Chapter 5 segmenting markets. 5-2 Brassington & Pettitt, Principles of Marketing 4e, © Pearson...

chapter 5

segmenting

markets

5-2Brassington & Pettitt, Principles of Marketing 4e, © Pearson Education 2006

learning objectives_1

• Explain how both B2B and consumer markets can be broken down into smaller, more manageable groups of similar customers

• Understand the effects on the marketing mix of pursuing specific segments


learning objectives_2

• Understand the potential benefits and risks of segmentation

• Appreciate the role of segmentation in strategic marketing thinking


Segmentation Defined

Segmentation is the art of discerning and defining meaningful

differences between groups of customers to form the foundations of

a more focused marketing effort.


eg business and consumer travel markets


Stages of Segmentation for B2B Markets

• Identify subgroups within the whole market that share common general characteristics (macro segments)

• Select target segments from macro segments based on differences in specific buying characteristics (micro segments)


B2B Segmentation Bases

Macro

• Size

• Location

• Usage rate

Micro

• Product

• Applications

• Technology

• Purchasing and decision-making processes

• Buyer-seller relationships


Consumer Segmentation

• Similar to B2B segmentation, except

– Consumer segments tend to be larger

– More difficult to get close to buyer

– More emphasis on lifestyle and context


Consumer Segmentation Bases

Geographic

GeodemographicMulti-variable

Behaviour Psychographic

Demographic


eg Geographic Segmentation and Instant Hot Chocolate

• Ideal for UK market (homes equipped with kettles, nice bedtime drink, or substitute for tea

• Less so for French market (kettles uncommon, norm of making hot chocolate with milk rather than water)


Demographic Segmentation

• Age

• Gender

• Race

• Income

• Occupation

• Social status

• Family structure


eg Geodemographic Segmentation and Mosaic

• The analysis of people by where they live

• Micro-targeting system

• Targets by neighourhood

Source: Experian Ltd, http://www.experian.com. © 2005 Experian Ltd. All rights reserved. The word ‘Experian’ is a registered trademark in the EU and other countries and is owned by Experian Ltd and/or its associated companies


Psychographic Segmentation

• Lifestyle segmentation

• Categories

– Activities

– Interests

– Opinions

– Demographics Quorn targets vegetarianswith meat substitutes

Source: © Quorn http://www.quorn.co.uk


eg Lifestyle Orientations in China

• Fashion-orientated

• Tradition-orientated

• Achievement-orientated

• Moderate-orientated


Lifestyle Orientations in the USA


Why Use Psychographic Segmentation?

• To define a target market

• To create a new view of the market

• To position the product

• To better communicate product attributes

• To develop overall strategy

• To market social and political issues


Behaviour Segmentation

• End use

• Benefits sought

• Usage rate

• Loyalty

• Attitude

• Buyer readiness

eg usage segmentation in the soup market

•Dinner party starter

•Warming snack

•Meal replacement

•Recipe ingredient

•Easy office lunch


Loyalty Segments

• Current loyal user, continuing purchase

• Current customer, switching possible

• Occasional user, could become loyal

• Occasional user, switching possible

• Non-user, could become user

• Non-user, unlikely to become user


Figure 5.2 The AIDA Response Hierarchy Model

Awareness

Interest

Desire

Action


Segmentation Targeting Strategies

Undifferentiated Differentiated Concentrated


Undifferentiated Strategy

Marketing mix The market


Differentiated Strategy

Marketing mix 1 Segment 1

Marketing mix 2

Marketing mix 3

Segment 2

Segment 3


eg Cadbury’s Market Segments

• Immediate eat

• Home stock

• Kids

• Seasonal

• Gift


Concentrated Strategy

Marketing mix 2 Segment 2


Criteria for Successful Segmentation

Distinctiveness

Accessibility

Defendability

Tangibility


Key Terms_1

• Which bases of segmentation groups consumers in terms of their usage rate, the purpose of use, or their willingness and readiness to buy?

Behavioural segmentation

• _____ occurs when a consumer consistently buys the same brand over a long period.

Brand loyalty


Key Terms_2

• _____ stages categorise consumers in terms of how close they are to making a purchase or a decision.

Buyer readiness

• Which segmentation base considers the measurable aspects of population structure, such as birth rates, age profiles, family structures, education levels, occupation, income and expenditure patterns?

Demographic segmentation


Key Terms_3

• _____ is a combination of geographic and demographic segmentation that can either give the demographic characteristics of particular regions, neighbourhoods and even streets, or show the geographic spread of any demographic characteristics.

Geodemographics

• Which segmentation base groups customers in terms of their geographic location?

Differential advantage


Key Terms_4

• _____ means to group consumers on the basis of psychographic characteristics.

Lifestyle segmentation

• _____ segments in B2B markets are defined in terms of broad organisational characteristics such as size, location and usage rates, or in terms of product applications.

Macro


Key Terms_5

• _____ segments in B2B markets are defined in terms of detailed organisational characteristics such as management philosophy, decision-making structures, purchasing policies.

Micro

• What term refers to using a number of different variables to develop a rich profile of a target group of customers?

Multivariate segmentation


Key Terms_6

• Which bases of segmentation defines consumers in terms of their attitudes, interests and opinions?

Psychographics

• _____ are consumers who are not loyal to any one brand of a particular product and buy two or more brands within the category.

Switchers


Key Terms_7

• _____ is the process of deciding how many market segments to aim for and how to do it.

Targeting

Chapter 5 segmenting markets. 5-2 Brassington & Pettitt, Principles of Marketing 4e, © Pearson...

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