Identifying Market Segments and Targets Flashcards
Bases for Segmenting Consumer Markets
- Geographic segmentation
- Demographic segmentation
- Psychographic segmentation
- Behavioural segmentation
Hard segmentation
geographic and demographic
Soft segmentation:
Psychographic and behavioral
most important
Geographic Segmentation
Geographical units • Nations • States • Regions • Counties • Cities • Neighborhoods
Nielsen Claritas’ PRIZM • Education and affluence • Family like cycle • Urbanization • Race and ethnicity • Mobility
Demographic Segmentation
• Age
“our wants and abilities change with age”
• Life stage
“a person’s major concern (e.g. divorce)
• Gender
“men and women have different attitudes and behave differently”
• Income
“income segmentation is a long-standing practice”
• Generation
“silent gen – baby boomers – gen x – millennials - iBrains
• Cultural background
“race and culture”
Psychographic Segmentation
Buyers are divided into groups on the basis of psychological/personality traits, lifestyle, values
-> VALS Segmentation System
VALS Segmentation System
VALS - A survey acting as a value and life-style indicator with the aim to reflect trends in the society
Behavioral Segmentation
Marketers divide into groups based on their knowledge of, attitudes toward, use of, response to a product
- Needs and benefits
- Decision roles: Initiator, influencer, decider, buyer, user
Typical initator in families?
In a family, the child is the initiator (“I want the sweets”) > marketing started to focus on children to make their parents buy for them
User and usage-related Variables
- Occasions
- User status
- Attitude
- Loyalty status
- Usage rate
- Buyer readiness stage
Occasion
when something is used is observed (e.g.: champagne became a drink for special occasions)
Attitude
you don’t just have an opinion, you communicate it to influence other people’s behavior
Loyalty Status
loyal customers buy more and spend more, they are less price sensitive and might not even notice a price increase
Usage rate
way to increase revenue and increase average spending (works very well online)
you want to create a heavy user,
e.g.: people who drink 2L of coke per day; at McDonalds: creating heavy users by offering to super size the order)
User Status
it’s a regular or a subscriber of our service
e.g.: subscribing to Netflix
How to mirror brand awareness:
People need to be aware of the brand, they like to buy what they know and liked, very few people like to try new things
> supermarkets introduced “new product section” to analyze what new products customers are interested in
Tricky strategy to increase prices (hidden price increase)
Keep price constant but put less content (loyal customers don’t notice it)
Behavioral Segmentation Breakdown
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Business Markets
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How Should Business Markets Be Segmented?
- Demographic
- Operating variables
- Purchasing approaches
- Situational factors
- Personal characteristics
Marketing Targeting
- Need based segmentation
- Segment identification
- Segment attractiveness
- Segment profitability
- Segment positioning
- Segment “Acid Test”
- Marketing Mix strategy
Effective Segmentation Criteria
- Actionable
- Differentiable
- Measurable
- Substantial
- Accessible
Porter’s Five Forces
- Threat of rivalry
- Threat of new entrants
- Threat of substitutes
- Threat of supplier bargaining power
- Threat of buyer bargaining power
One-to-One Marketing
Fake-customization: even if they say that they tailor the suit for you, usually it is a mass product
