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    Rediscovering Market Segmentation

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    raaiedjay
    This document discusses rediscovering market segmentation. It begins by explaining that market segmentation involves dividing buyers into groups based on common needs and purchase behaviors. While traditional demographic segmentation is no longer sufficient, psychographic segmentation based on values and lifestyles is weak for predicting purchases. The document recommends a meaningful segmentation approach based on analyzing customer purchase data to understand attitudes, needs, and behaviors that drive buying decisions. It provides a 6-step process for developing a segmentation that makes sense for senior management and can adapt to changing markets.

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    Rediscovering Market Segmentation

    Uploaded by

    raaiedjay
    127 views16 pages
    This document discusses rediscovering market segmentation. It begins by explaining that market segmentation involves dividing buyers into groups based on common needs and purchase behaviors. While traditional demographic segmentation is no longer sufficient, psychographic segmentation based on values and lifestyles is weak for predicting purchases. The document recommends a meaningful segmentation approach based on analyzing customer purchase data to understand attitudes, needs, and behaviors that drive buying decisions. It provides a 6-step process for developing a segmentation that makes sense for senior management and can adapt to changing markets.

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    This document discusses rediscovering market segmentation. It begins by explaining that market segmentation involves dividing buyers into groups based on common needs and purchase behaviors. While traditional demographic segmentation is no longer sufficient, psychographic segmentation based on values and lifestyles is weak for predicting purchases. The document recommends a meaningful segmentation approach based on analyzing customer purchase data to understand attitudes, needs, and behaviors that drive buying decisions. It provides a 6-step process for developing a segmentation that makes sense for senior management and can adapt to changing markets.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    127 views16 pages

    Rediscovering Market Segmentation

    Uploaded by

    raaiedjay
    This document discusses rediscovering market segmentation. It begins by explaining that market segmentation involves dividing buyers into groups based on common needs and purchase behaviors. While traditional demographic segmentation is no longer sufficient, psychographic segmentation based on values and lifestyles is weak for predicting purchases. The document recommends a meaningful segmentation approach based on analyzing customer purchase data to understand attitudes, needs, and behaviors that drive buying decisions. It provides a 6-step process for developing a segmentation that makes sense for senior management and can adapt to changing markets.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 16

    REDISCOVERING MARKET

    SEGMENTATION

    Group Members:
    Saadia Shahwaiz F2016270020
    Raaied Baig F2016270001
    Hamza Malik F2016270030
    Fatima Javaid F2016270032
    INTRODUCTION
    MARKET SEGMENTATION

    Different kinds of people display different buying patterns


    Understood by those who are responsible for market research, pricing, sales
    and strategy
    Gathering relevant data to find the patterns of customers buying behavior will
    construct a proper meaningful segmentation.
    Referring to the division or collection of buyers into smaller groups
    (segments) on the basis of common needs and will respond similarly to a
    marketing action.
    It enables companies to target different categories of consumers who value a
    certain products and services differently from one another
    INTRODUCTION
    In 1964, D. Yankelovich with his article New Criteria for Market
    Segmentation stated that:
    Traditional demographic traits (age, sex, education, income) were no
    longer enough to serve as a basis for marketing strategy.
    Non-demographic traits (values, tastes, preferences) were more likely
    to influence consumers purchases.
    Marketing Strategy actually & essentially depends on identifying
    segments that were potentially receptive to a particular brand/product
    category.
    The idea was to broaden the use of segmentation in order to inform
    about product innovation, pricing, choice of distribution channels
    THE DRIFT INTO NEBULOUSNESS
    THE BEGINNING OF PSYCHOGRAPHICS
    By 1960s consumers were becoming less predictable in their buying habit - i.e.
    people had become very price conscious.
    Product introductions and modifications of existing product remained
    Tastes and purchasing patterns no longer aligned with age and income -
    demographic segmentations lost their ability to guide companies decisions
    Started focusing on things like status or lifestyles - i.e. advertising in the fashion
    industry reflecting the segments personal inner characteristics & lifestyle.
    VALS is the most accepted research method used for psychographic market
    segmentation.
    In 1978 by Arnold Mitchell and his colleagues at Stanford Research Institute
    based heavily upon the work of Harvard sociologist David Riesman and
    psychologist Abraham Maslow.
    THE WEAKNESS OF
    PSYCHOGRAPHIC SEGMENTATION

    Psychographic segmentation can be used to create advertising that will


    influence consumers to think warmly about a particular brand.
    Very weak at predicting what & how people are likely to purchase

    Or how to keep existing customers or gain new ones.

    Good basis for advertising but does not enlighten companies with
    precise info.
    Need a different kind of non-demographic segmentation to investigate
    what kinds of products to make.
    DIFFERENT SEGMENTATIONS FOR
    DIFFERENT PURPOSES
    THE WAY BACK - A MEANINGFUL
    SEGMENTATION

    Depends on finding patterns in customers actual buying behavior through


    relevant data:
    Gather info about which benefits & features matter to your customers
    Know which customers are willing to pay higher prices or demand lower ones.
    Learn about the advantages/disadvantages customers identify in your offerings
    Gather data on emerging social, economic & technological trends
    Use qualitative research to explore customers motives & needs
    Use quantitative research to understand completive strengths & opportunities
    Reexamine the sales data to reveal the hidden behavior
    THE OUTPUTS OF A MEANINGFUL
    SEGMENTATION

    With such data, you can fashion segments that are both revealing and
    applicable
    Such segments will:

    Reflect the companys strategy

    Indicate where sources of revenue or profit may lie

    Identify consumers values, attitudes, and beliefs as they relate they


    specifically to product or service offerings
    Focus on actual customer behavior

    Make sense to top executives

    Accommodate or anticipate changes in markets or consumer


    6 STEPS FOR A MEANINGFUL
    SEGMENTATION
    What are trying to do:
    The goals change as they change (leave the company)
    CMOs dont understand how segmentation would benefit their companies
    strategic decisions
    Identify groups large enough and profitable to justify pursuit

    Which customers drive profits:


    Companies can rank their existing customers based on profitability
    Find new potential customers who have common attributes with their existing
    profitable customers

    Which attitudes matter to the buying decision:


    Psychographics -Personality traits are not enough (stable) for the buying
    decision
    Lifestyle attitudes, self-image , aspirations, customers values and environment
    crucial because they are constantly changing
    CONT
    What are my customers actually doing:
    Further research on customers heaviness of use, brand switching, retail
    format and channel selection
    Before a product launch - find out how interesting those features are, how
    willing are the customers to pay and at what price

    Will the segmentation make sense to senior management:


    Only if it simply distributed and justified

    Can our segmentation register change?


    Yes, but when is it part of an ongoing process and not a one-time effort,
    because:
    Consumers needs, attitudes and behavior can easily change
    Markets are changing (new technologies, emerging consumers niches,
    fluctuating economics)
    THE SPECTRUM
    Is a tool that can facilitate identifying which specific expectations, motives or
    concerns lie behind a consumers particular behavior
    A range, where any product, purchase activity, attitude or incentive can be
    positioned

    Low End Middle High End

    Low/Shallow End: consumers are seeking products/services with low


    perceived cost & risk, which they think will save them time, effort or money
    (i.e. toilet paper, credit card).
    Middle: consumers are actively concerned, but for issues such as design,
    status, quality or complexity. (i.e. car, pc)
    High/Deep End: consumers emotional investment is great & their core
    values are actively engaged. (i.e. health care issues)
    THE GRAVITY OF SPECTRUM

    1. Motives: small-daily decisions for items which are seen as non-


    investment purchases and give little but significant value as an extra touch
    (Razor example)

    2. Concerns: thoughts which drive customers behavior and come from


    cultivation-own philosophy for life (Toyota hybrid cars and the
    environmental concern)

    3. Emotions: totally personal factors which influence consumers


    behavior. Cannot be characterized as clever or nonsense purchases but
    as beneficial or harmful investments.
    THE GRAVITY OF SPECTRUM
    IMPLICATION OF MARKETING
    STRATEGY

    Different starting points means different applied segmentation.


    objectives, goals, situation, conditions, overall strategy
    Effective segmentations focus on just one or two issues, and they need
    to be redrawn as soon as they have lost their relevance.
    Be specific, definite & constantly revised/reviewed

    Only with the appropriate in each case, precise data, someone can
    invent or reach revealing, actionable & applicable segments.
    CONCLUSION

    We believe that organizations able to overcome these


    weaknesses will be able to respond more quickly and
    effectively to rapidly changing market conditions, develop
    insight into where and how to compete and gain maximum
    benefit from marketing.
    THANK YOU!

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