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SMM14Service Industry Marketing
Workshop 3
Changing Consumer Behaviour
What Is The Problem With Segmentation
1
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Outline
Customers as assets
Segmentation
Changing consumer trends
Impacts upon buyer behaviour
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Customers As Assets
Customer Turnover (Churn)
What is the customer turnover
What is the life of a customer
What is the growth in the customer base
Customer Status
New customers
Loyal stable customers Disillusioned customers
Lost customers
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Customers As Assets
* Process
customer database
- transaction history of each customer
- socio economic profile if possible- media habits
segmentation
marketing mix appropriate to targeted segment
* Barriers
assembling the information
* Tactical
sales promotions
* Strategic
new product developmentcustomer retention
cross selling
lapsed customer reactivation
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Customers As Assets
Regular customers
- Become aware of the breadth of products
- Familiar with performance characteristics- Know the systems and procedures of the company
- Believe they have made the right choice
- the organisations
- the product / service
Focus on loyal customers
- Stop the shopping around concept
- Less likely to buy on price
- More efficient and effective for company
- Highly target communication
- Identify profitable lost customers quickly- More focused new product development
- Cross selling
- Competitive advantage
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Segmentation - broad definitions
The process of dividing a total market into groupsof people with relatively similar product needs, forthe purpose of designing a marketing mix thatmatches precisely the needs of individuals in asegment (Dibb et al, 1994)
The identification of the ultimate market segment
.. the individual (Gordon, 1998)
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Factors For An Effective Segment
1. Identification - can you identify a distinct group of customers withthe same needs
2. Measurability - target segment must be capable of some form ofmeasurement, or at least a best guess
3. Adequate Size - the target segment has to be large enough to makethe marketing effort financially worthwhile
4. Accessibility - targeting is useless unless this group can be accessedby promotion and distribution. Can you access the decision makers?
5. Responsiveness - the target group should react to any change in the
marketing mix elements.
Unique / Appropriate / Stable ??
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Hooley, Piercy and Saunders
FOUR basic questions need to be answered:
How do we define the market what is the scope andconstitution?
How is the market segmented into different customergroups?
How attractive are the alternative market segments?
How strong a competitive position could we take where doour current or potential strengths lie?
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Target market selection
(Curre n
t&po
tentialc
omp
any
strength
sins
erving s
egment)
Weak
Average
Strong
Market segment attractiveness
Unattractive Average Attractive
Strongly Avoid Possibilitiesavoid
Avoid Possibilities Secondary
targets
Possibilities Secondary Primetargets targets
St
reng
th
s
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Behavioural differencesin buyer behaviour :
Brand Seekers
Low Price Ferrets
Promotion Junkies
Stock Pilers
Budget Bound
Promotion Opportunists
Promotional Oblivious
lifestyle is one of thekey profiling tools to
determine possiblelikes and dislikes
Sport
Theatre and Cinema
Arts and Culture Keep fit
Music
Outdoor
Towards A Better Understanding
Psychographic / Behaviourist (What and Why)
e.g. lifestyles, personality, benefits sought, product features,price, delivery, loyalty, usage rate, innovation, readiness
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Value Based Segmentation
Define value
profitability to date. Favours older customers as they arelikely to have generated more profit over a lifetime butmay not necessarily be the most profitable
recently, frequency, monetary popular in mail order
recent profitability if you have limited historical data
average profitability over a 12 month period and doesnot discriminate against new customers
potential profitability life time value
connected profitability e.g. a student who costs you buttheir parents can make you
Richard Clarke (2004)
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Benefits of Segmentation
Maximising customer needs
Mass markets vs customisation
Competitive advantage
Resource allocation
Dangers of Segmentation
Descriptive not predictive
Assumes competition free
May define wrong segment
Alienates consumer groups
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Changing Consumer Trends
Self segmentation
Media habits and consumption
Use of technology
Opinion formers / influencers
Choice
Consumer power / knowledge
Lobbying / boycotts
Feedback / reviews
Values & lifestyles
Ethical /Green / Fair Trade
Cause relatedmarketing
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Changing Consumer Trends
Healthy lifestyles
Fashions & fads
Motivations & Aspirations
Bargaining
LegalMore aware of rights
Protectionism
Demographic trends
Singles, aging, ethnicity, religion
Permission
Trust
Volunteer
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Bennett, 2006
The Impact On Buyer Behaviour And Problem Solving
Levels ofInvolvement & Risk
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Consumer Risk
Performance risk
Financial risk
Physical risk
Social risk
Ego risk
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Choice criteria
Technical e.g. reliability, comfort
Economic - e.g. price, value for money
Social - e.g. status, fashion
Personal e.g. self image, ethics
About understanding the key criteria / benefits to thecustomer of the purchase. What is it you areoffering them (what they think not you!)
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C Social
Personal
Psycho-logical
Situa- tional
Cultural
ValuesSystems
Beliefs
Cross-cultural
Social class
Social
Friendship
groups
Work groups
Family
Roles
Status
Personal
Age / life stage
Occupation
Economic
status
Lifestyle
Personality
Psychological
Motivation
Perception
Learning
Beliefs
Attitudes
Situational
Occasion
Environment
Marketing
influences
Selling
influences
Factors Influencing Consumer Buying Behaviour
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Organisational
Inter- personal
Individual
Situa- tional
Environmental
Level of demand
Economic outlook
Interest rates
Technological change
Political / regulatory
Competitive
environment
Social responsibility /
ethical concerns
Organisational
Objectives
Policies
Procedures
Structures
Systems
Culture
Personal
Interests
Authority
Status
Empathy
Persuasiveness
Individual
Age
Income
Education
Job position
Personality
Risk attitude
Situational
OccasionEnvironment
Marketing
influences
Selling
influences
Factors Influencing Organisational Buying Behaviour
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Who is important in the decision making unit(DMU)
B2C B2B
Initiator Initiator
Influencer Gatekeeper
Decider Influencer
Buyer Decider
User Buyer
User
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Customer Perception vs Motivation
100%
High Motivation Low
Low
Pe
rception
H
igh
50%
50% 0%
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Sources of Segmentation Data
National Statistics Online - http://www.statistics.gov.uk/
Acorn Classifications Data
Mori and/or Mintel
Quality Press (e.g. Guardian, Independent) - every now and then turn up with moremodern classifications
Institute of Direct Marketing
Chartered Institute of Marketing
WARC Marketing Pocket Book (World Advertising Research Centre)
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