MARKET RESEARCH FOR SEGMENTATION & TARGETING

Prepared by:

MARKET SEGMENTATION :
A process of partitioning markets into segments of similar potential customers likely to exhibit similar purchase behavior Match goods and services to customers needs and wants The foundation for overall marketing strategy Goal-to analyze markets, find a niche, and develop and capitalize on a superior competitive position
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THE LOGIC OF SEGMENTATION STRATEGY

Not all buyers are a like Sub groups of people with similar behavior, value, and backgrounds may be identified The sub groups will be smaller and more homogeneous than the market as a whole It should be easier to deal with smaller groups of similar customers than with large groups of dissimilar customers
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The Major Steps In Market Segmentation And Selection Of Target Markets

Step 1 The market C1 C3 C8 C2 C6 C4 C5 C7 Is disaggregated C1 C3 C8 C2 C6 C4 C5 C7 #1 C1 C2 C3 C4 C5 Step 2
And grouped into meaningful market

Step 3
So that a target market can be chosen

#2

#3

C6 C7 C8
#1 #2

Product Price Distributio n Promotion

#3

Heterogeneous consumers

Individual consumers

Fairly homogeneous Market segments

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CRITERIA FOR SEGMENTATION

1. The market segment has a characteristic or characteristics that distinguish it from the overall market. 2. The market segment has a market potential of significant size-that is, large enough to be Profitable. 3. The market segment is accessible through distribution efforts or reachable through promotion efforts. 4. The market segment has a unique market need and the likelihood that the market segment will favorably respond to a marketing mix tailored to this specialized need is high. 5. The segments market potential should be measurable.
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ETERMINING DETERMINING WHETHER A MARKET SEGMENT IS MEANINGFUL

Is there a characteristic that distinguishes the segment? Yes Is the market potential of adequate size? No Yes Is the segment accessible ? Yes Will the market segment respond favorably to a specialized marketing mix? No Yes Consider choosing this meaningful market segment as is a target market

No

No

The market segment is not meaningful

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SELECTED BASES FOR SEGMENTATION OF CUSTOMER MARKETS

Bases for Segmentation of Consumer Markets

Geographic Political boundarie s Climatic regions Populatio n boundarie s

Demographi c Age Sex Race Marital status Family size Family life cycle

Socioeconom ic Occupation Education Income Social class

Psychographic /Lifestyle Activities Interests Opinions Values

Behavior patterns Type of store Time of purchase Number of units purchased Shopping frequency Media habits

Consumption patterns Frequency of use-heavy vs. light usage, unit size Occasion Loyalty to brand Ownership of other product

Consumer predispositio ns Product knowledge Benefit sought Consumer problem

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DEMOGRAPHIC SEGMENTATION
It is the most widely practiced form of segmentation It comes from the Greek words demos ( the peoples) and graphic (writing) and means describing people One of the major problems for its lack of richness in describing for market segmentation. It lacks dimensionality when describing
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LIFESTYLE/PSYCHOGRAP HICS SEGMENTATION

It is the systematic use of relevant activity, interest, and opinion construct to quantitatively explores and explains the purchasing and consuming behavior of persons for products/services This Measures : 1. How people spend their time engaging in activities 2. What is of most interest or importance to them in their immediate surroundings 3. Their opinions and views about themselves and the world around them
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LIFESTYLE DIMENSION
Activities Interest Opinions Themselves Social issues Politics Business Economics Fashion Products Future Culture Demographics Age Education Income Occupation Family size Education Geography City size Stage in life Work Family Hobbies Home Social events Job Vacation Community Entertainment Recreation Club membership Dwelling Community Food Shopping Media Sports Achievements cycle

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ILLUSTRATIVE QUESTIONS IN A LIFE-STYLE STUD

A.Activities
Once Daily About how many times in the last 12 months have you Almost None Once or 2 Twice 3 to 5 Times 6 to 18 Times About 19 to 35 Times a Week

Traveled out of state __________ __________ __________ __________ __________ __________ __________ Used a credit card __________ __________ __________ __________ __________ __________ __________ Attended a picnic __________ __________ __________ __________ __________ __________ __________ Placed a bet __________ __________ __________ __________ __________ __________ __________ Gone hunting __________ __________ __________ __________ __________ __________ __________ Dialed information __________ __________ __________ __________ __________ __________ __________ (and so forth; hundreds of questions are possible.)

B. Interest and Options

Please indicate the extent to which you agree or disagree with each statement below. Use the following response scale to record a number next5 to each statement: Definitely Definitely Disagree -3 -2 -1 0 +1 +2 +3 Agree __________________ I live a well-planned life. __________________ My family is the most important thing in my life. __________________ I try to work out physically on a regular basis __________________ The government should be cut back __________________ I like parties. T - 11 (and so forth; hundred of questions are possible.)

VALS
Principle Oriented

Abundant resources ACTUALIZERS

Status

Oriented

Actions

Oriented

FULFILLED

ACHIEVERS

EXPERIENCERS

BELIEVERS

STRIVERS

MAKERS

STRUGGLERS Minimal resources

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DEMOGRAPHIC AND LIFE-STYLE CHARACTERISTICS OF THE VALS 2 SEGMENT

Segment Actualize Fulfilled Believer Achiever Striver Experience r Maker Struggler Percent of Populati on 8% 11 16 13 13 12 13 14 Sex (M) 59% 47 46 39 41 53 61 37 Median Age 43 48 58 36 34 26 30 61 Median Income $58,000 38,000 21,000 50,000 25,000 19,000 23,000 9,000 Education (some College) 95% 81 6 77 23 41 24 3 Occupation (White Collar) 68% 50 11 43 19 21 19 2 Married

73% 73 70 73 60 34 65 47

Continued..
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DEMOGRAPHIC AND LIFE-STYLE CHARACTERISTICS OF THE VALS 2 SEGMENT CONTINUED

Fulfilled Moderately active in community and politics Leisure education and travel Health conscious Politically moderate and tolerant Believers Respect rules and Trust authority figures Enjoy settled, comfortable, predictable existence Socialize within family and established groups Politically conservative Reasonably well informed
Actualizers Value personal growth Wide intellectual interests Varied leisure activities Well informed; concerned with social issues Highly social Politically active

Achievers Lives center on career and family Have formal social relations Avoid excess change or stimulation May emphasize work at expense of recreation Politically conservative Strivers Narrow interest Easily bore Somewhat isolated Look to peer group for motivation and approval Unconcerned about health or nutrition Politically apathetic Strugglers Limited interest and activities Prime concerns are safety and security Burdened with health problems Conservative and traditional Rely on organized religion

Like the new offbeat, and risky Like exercise, socializing, sports, and outdoors Concerned about image Unconforming, but admire wealth, power, and frame Politically apathetic

Experiencers

Enjoy outdoors Prefer hands on activities Spend leisure with family and close friends Avoid joining organizations, except unions Distrust politicians, foreigners, and big business

Makers

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SYCHOLOGICAL CHARACTERISTICS OF THE VALS 2 SEGMENT

Actualizers Optimistic Self-confident Involved Outgoing Growth oriented Achievers Moderate Goal oriented Conventional Deliberate In control Strivers Dissatisfied Unsure Alienated Impulsive Approval seeking Strugglers Powerless Narrowly focused Risk averse Burdened Conservative
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Fulfilled Mature Satisfied Reflective Open-mined Intrinsically Motivated Believers Traditional Conforming Cautious Moralistic Settled

Experiencers
Extraverted Unconventional Active Impetuous Energetic

Practical Self-sufficient Constructive Committed Satisfied

Makers

BENEFIT SEGMENTATION (1)

The benefit that people are seeking are the basic reason for purchase and therefore the proper basis for market segmentation Need qualitative research to explore customer benefit The concept appears simple but its implementation is complex, requiring multivariate analysis
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BENEFIT SEGMENTATION (2)

RESTAURANT CUSTOMER 1 Segment
Dinners Segment Segment 2 3 Romantics Entertainers Family

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A BENEFIT SEGMENTATION ANALYSIS OF THE TOOTHPASTE MARKET

THE SENSORY SEGMENT Flavor, product appearance Children Users of spearmint flavored toothpaste Colgate, Stripe THE SOCIABLES Brightness of teeth Teens, young people Smokers THE WORRIERS Decay prevention Large families THE INDEPENDENT S Price Men Heavy users Heavy users

Principal benefit sought Demographic Strengths Special Behavioral characteristics Brands disproportionatel y Favored Personality Characteristic s Life-style characteristics

High selfinvolvement Hedonistic

Macleans, Plus Crest Brands on sale White, Ultra Brite High High High hypochondrias sociability autonomy is Active Conservative Value oriented
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SEGMENT MARKETING MIX STRATEGIES-FEMALE INVESTOR MARKET

Elements of Segment Marketing Mix Strategy Segment A Segment B Segment C Career Woman Single Parent Mature Woman Growth Safety Income Minimum Growth Safety Takes Growth stocks Blue chips Utility stocks municipal mutual funds bonds / T-bills bonds Normal fees Normal fees Normal fees and and and no loads commissions commissions Career women Parent/childr Fashionable (business en (home (home office) setting) setting) Money Magazine Business Week Family Circle Lunchtime Morning or Day or evening seminar at or evening Seminar at near work seminar at local school convenient location

ProductNeeds Primary -Mix of

financial products

Price-Commission
and service fees

Promotion Ad
copy and media Place-sales presentation venue

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BASES FOR SEGMENTATION OF ORGANIZATIONAL MARKETS

Bases For Segmentation Of Organizational Markets Organization characteristics
Industry type Organization al size Technology used Purchase behavior And usage patterns Order size (heavy vs. light usage) Centralized vs decentralized purchasing Type of rebuy (e.g., straight rebuy vs. new task)

Geographic Political boundaries (e.g., cities, states, etc.) Domestic/ internation al

Organizational Predisposition or policy

Product knowledge Benefits sought Organization al problems Multiple vs. single supplier policy
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THE NESTED APPROACH TO SEGMENTATION: MACRO INTERMEDIATE, AND MICRO BASES

General, Observable, Objective (Macro) Emphorographics Industry Company Size Location Operating variables Technology User-Nonuser Status Customer Capabilities Purchasing Approaches ( Financial) Organization of Decision-Making Unit Purchasing Policies Purchasing Criteria Situational Factors Urgency Application Size of Order Personal Characteristics Motivation Buyer-Seller; 1 to 1 Relationship Risk Perceptions Source: Thomas V. Bonoma and Benson P. Shapiro

(Intermediate )

Specific, Subtle Subjective (Micro)

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Type of Company & Company Orientation Manufactur Service Manufactur Service e e Price Quality Price (Mean) Quality (Mean) (Mean) (Mean) Size of segment Growth Competitive situation Competitive advantage Mean 3.29 3.71 3.29 3.43 3.43 3.33 3.83 2.67 3.50 3.33 3.50 4.50 3.17 4.00 3.79 4.14 4.86 3.00 4.43 4.07
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Thank you

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