Chapter 12: Market segmentation and the selection of target groups Flashcards
Market segmentation and the selection of target groups is part of
strategic retail marketing policy
Consumers become more and more
individualistic
➔ Difficult to place them in one target group and describe them!
➔ Different needs on different moments and locations!
➔ Challenge for retail!
Market segmentation
Dividing the market into more or less homogenous groups of individuals with common characteristics and a similar purchasing behaviour
Segmentation criteria
- Heterogeneity of needs: needs of the segments must distinguish themselves from other groups
- Measurability: criteria of the segment must be measurable
- Approachability: segment must be reachable through promotional and distributional technique
- Size: segment must be large enough to be economically exploitable
Segmentation strategies
A-priori segmentation:
▪ Classifying based on general characteristics and then assessing
whether there are differences in behavioural characteristics
between or among groups
▪ Methodology disadvantage is that the segments are not
homogeneous in terms of their product requirements,
purchasing behaviour and use of the product
Segmentation strategies
Ex-post segmentation:
▪ Groups of customers behave differently towards products and
homogenous segments are based on the similarity in
requirements, behaviour and use
▪ The advantage is that the requirements of homogeneity and
heterogeneity are met and there is a direct relationship to
purchasing behaviour
Most common segmentation strategies
▪ Geographical segmentation
▪ Demographic segmentation
▪ Psychographic segmentation
▪ Domain specific segmentation (bell curve)
We use target marketing in the current environment to
develop a store personality
CRM systems
In the physical world, we partially resolve the problem of anonymity with CRM systems. CRM stands for customer response management and is a system that allows a retailer to collect customer data to ultimately serve the customer better. Many retailers use customer cards, either physically or digitally in the app for example.
basic idea of CRM system
increase loyalty and then this should be shaped mainly by better responding to a customer’s needs rather than giving discounts or points. The goal is ultimately to create a greater connection between the retail chain and the customer.
Once there are enough users, the CRM system can be effectively deployed by
using concepts such as one-to-many marketing or also called group marketing and one-to-one marketing. One-to-many marketing involves looking more at groups that exhibit similar behaviour. Based on this data, information is sent to these groups.
If the retailer does not have access to a loyalty or CRM system, he can really only record visits. In doing so, he uses so-called
customer counting sytems, a system that does not quite do what it says, because it does not count customers but visitors. The systems are very sophisticated camera’s and can give insight into:
- Numbers, group size, gender
- Average frequency of visits per person
- Analyses of different parts and departments
- Where people have been