Segmentation

1
Segmentation

• Group Exercise
• Travel/Business/Leisure
• Sports
• Outdoor/Skiing/Mountain Biking
• New Mothers/New Fathers
• Gardening/Home Related
• Recreational Shopping
• Students/Computers/Movies/Reading

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Segmentation Mkt Targeting

• Market Segmentation is the process by which a
  market is divided into distinct customer subsets
  of people with similar needs characteristics
  that lead them to respond to a particular product
  offering and strategic marketing program

3
Targeting

• Evaluating the relative attractiveness of each
  segment, (size, revenue potential, growth rate),
  the benefits sought the firms relative
  strengths.
• Positioning is designing product offerings and
  developing strategic marketing programs that
  collectively create an enduring competitive
  advantage in marketplace

4
Rationale

• Market Aggregation Strategy
• Segmentation Strategy Benefits are opportunity
  for new product development
• Strategic allocation of resources
• Reach homogeneous groups
• Issue Finding appropriate scheme to facilitate
  formulation of successful mkt strats programs

5
Segmentation

• 2 Step Strategy
• 1. Identify
• 2. Aggregate into segments
• Physical Descriptors-General Behavioral-Product
  Related Behavioral-Needs
• How might you do this on the web?
• (bookmarked sites, lifeminders surveys, etc?)
• Foundation for developing the proper mix of
• mkt activities including advertising

6
Segmentation Issues

• What should come first?
• Product Selection? Or Prospect Selection?
• (do you start with product or do you start
• with a mkt segment that is desireable?)
• GLOBAL segmentation, sophisticated markets
  communication issues
• Market Attractiveness
• Analyzing Prioritizing Target Mkts

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Market Attractiveness Matrix

• Mkt Attractiveness Factors
• Mkt/Customer
• Economic/Tech
• Competitive
• Environmental

• Competitive Position Factors
• Mkt Position
• Economic/Tech
• Capabilities
• Interactions

8
Analyzing Prioritizing Targets

• 1 Selection of Mkt attractivenss business
  strength factors choose criteria
• 2 Weighing each of these factors
• 3 Rating each segment on these areas
• 4 Projecting the future position of a mkt
• 5 Evaluating implications for choosing target
  mkts and allocating resources

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SEGMENTATION

• CREATE PROFITABLE EXCHANGES
• to do this on web, must first
• initiate awareness
• SHARED CHARACTERISTICS
• with web quietly assess characteristics/test
• easier to do subtle queries to find out more
• without as much expense and time now

10
SEGMENTATION

• CONSUMER MARKETS
• B2C
• BUSINESS MARKETS
• -B2B

11
Targeting Strategies

• Mass Market Strategy
• Niche-Market Strategy
• Growth Market Strategy
• International Arena
• Ethical Issues
• Exclusion Issues

12
SEGMENTATION

• FOOTPRINTS - web (bookmarked sites,
  subscriptions, cookie trails, purchases)
• STARS -Simmons Teenage Research Study
• GVU - Georgia Tech Graphics Visualization
  Usability Survey 10,000 users
• Forrester Research Data - web site
• GVU 38.7 Forrester 43
• Home Environment Growth of Internet

13
Segmentation

• PROFILE
• BEHAVIORISTIC
• GEOGRAPHIC
• DEMOGRAPHIC
• PSYCHOGRAPHIC

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Segmentation

• Behavioristic - Stephan Tannenholz
• 1. Sole Users
• 2. SemiSole
• 3. Discount Users
• 4. Aware Nontriers
• 5. Trial/Rejectors
• 6. Repertoire Users

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SEGMENTATION

• USAGE RATE VARIABLES
• What factors impact usage rate?
• Q How might the trend toward pants affect
• pantyhose sales globally? LEggs Data
• Volume Segmentation -
• Q Is it easier to get heavy users to use more or
  to get nontriers to do trial?
• Q How to predict usage via other products?

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SEGMENTATION

• How does the weather impact buying patterns?
• Purchase occasion variables?
• Benefits Sought Variables - this is the prime
  objective of many consumer attitude studies and
  is the basis for ads.
• Switching in response to different need states -
  compare to Maslow hierarchy.

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SEGMENTATION PROFILE

• DEMOGRAPHIC
• AGE
• GENDER
• INCOME
• OCCUPATION
• ETHNICITY

• PSYCHOGRAPHIC
• VALUES
• ATTITUDES
• PERSONALITY
• LIFESTYLE
• EMOTIONAL

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SEGMENTATION

• Cultural Anthropology - Environment can have a
  powerful impact.
• China Example - 1 run water/84 TV
• Hispanic Example - Texas vs LA trends
• Psychographics may help predict purchase
• behavior or tendencies because it shows what
  people feel, believe, how they live
• web hyperlinks, domain names, search engines,
  pricing, cross cultural etc.

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SEGMENTATION

• GEOGRAPHIC SEGMENTATION
• GLOBAL DEVELOPMENTS
• Cosmopolitanism
• COMBINING GEOS PSYCHOS
• VALS/SRI -Japan, Germany, France, Norway, Italy
  YR - 4 Cs.
• RISC - 12 European countries
• Anticipating Change in Europe (ACE)
• traditionalist, homebody, rationalist, pluralist,
  striver, trendsetter ---- Istanbul Turkey Update

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CHICAGO SEGMENTATION
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CHICAGO SEGMENTATION

• Selection of Target Prospect Groups
• Must be large enough market to be profitable -
  market assessment formulas
• Estimate potential demand volume
• Starbucks/Coffee Beanery Examples
• Web - may need to have speed, convenience,
  delivery, but can reach broader geographic range
  potentially.

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4 Ps6Ps7Ps...

• PRODUCT
• PRICE
• PLACE
• PROMOTION
• PUBLIC
• POLICY
• PROLIFERATION/PACE/TECHNOLOGY
• (ALSO KNOWN AS IP INFORMATION P

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Positioning Decisions

• Physical vs Perceptual Product Positioning
• Physical Positioning Limitations
• Perceptual Product Positioning
• How Consumers Perceive Competitive Offerings
• Simple physical based attributes
• Complex physical attributes
• Abstract attributes

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Product Life Cycle

• Introduction - trendsetters/early adopters
• innovator stage critical
• Decline - selective demand/conquest
• Service
• Equipment based vs People Based
• Product
• Classifications

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Product Classifications
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Product Differences

• Perceptible Differences
• Hidden Differences (not known until use)
• Induced Differences

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BRAND EQUITY

• Individual Brand
• National Brand
• Family Brand
• Private Label Brand
• WEB Brand (emerging virtual brands)
• RossRoy/InterOne Plymouth - Chrysler
• Brand Stewardship - BrandAsset Valuator Matrix -
  brand stature vitality/personality

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Brand Equity

• Packaging - containment/protection/convenience/app
  eal
• Identification -
• web becomes validator for brand
• web is also way to have universal brand price
  information, knowledge, comparison
• Price, Quantity demand, supply, sales

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Positioning Process

• 1 Identify relevant product brand set
• 2 Set of determinant attributes/product space
• 3 Collect information from sample customers
• 4 Analyze intensity of a products current
  position in customers minds
• 5 Determine products current location/position
• 6 Determine customers most preferred combo
• 7 Examine fit btw preferences of mkt segments
• 8 Select positioning or repositioning strategy

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Perceptual Mapping Exercise

• Expensive
• Slow
• -------------------------------
• Inexpensive

• Quick
• -------------------------------

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Market Position Strategies

• Monosegment Positioning
• Multisegment Positioning
• Standby Positioning
• Imitative (copy cat) Positioning
• Anticipatory Positioning (proactive/offensive/pre-
  emptive)
• Adaptive Positioning (evolutionary)
• Defensive Positioning

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Lifestyle Data ClusterWWW.SITERREPORTS.COM

• Profile Behavior
• Listens classical radio
• 3 Foreign Trips/3 yrs
• Attended live theatre
• Drinks imported wine
• Visited Museum
• Uses Gold AMEX card
• Uses Dry Cleaner

• Microvision Index
• 21.5 750
• 22.9 483
• 47.2 345
• 29.6 350
• 45.8 334
• 36.6 710
• 26.5 481
• Nat ave index 100

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MicroVision Groups

• MVG01 - Accumulated Wealth
• MVG02 - Mainstream Families
• MVG03 - Young Accumulators
• MVG04 - Mainstream Singles
• MVG05 - Asset Building Families
• MVG06 - Conservative Classics
• MVG07 - Cautious Couples
• MVG08 -Sustaining Families
• MVG09 - Sustaining Singles
• MVG10 - Anomalies
• MVG11 - Unclassified
• WHO ARE THEY MISSING AND WHAT DO YOU THINK OF
  MVG10 11?

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IVALS INTERNET PSYCHOGRAPHICShttp//future.sri.co
m

• Affinity Mapping Software
• 10 Profile Segments
• WIZARDS SURFERS
• PIONEERS IMMIGRANTS
• UPSTREAMERS SOCIABLES
• SOCIALITES SEEKERS
• WORKERS MAINSTREAMERS
• WHICH GROUP CONTAINS THE POWER USERS?
• WHICH GROUP SEES THE INTERNET AS A TOOL?

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CLICK-STREAM ANALYSISwww.alexa.com

• A NEW MODEL OF ADVERTISING VIEWERSHIP
• NOVAK HOFFMAN OF VANDERBILT UNIV
• similar to eye tracking studies, but applied to
  how one navigates through electronic ads and
  online navigation process
• http//www200.ogsm.vanderbilt.edu/papers/clickstre
  am/clickstream.html
• This would be good as a paper option!

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MARKET DEMAND

• DEMAND VARIABLES Nielsen Knowledge Vault -
  product sales factors
• Product Distribution Costs
• Competition
• Corporate Obj Strats
• Variable Influences
• Research - www.forrester.com, www.demographics.com
  , www.census.gov

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SOFTWARE

• AC NIELSEN KNOWLEDGE VAULT
• TEAMS - Total Evaluation Analysis Sales
• SPSS - DIA Study
• Arbitron
• Knowledge Seeker
• Proprietary forecasting programs

38
Segmentation

• Distribution Issues - B-B, alternative channels,
  place issues
• Place, direct, network, multilevel, indirect
• Input/Output web based
• push/pull selective, distribution, co-op, excl
• VMS - Franchising McD.s, Mailboxes

39
SEGMENTATION

• EMOTIONAL FACTORS THAT MOTIVATE CONSUMERS
• Theoretical underpinnings
• Business Industrial Markets - purchasing depts
  buyers, some of this may carry over
• Business Markets - segment by end user, by
  channels, primary demand trends, 2 step
• wholesaler WD channels have diff needs