Chapter 6- Segmentation Flashcards
What can influence on behaviour?
- Buying behaviour is an extremely complex phenomenon
- Many variables that can influence a consumer’s purchase decisions
- We consider several of these possible influences on behaviour
- These influences are commonly used to segment consumers into groups to determine those most/least likely to purchase your products
Define Segmentation
“Analysing the differences and commonalities in buyer behaviour in order to identify target segments”
What does segmentation refer to?
Segmentation refers to variation in customer needs, wants, preferences, behaviour
Why Segment?
Customers are different. So mass marketing is inefficient. So segmentation (separate programs for different customers) is useful as it makes marketing more efficient.
Define Culture
- Culture refers to a set of values, ideas, artefacts and other meaningful symbols that help individuals communicate, interpret, and evaluate as members of society.
- Culture is learned, not a biological response
Problems with Culture
It is thought to be dynamic (i.e. women’s role in the workforce) - making it difficult to measure and not very predictive
• Therefore… difficult to define
• But culture is something that should still be considered at least when marketing to a global consumer base
•
• Different approaches to business are acceptable in different
Ads that are misinterpreted in different countries
countries (i.e. bribery)
• Language and other verbal and non-verbal symbols (colours etc), methods of communicating the culture
Demographics
• Includes variables such as: age, gender, marital status, income, occupation and education
• Refers to the identifiable and measurable statistics of a population
– Therefore easier to measure than other segmentation variables
– Easy to then reach these consumers with marketing material
Benefits of using demographics?
-Often demographics are correlated (i.e. education and age, income and education)
-But correlate weakly with brand
choice
- Often used as a basis for segmentation or for ensuring survey populations are not different from general populations
-Ensuring generalisability is probably a better way of using demographic information in survey research than as a method of segmenting
-• Long term study of demographics is also a good way of spotting trends in populations, which may indicate new opportunities, threats etc…
– Baby boomers
Define Social Class
The division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of other classes have more/less status
Problems with Social Class
• Social class is often defined by one or more of the demographic/ socioeconomic variables
– Income
– Education level
– Occupation
• Generally a poor link to buying behaviours, often consumers behave “outside of their class” (i.e. aspirational groups)
Involvement of segments
- Sometimes used to explain the lack of predictive accuracy supplied by variables such as culture, social class etc. in predicting purchasing behaviour
- The importance and risks of the purchase and the cognitive processing involved
- Involvement is difficult to predict, most buying is less involving than marketing managers suspect
Geographics
Used to segment by location
More useful than some other variables used for segmentation because more accurately related to buying behaviour
– Example - global ad campaigns versus local ad campaigns
There are easily found and relevant differences in the purchasing
behaviour of consumers in different areas
– People living in Port Adelaide are more likely to do their main supermarket shopping in that area
Geodemographics
• A combination of geographic and socio-economic variables used to segment markets
• Often used in cluster analysis to describe clusters
– Name the clusters things such as: white collar affluents, pioneering young families, emerging ethnic enclaves etc…
Summary of why variables are important
• All of these variables seem to have some correlations with the way that people buy
• Variables are not necessarily predictive of consumption behaviours
• Poor track record in predicting anything other than the obvious
Particularly those variables that are easier to measure (like demographics and geographics)
Small segments
Textbooks often state that segments (such as the affluent) are desirable because they have the disposable money to buy products, but they may be small segments
– Chances are, the majority of purchases come from the masses, not from the few unusually affluent
– Focusing on a small group, may be more efficient, but may also restrict the majority of the customers who do not come from within that particular segment
Do user profiles of competing brands differ?
User-profiles of competing brands seldom differ!
Substitutable brands usually compete in a single unsegmented mass market
A buyer is a buyer, whoever he or she may be
How many segmentation variables are there?
200+ Segmentation Variables
How to calculate a MAD average
To calculate the avg. MAD take an average of the deviations, using the absolute number (i.e. ignoring the – ve/ +ve sign of the number)
Example: Barclaycard Average MAD is (3+3)/2 = 3
Are deviations common?
Bigger deviations were highlighted
They could distinguish users of a brand from the average brand
Big deviations were rare
Things to ensure when segmenting the market
- the segments must be of a certain size otherwise they won’t be profitable
- you can measure them and reach them consistently (the segments are stable over time)
- the brand offering must appeal to the segments with minimal wastage of those that are outside the segment
Types of segmentation
- Market / Category Segmentation
- Stock-Keeping-Unit (SKU) Segmentation
• Category & SKUs - functional differences
• Generally self evident (tea from coffee)
• May have different followings (segments) - Brand-User Segmentation
• Directly competing brands differ little
• All have similar key SKU’s
• Most consumers know a brand is a brand and “any reputable one will do”
Differentiation
• Brands are supposed to be differentiated.
• A certain type of person will prefer a certain type of brand. This preference means they are loyal.
• Differentiation is largely situation and person specific
• On a particular buying occasion some brands are more mentally
Different people are aware of different brands
and/or physically available than others
• From each buyer’s perspective brands are different - but each buyer has a different view
Key things to worry about
• ‘Cut through’
•Media choice
• Clear, unmistakable branding
Likeability (of ads)
• Tracking salience (not awareness/image)
• How easy is it buy from you?
• Distribution and the ‘point of sale’
• Competitive marketing is mass marketing
• Your brand is like your competitors
But you want 10% of the market
• Gives scope for promotion, selling, advertising, assurance
Does brand level segmentation exist?
Brand level segmentation generally does not exist – substitutable brands usually compete in what for them is a single unsegmented mass market, whatever its overall size and structure may be.
