Strategic marketing lecture 4
Transcript of Strategic marketing lecture 4
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Module: Strategic MarketingInstructor: Bilal Ahmad
LECTURE: Strategic market segmentation
Introduction
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• Identification of Market segments
• Buyer’s needs, preferences and purchase
behavior
• Formation of market segments
• Customer group identification
• Forming group base on Response differences
• Finer segmentation strategies
Learning Outcomes
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• Selecting the segmentation strategy
• Strategic analysis of market segments
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• Identifying market segments– Segmentation variables
– Characteristics of people and organizations• Consumer markets
• Organizational markets
• Product use situation segmentation
• Buyers’ needs and preferences
– Consumer needs
– Attitudes
– Perceptions
• Purchase behaviour
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• Segmentation variables
– Segmentation and targeting of customers allows the
marketer to deliver a product within the target audience
needs and wants (Pickton and Broderick, 2005: 373)
Identification of Market segments
Buyers’ Needs/PreferencesUseSituationCharacteristics of People/
Organizations
PurchaseBehavior
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Illustrative Segmentation Variables
Characteristicsof people/organizations
ConsumerMarkets
Organizational Markets
Age, gender, income,family size, lifecycle stage, geographiclocation,lifestyle
Type of industry, size, geographic location, corporate culture, stage ofdevelopment, producer/intermediary
Use situation Occasion, importance ofpurchase, prior experience with product, user status
Application, purchasingProcedure (new task, modified rebuy, straightrebuy
Buyers’ needs/preferences
Brand loyalty status, brandpreference, benefits sought,quality, proneness to make a deal
Performance requirements, brand preferences, desiredfeatures, servicerequirements
Purchasebehavior
Size of purchase,frequency of purchase
Volume, frequencyof purchase
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• Definition– Market segmentation based on use of product
– Needs and Preferences vary according to
different use situations
• Mass customization
Product use situation segmentation
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• Example:
• Astra/Merck segmentation based on.– Health care as business
• Care administrator
– Traditional• Physicians with standard patient needs
– Cost sensitive• Physicians for whom cost is paramount
– Medical though leaders• People on leading edge
Product use situation segmentation
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– Needs and preferences• Specific to product
• Specific to brand
• Used as segmentation bases
• Used as segmentation descriptors
– Customer needs
– Attitude
– Perceptions
Buyer's needs and Prefrences
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• Customer needs
– Basic physiological needs
– Nature and intensity of needs
– Better solution (Filling the gap)
• Attitudes– Attitude influence behavior
– Marketing strategy development
Buyer's needs and Prefrences
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• Perception– Process by which an individual selects,
organize, and interprets information inputs to
create a meaningful picture of the world.
(Bernard and Gary, “Human behavior”. 1964)
– Evaluation of Positioning strategy
– Strategic management of Positioning strategy
Buyer's needs and Prefrences
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• Purchase behavior– Consumption variables
– Volume of purchase
– CRM system
– Loyalty Program
Buyer's needs and Prefrences
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• Purchase behavior
Buyer's needs and Prefrences
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• Levels of involvement
Forming Market segments
Low involvement
Habitual Decisions
E.g.. tea, toothbrush
Moderate involvement
Simple decisions
E.g. Face wash, snacks
High Involvement
Lengthy decisions
E.g. Car, University
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– Requirements for segmentation• Response differences
• Identifiable segments
• Actionable segments
• Cost/benefits
• Stability
– Approaches to segment identification
– Customer group identification
– Forming groups based on response differences
Forming market segments
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• Example
• Miller genuine draft –
– “mainstream sophisticates”
• Milwaukee’s Best Light –
– “hardworking men”
• Pilsner Urquell –
– “beer afficionados”
• Miller Icehouse –
– for “drinking buddies”
Forming market segments
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• Response differences
• Identifiable segments
• Actionable segments
• Cost/benefits of segmentation
• Stability over time
• Product Differentiation and market
segmentation
Requirements for segmentations
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Segment identification
B-Start with customer
response profile
A-Start with identifiers of
customer group
Approaches to segment identification
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• Management insight and available
information
• Cross classification analysis
• Data Mining for segmentation
• Segmentation illustrations
Customer group identifiaction
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• Customer relationship management (CRM)– Cluster analysis
– Perceptual maps• Product market area
• Competitor analysis
• Buyer’s perception analysis
• Map preparation
Forming group based on response differences
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– Logic• Customized offerings
• Diverse customer base
• Close customer relationships
– Finer segmentation strategies• Micro-segmentation
• Mass customization
• Variety-seeking strategy
Finer segmentation strategies
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– Deciding how to segment
– Strategic analysis of market segments• Customer analysis
• Competitor analysis
• Positioning analysis
• Estimating segment attractiveness
• Segmentation “fit” and implementation
Selecting the segmentation strategy
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• Anticipating the future
– Boundaries and composition of Product market
– End-user customer base
– Market and industry transformation
– Potential threats
– Value chain composition and structure
– Product life cycle phase?
Strategic vision about future