Social Media Impact On Consumer Electronics: American Market Segmentation Survey by PSB
Consumer Market Segmentation
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Transcript of Consumer Market Segmentation
Market Segmentation
1
Companies must plan
CONSTANTLY
and the plan must be based
on an understanding of
market trends and marketing
segments
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What is a Market?
PEOPLE!!!!
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What is a Market?
PEOPLEBUT - not just ANY people, they have to have
• Willingness to buy
• Purchasing power (money)
• Authority to buy4
What is Market Segmentation?
The breaking down or building up of potential
buyers into groups called
Market Segments
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Grouping people according to their
similarity related to a particular
product category
Benefits of Market Segmentation
Identifies opportunities for new product development
Helps design marketing programs most effective for
reaching homogenous groups of buyers
Improves allocation of marketing resources 6
Fundamental-Buyer Related Questions
Who are they?
What do they want to buy?
How do they want to buy?
When do they want to buy?
Where do they want to buy?
Why do they want to buy?7
Each Market Segment should be…
Measurable
Differentiable
Accessible
Substantial
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Classes of Consumer Products
Convenience Shopping Specialty
Goods
Services
PO
P
14-1
$$
ATM
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Market Segmentation
- it is too difficult to create a product that will satisfy everybody, that is why we focus on a segment of the total market
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Market Segmentation
Grouping people
according to their
similarity related to a
particular product category
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Market SegmentationCharacteristics
• age
• gender
• geographic location
• income
• spending patterns
• cultural background
• demographics
• marital status
• education
• language
• mobility12
Market Segmentation4 commonly used bases for Segmentation
Descriptive
geographic location
demographic
Behavioural
psychographic
benefits13
Figure 3.1 Bases for Market SegmentationSlide 3-7
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Market Segmentation
geographic location - based upon where people live
(historically a popular way of dividing markets)
demographic - based upon age, gender and income level
(very often used)
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Market Segmentation
Psychographic / lifestyles - based on people’s
opinions, interests, lifestyles
e.g., people who like hard rock music probably
prefer beer to wine
benefits - based on the different expectation that
customers have about what a product/service can
do for them
e.g.. People who want to but “lite” food because it
will help them lose weight
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Geographic Segmentation
The reason why we study geographic segmentation
is because WHERE people live has a big effect on
their consumption patterns.
Additionally, WHERE people live in a city is also a
reflection of their income level and we can make
certain assumptions about their ABILITY TO SPEND
based upon their address.
This helps people plan store locations and the
location of other services.17
Geographic Segmentation
Climate:
clothing purchases, equipment and recreation are
effected by geographic location
You will sell more winter jackets in the mountain areas
of the Philippines, like Baguio, BUT, then the
population in Baguio is very small.
However, almost the everywhere else in the
Philippines, electric fans will be saleable.
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PHILIPPINE DEMOGRAPHICS
Urbanizationurban population: 65% of total population (2008) rate of urbanization: 3% annual rate of change (2005-10 est.)
http://www.indexmundi.com/philippines/demographics_profile.html
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Demographic Segmentation
Demographic Segmentation is the most
common approach to Market Segmentation
Variables are:
• age
• gender (male/female)
• income
• occupation
• education
• household (family - style) size
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
age
• age is another obvious way to divide the market into
segments since so many products are based upon
“time of life”
• diapers for babies
• toys for children
• entertainment for “over 19”Examples ??
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Demographic Segmentation
age
• also, people have different consumption
patterns at different ages
•eg. Milk products
• children and teens drink a lot of milk
• adults don’t
• older adults need calcium, but don’t drink
milk
(they take pills) Examples ??
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PHILIPPINE DEMOGRAPHICSAge structure0-14 years: 35.2% (male 17,606,352/female 16,911,376) 15-64 years: 60.6% (male 29,679,327/female 29,737,919) 65 years and over: 4.1% (male 1,744,248/female 2,297,381) (2010 est.)Median agetotal: 22.7 years male: 22.2 years female: 23.2 years (2010 est.)
http://www.indexmundi.com/philippines/demographics_profile.html
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PHILIPPINE DEMOGRAPHICSInfant mortality rate
total: 19.94 deaths/1,000 live births
male: 22.49 deaths/1,000 live births
female: 17.26 deaths/1,000 live births
(2010 est.)
Life expectancy at birth
total population: 71.38 years
male: 68.45 years
female: 74.45 years (2010 est.)http://www.indexmundi.com/philippines/demographics_profile.html
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Age effects: occurrences due tochronological age; heightenedinterests (travel, sports andleisure activities)
cohort effects: occurrences dueto growing up during a specifictime period; rock and roll, rap music,
Game Boy, Playstations, “puruntong” shorts,DVDs vs. Betamax, Nintendo vs. Sega, Niknikshirts, RJ and the Riots, the Beatles, ABBA,Madonna, Spice Girls, EasyCall, etc; “mgakinalakihan” 26
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A longer life expectancy is already a fact, a given, because of techno advances, but a healthy, more productive longer life expectancy is a choice.
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Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
Gender (male/female)
•gender is an obvious way to divide the market into
segments since so many products are gender-specific
• clothing
• medical products
• sports products/services
• entertainment
Examples ??
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PHILIPPINE DEMOGRAPHICSSex and Age ratioat birth: 1.05 male(s)/female under 15 years: 1.04 male(s)/female 15-64 years: 1 male(s)/female 65 years and over: 0.76 male(s)/female total population: 1 male(s)/female (2010 est.)
http://www.indexmundi.com/philippines/demographics_profile.html
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Demographic Segmentation
Demographic Segmentation is the most common approach to Market Segmentation
Variables are:
Household (family - style) size
•Sociocultural segmentation: sociological (group) and anthropological (cultural) variables combined
• Segmenting by the “stages in the family life cycle”
There are different buying characteristics of people in
each stage of the family32
Demographic Segmentation
•household (family - style) size
BUYING PATTERNS
• 0-5 young children
• 6-19 school children
• 20-34 young adults
• 35-49 younger middle-aged
• 50-64 older middle-aged
• 65+ seniors
• 80+ SUPER seniors33
Demographic Segmentation
•household (family - style) size
THE CHANGING HOUSEHOLD, say, in in Canada
• half of the households in Canada are only one, or
two people
• number of married couples forming a household is
decreasing
• many unmarried people, and old widowed people,
live by themselves
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Demographic Segmentation
•household (family - style) size
FAMILY LIFE CYCLE STAGES
1. Young Single
2. Young Married with no Children
3. Young - married with children
- divorced without children
- divorced with children
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Demographic Segmentation
•household (family - style) size
FAMILY LIFE CYCLE STAGES
4. Middle Aged
a. married without children
b. divorced without children
c. married with children
d. divorced with children
e. married without dependent children
f. divorced without dependent children36
Demographic Segmentation
•household (family - style) size
FAMILY LIFE CYCLE STAGES
5. Older
a. older married
b. older unmarried (divorced, widowed)
6. other
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Demographic Segmentation
•household (family - style) size
SSWDs
single separated widowed divorced
in Canada, 1.6 million people live alone
- they buy different sizes of products
e.g., Single serving soup, etc.
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Demographic Segmentation
Demographic Segmentation is the most common
approach to Market Segmentation
Variables are:
• age
• gender (male/female)
• income
• occupation
• education
• household (family - style) size40
Demographic Segmentation
income
Segmenting markets on the basis of income and
expenditure patterns
- The number of single mom families has increased
by 12.8% between 1985 and 1994
- Male single parent families have more income, on
average, than Female single parent families
(chart 3.6)
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PHILIPPINE DEMOGRAPHICSEthnic groupsTagalog 28.1%, Cebuano 13.1%, Ilocano 9%, Bisaya/Binisaya 7.6%, Hiligaynon Ilonggo 7.5%, Bikol 6%, Waray 3.4%, other 25.3% (2000 census)ReligionsRoman Catholic 80.9%, Muslim 5%, Evangelical 2.8%, Iglesia ni Kristo 2.3%, Aglipayan 2%, other Christian 4.5%, other 1.8%, unspecified 0.6%, none 0.1% (2000 census)LanguagesFilipino (official; based on Tagalog) and English (official); eight major dialects - Tagalog, Cebuano, Ilocano, Hiligaynon or Ilonggo, Bicol, Waray, Pampango, and Pangasinanhttp://www.indexmundi.com/philippines/demographics_profile.html 42
Engel’s Laws
As family income increases ……
• a smaller % goes for food - TRUE
• the % spent on housing and household operations and clothing will remain constant (that is: grow as total income grows) - FALSE in reality this amount declines
• the % spent on recreation, education will increase - TRUE, but there are exceptions
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Engel’s LawsWhy is this important……
• because marketing managers can use this
law to figure out what will happen (i.e., What
kinds of spending patterns will develop) if
people’s incomes increase
• also, if you are planning on going into a
new market, where people have more
money - this “law” helps you to plan how people’s spending patterns will be different
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Interrelation of Income, Education, Occupation
• income determines ability to pay for a product/model;
• education may determine buying decision processing;
• occupation may determine time and effort of buying decision processing 45
Psychographic Segmentation
“The use of psychological attributes,
lifestyles and attitudes in determining
the behavioral profiles of different
customers”
The use of detailed information to understand
differences in what people buy
psychological
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Psychographic Segmentation
Psychographic profiles on a target market segment
are obtained by doing a lot of questionnaires and
surveys to ask people if they agree/disagree with
certain statements made about particular activities,
interests or opinions
AIO - activities, interests, and opinions
http://ourworld.compuserve.com/homepages/finkleman/psychogr.ht
m47
AIOs:Activities (how the consumerspends time),Interests (the consumer’spreferences and priorities),Opinions (how a consumerfeels about a variety ofevents, the future, andpolitical/social issues) 48
Psychographic Segmentation
InterestsActivitiesOpinionsBehavioral patternsHabitsLifestylePerception of selling companyHobbies
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Psychographic Segmentation ExampleConsider a company that manufactures high end luxury cars. This is a product that cannot be afforded by people from every income group. Only individuals falling in high income groups are realistic customers of this specific product.
He will analyze the habits and lifestyles of his existing customers, and even those of the customers of his direct rivals. Soon he will see that some customers use these luxury cars as status symbols, some use them as utility vehicles, and some use them for long distance drives. Users who prefer long drives will be shown the highlighted fuel efficiency of the vehicle, people who use the car sparingly just for prestige purposes will be told about the excellent looks and prestige of the car model and the brand, and people who use them for other purposes will be informed about the interior space, the handling, the braking system etc.Understanding the usage of a particular vehicle will provide the basis for the marketing of a product.
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Behavioralistic Segmentation
Behavioral segmentation is based on
actual customer behavior toward products. Some behavioralistic variables include:
•Benefits sought•Usage rate•Brand loyalty•User status: potential, first-time, regular, etc.•Readiness to buy•Occasions: holidays and events that stimulate purchasesBehavioral segmentation has the advantage of using variables that are closely related to the product itself. It is a fairly direct starting point for market segmentation. 51
Benefit Segmentation
“It is based on the Attributes (characteristics)
of products, as seen by the customers”
example, people buy something because
it causes a benefitDiet coke: less sugar, lose weight
Extra white toothpaste: whiter teeth, better
smile
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Benefit Segmentation
“Many marketers now consider benefit
segmentation one of the most useful methods
of classifying markets”
ie. Watches
- the benefits customers looked for where durability and
product quality- older research was based on dividing the
watch market according to a different segment - once they
used the new segment, they changed the marketing plan-
modern example would be price of PCs for home use -
biggest use is entertainment NOT schoolwork or home based
businesses53
Benefit Segmentation of the Toothpaste Market
Segment Name
The
The Sensory The Independent
Segment Sociables The Workers Segment
Principal benefit sought Flavour, product Brightness Decay Price
appearance of teeth prevention
Demographic strengths Children Teens, young Large families Men
people
Special behavioural Users of Smokers Heavy users Heavy users
characteristics spearmint-
flavoured
toothpaste
Brands disproportionately Colgate, MacLean’s, Crest Brands
favoured Stripe Plus White, on sale
Ultra Brite
Personality characteristics High self- High High High
involvement sociability hypochondriasis autonomy
Lifestyle characteristics Hedonistic Active Conservative Value-
oriented
Benefit Segmentation
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Use-related segmentation: level of usage, level of awareness, degree of brand loyalty
1.Rate of usage: heavy, medium, light, and non-users
2.Brand loyalty: finding out what makes consumers loyal to a brand so that they can direct promo efforts to like-minded or like-situated people; vs. brand switchers; stronger brand loyalty (rewards/relationship programs) 55
Usage situation segmentation: weekday vs. week-end; Valentine’s Day, Mother’s Day, Christmas; funerals; time of day (merienda or snacks vs. ulam); sister or mother or female cousin or girlfriend or fiancée; Surf pine scent, Sunsilk summer shampoo
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Social class: implies a hierarchy in which individuals in the same class generally have the degree of status, while members of other classes have either higher or lower status 57
Differentiatedmarketing
Each targeted segment receives a specially designed marketing mix
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Segmentation is the Antithesis of mass (undifferentiated) marketing: • same product and
marketing mix for all consumers;
• consider Ford’s first Model T (“in any color for so long as it is black”) 59
NOTE:Hardly any product is undifferentiated; even Coke has added variants to appeal to different segments of the market (Coke Lite, Coke Vanilla, Cherry Coke, Caffeine free, Sakto, Litro,etc.)
Still-undifferentiated products: commodities (gasoline, steel, water)BUT for NOT long….
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Countersegmentation: a genericneed or consumer characteristicthat would apply to the members of2 or more segments and recombinethose segments into a larger singlesegment that could be targetedwith an individually tailored productor promo campaign; Dove’s “real beauty” or
the Benetton campaigns
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Examples of a FIRM’s Segmentation:
Acc. To benefits (performance, durability, reputation, convenience)
•Sugar free conscious buyers: Pepsi Max, Unsweetened Del Monte juice mixes; Sugar Not•Health Food Conscious buyers: Herbalife, Squalene
•Weight watchers buyers: Xenical, Slim Fast, Diet Coke (0 calorie!)
Acc. To Product Line:1.Athletic Market: Nike, Adidas2.Leather Shoes: GiBi3.Dental hygiene: Oral B
4.Male market: Gillette after-shave lotion, antiperspirant, shaving foam, Sensor
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NOTE:
When a company segments, it does not necessarily mean that it will concentrate on just one segment. It may (often) mean that they will create products and services (offerings) for the different segments within their universe•Skin care: for the 20s. 30s, 40s
•Different magazines within the Summit publishing group
•Cell phones: from entry level (talk and text) to the most sophisticated GPS-equipped satellite phones•Variants of furniture polish, laundry soaps, IPods, etc.
This is because they recognize diff segments will have different limitations, preferences, or wants, but the company will still want that share of that segment’s pockets (why let the competitor get that share??)
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How Market Segmentation Works:
1.Designed to discover the needs and wants of specific groups of consumers so that specialized goods and services can be developed and promoted to satisfy each group’s needs (vitamins for infants, babies, adults, women, men)
Micromarketing: even smaller, but still viable segments
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How Market Segmentation Works:
2. Also for repositioning of a product (Avon’s Skin So Soft lotion now a mosquito
repellent lotion; PlayStation and Nintendo not just for kids), Silly
String can be used as a mine detector by the military, or the addition of a new market segment (for cellphones; J&J baby products, Nivea men’s
skin products, adult diapers)
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Repositioning: imagine how coffee, eggs, wine, dark chocolates, even pork or coconut oil are now in the minds of consumers. Marketing or scientific re-evaluations or what? •Silly String: toy or weapon?
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67An attempt to change PORK in the consumer minds
How Market Segmentation Works:
3. To be able identify which is most appropriate media in which to promote the products (specific magazines, Lifestyle TV channel)
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What products will be (or NOT be) in these magazines?
Iconic Products:
Coke, Xerox, Frigidaire, Aspirin, Ponds, Johnsons’floor wax, Tide, Band Aid, IPods, Colgate
•Heritage: They've been around for a long timeand stuck to their vision mission and core values.
•Consistency: Although their identities may havebeen through many iterations they have evolvedrather than changed dramatically.
•Relevance: They've managed to keep in tunewith the markets they operate in, to stay freshand relevant - whilst maintaining the pointsmentioned above. 70
Iconic Products:
Coke, Xerox, Frigidaire, Aspirin, Ponds, Johnsons’floor wax, Tide, Band Aid, IPods, Colgate•Leadership: Without doubt the most significant inmy mind. Whilst not necessarily the biggest in thefield they are the most respected. Recognised bycustomers and non-customers as best in class,respected by captains of industry, business mediaand politicians as leaders. These are the companies that set the standards and
Governments go to for specialist advice, journalists for comment, and the investment community watches closely. They arethe innovative in every sense of the word, but pragmatic and well managed.
•Integrity: Many many icon brands have survivedcrisis, Citigroup, IBM, even Coca Cola, but theyhave recovered and been forgiven. They have adeep rooted cultures that helps them get back ontrack.
THEY DOMINATE and are timeless and age-less!!!
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