal characteristics).
Brassington and Pettitt: Essentials of Marketing
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OHT 4.7
Common micro segmentation bases in B2B markets
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Product.
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Applications.
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Technology.
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Purchasing policies.
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Decision making unit structures.
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Decision making process.
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Buyer–seller relationship.
Brassington and Pettitt: Essentials of Marketing
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OHT 4.8
Segmenting consumer markets
Consumer segmentation bases place more emphasis on
buyers’ lifestyles and purchasing context.
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OHT 4.9
Consumer segmentation bases (1 of 2)
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Geographic segmentation - defines customers according
to their location.
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Demographic segmentation - age, sex, race, income,
occupation, socio-economic status, family structure, etc.
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Geo-demographic segmentation - combines geographic
information and lifestyle data about neighbourhoods.
Brassington and Pettitt: Essentials of Marketing
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OHT 4.10
Consumer segmentation bases (2 of 2)
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Psychographic segmentation - intangible variables e.g.
beliefs, attitudes, etc.
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Behaviour segmentation - the individual’s relationship
with the product, how the product will be used, benefits
sought, etc.
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Multivariable segmentation - using several segmentation
variables.
Brassington and Pettitt: Essentials of Marketing
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OHT 4.11
AIDA response hierarchy model
Figure 4.2
Brassington and Pettitt: Essentials of Marketing
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OHT 4.12
Segmentation process
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Defining the boundaries of the market - what business
are we in?, and looking at the world through the
customers’ eyes.
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Targeting customers.
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OHT 4.13
Targeting strategies
Figure 4.3
Brassington and Pettitt: Essentials of Marketing
© Pearson Education Limited 2005
OHT 4.14
The concentrated targeting strategy
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The concentrated approach is the most focused and
involves specialising on serving one specific segment.
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Can lead to very detailed knowledge of the target
segment’s needs and wants.
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This strategy can help keep costs down as there is only
one marketing mix to manage.
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Helps to develop a niche market.
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OHT 4.15
The differentiated targeting strategy
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Involves the development of a number of different
marketing mixes for different segments.
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Allows a business to tailor its offerings to suit different
segments.
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Spreads risk across market segments.
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Requires a detailed overview of the market and its
development potential.
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Can dilute a company’s efforts.
Brassington and Pettitt: Essentials of Marketing
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OHT 4.16
The undifferentiated targeting strategy
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Least demanding targeting strategy.
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Assumes that the market is one homogeneous unit with
no significant differences.
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One single marketing mix serving all needs.
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Relatively inexpensive.
Brassington and Pettitt: Essentials of Marketing
© Pearson Education Limited 2005
OHT 4.17
Segmentation – the benefits (1 of 2)
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Customers can find products/services that fit more
closely to what they want.
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Customers can feel more responsive and loyal to
organisations that speak directly to them and tailor their
products accordingly.
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Enables organisations to target its marketing mix more
closely on potential customers thus matching their needs
more accurately.
Brassington and Pettitt: Essentials of Marketing
© Pearson Education Limited 2005
OHT 4.18
Segmentation – the benefits (2 of 2)
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Enables organisations to define shopping habits.
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Places the customer at the core of all decisions.
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Enables the organisation to achieve a better
understanding of itself and its environment.
Brassington and Pettitt: Essentials of Marketing
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OHT 4.19
Segmentation - the dangers
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Risk of poor definition and implementation of
psychographic segmentation.
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Knowing where to stop.
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Fragmentation of the market.
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Customer confusion.
Brassington and Pettitt: Essentials of Marketing
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OHT 4.20
Criteria for successful segmentation
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Distinctive.
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Tangible.
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Accessible.
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Differential advantage.
Brassington and Pettitt: Essentials of Marketing
© Pearson Education Limited 2005