MARKETING Segmentation, Targeting, Positioning and CRM Flashcards
A bit about Market fragmentation:
Ø Peoples interests, backgrounds, and needs divide them into many different groups
Ø Diversity of people means that the same service or product will not apply to everyone
Ø Technology, cultural developments, globalization and societal sophistication are all drivers of market fragmentation
Sociology and market segmentation:
Ø Durkheim mechanical (similarity) and organic (dependence) solidarity of societies.
The problem of market segmentation for companies:
Balancing the efficiency of mass marketing (same items and services for everyone) with the effectiveness of offering each individual exactly what he or she wants.
Smith’s definition of segmentation:
(1956)
“a rational and more precise adjustment of product and marketing effort to consumer or user requirements; it consists of viewing a heterogeneous market as a number of smaller homogeneous markets”
Benefits of Segmentation & Targeting:
Ø Places customers at the core of all decisions
Ø Enhances your understanding of your customers
Ø To build loyalty, identify high-potential customers, predict future purchase patterns
Ø Enables you to position your products closely to the target segment
Ø Efficient use of resources
Ø Enables you to identify new product and service opportunities
Segmentation description 2:
“Segmentation involves identifying (selecting) and describing marketing segments.”
Segmentation is the process of dividing (analysis) a larger market into smaller pieces based on one or more meaningful shared characteristics.
What is a segmentation variable ?
Segmentation variables are dimensions or categories that divide a total market into smaller homogenous groups
What are the different Segmenting categories?
- Age
- Psychographics
- Gender
- Family
- Class and income
- Ethnicity
- Place
Age:
Generational marketing (boomers, gen x, gen y,
millennials)
Psychographics:
Ø “Lifestyle” segmentation – describes people based on their activities, interests, and opinions
Ø Products can be defined in terms of lifestyle benefits => marketing at a more emotional level
Ø Less vulnerable to competition
Ø Harder to define and measure
Ø Many intangible variables – which ones to choose?
Ø Requires primary research in addition to other sources
Ø Risk of too much stereotyping
Gender
Female, male, metero, gay, lesbian, hyphenated
Family :
Class and income :
Buying power, differentiated taste, and aesthetics
Ethnicity :
National cultures of consumption
Place:
Geographic segmentation, geodemography, geocoding online advertisement
Example of Bad Psychographic Segmentation
Behaviour Segmentation :
Focuses on the consumer’s relationship with the product
- End use (e.g., baking soda)
- Transaction frequency (e. g. , from scanner data), profitability of the customer, loyalty of the customer, and so on
- Benefits sought in the product
Less vulnerable to competition
Is a good basis for creating meaningful segments, but the segments need to be ‘described’ based on observable variables
Tesco’s Behavioural Segments:
Bases for Segmentation
A word of caution: racism, sexism, stereotypes etc… don’t be a douche bag:
To me grouping people according to some essentialized characteristic has severe ethical implications
Sexism, racism, social stereotypes and other pitfalls are very dangerous territory and should be combatted at every level.
Characteritics of a “Good” segment :
Why do IDIC and CRM?
Increase share of customer rather than share of market (lifetime value and customer equity)
Instead of getting a lot of customers who each buy a little, get a few who buy a lot!
Think about customers as being customers for life: calculate how much they spend over an average lifetime
What is the 80/20 rule ?
20% of customers account for 80% of the purchases…. Focus on the 20% (“looking after gold members”)
What is the Long Tail strategy ?
Don’t focus on big hit sales, nut catering to the niche…. Internet sales has made this a far more viable option. It doesn’t matter that only 1/1000 wants your product if there are 7 billion people in your market.
4 Ps of the marketing Mix 4 Ps of the marketing Mix
- Price: Profitablility, strategy
- Product: Innovation, attributes
- Place: distribution and supply
- Promotion: Advertising and Branding
Concentrated strategy =
Specialization: focusing efforts. Often pursued by smaller firms
Differentiated Strategy =
Multiple specializations: several brands that cover different product needs
Adidas’ Differentiated Targeting Strategies:
L’oréal’s Differentiated Targeting Strategies
Customized (micro) strategy =
Fits each individual’s individuality 😉😉😉
Customized (micro) strategies examples:
Nike ID
Undifferentiated Strategy
It mainly concerns Fast-Moving Consumer Goods (FMCG)
