Week 4: Segmentation Flashcards
Why do we use Segmentation?
It drives the marketing mix!
- remember each segment requires at least one element of the marketing mix to be different (otherwise it is not a segment)
Effectiveness and efficiency
Positioning strategy
Product development
Segmentation Stakes:
Functional/Customer Analysis
Segmentation helps you to find out about small details about the marketing mix (on a micro level)
- Whether to make small improvements to existing products
- How to select targets of a media campaign
- Whether to change prices
Segmentation Stakes:
SBU level
It’s about which segment to go after (positioning)
- How to position the brand
- Which segments to pursue
- Whether to change the product fundamentally
- Whether to develop an entirely new product
Segmentation Stakes:
Corporate level
How our business model should relate to the general population to whom we are selling to (core values, beliefs)
- Whether to revise the business model in response to powerful social forces changing how people live their lives
What is a “Market Segment”?
Group expected to RESPOND IN A SIMILAR WAY to an offer (or other element of the marketing mix)
What is “Market Segmentation”?
The process of subdividing (or aggregating) the market into segments
What is a “Target Segment”?
The segment that the company CHOOSES to serve effectively and profitably
What is “Segmentation”?
The PROCESS of partitioning a market into groups of potential customers who are similar in designated ways and are likely to exhibit similar purchasing behaviour
Similarity within GROUP is greater than BETWEEN groups
What are the different Segmentation Approaches?
NORMATIVE
A PRIORI
POST HOC
DATA MINING
Segmentation Approach:
NORMATIVE
An econometric approach that attempts to determine buyer similarities by analysing elasticity coefficients, marginal revenue and response function coefficients
Segmentation Approach:
A PRIORI
Drawing on secondary sources, the market is segmented by appropriate variables (think bases/variables of segmentation)
Segmentation Approach:
POST HOC
A study is conducted to determine the information (bases/variables) of a representative sample of the market.
This provides the information for developing the segments.
Segmentation Approach:
DATA MINING
Customer data is analysed in order to determine patterns and relationships that can form a meaningful basis for segmenting the organisation’s customer bases
Segmentation Variables
Geographic
Demographic
Psychographic
Behavioural
Benefit
Occasions of Use
Segmentation Criteria
Sizeable
Clearly Identifiable
Reachable (your marketing strategies)
Respond differently to other segments
Coherent
Stable
