- Understanding the concept of segmentation - Knowing its implications - Identifying the relevant criteria for segmentation - Implementing market segmentation

Laurence Chérel - Catherine Madrid Tech De Co Bordeaux

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MARKET SEGMENTATION

- Understanding the concept of segmentation

- Knowing its implications

- Identifying the relevant criteria for segmentation

- Implementing market segmentation


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UNDERSTANDING THE OF SEGMENTATION

Findings:

When faced with a need, not all consumers adopt the same behaviour in satisfying it.

THEREFORE: they choose various solutions to satisfy their need.


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Generic market: eating breakfast

Main markets

Substitute market

For example in the breakfast food market

The solutions chosen can be:

- Traditional bread- OR pastries- OR crispy bread- OR cereal- Or nothing at all

Traditionalbread

Pastries

Crispy bread

Cereal Nothing


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INTERPRETATION

This means that in order to satisfy the need to eat breakfast, consumers have various solutions at their disposal.

They do not therefore adopt the same behaviour. The breakfast food market is segmented.


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KNOWING THE IMPLICATIONS OF SEGMENTATION

Segmentation consists in:-Determining the significant differences in consumer behaviour-In order to be able to group them into mutually exclusive uniform categories (= segments).

- Each of these segments is likely to be targeted through an appropriate marketing strategy.

Total adult population51 million (Insee.fr)

AbsoluteNon-

Consumers

20% who do not eat breakfast, i.e.

10,200,000 persons

Relative Non-

Consumers

33.2% eat foods

excluding bread/crispbread ,i.e.

16,932,000 persons6 630 000

= customers of the main markets

46.8% eat breador crispbread, i.e.

23,868,000

Professional marketPre-packaged and dry bread products

+ bread

REMINDERS (course on the market)

Breakfast food market for the adult French population in relation to the project to launch honey crispbread


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DIAGRAM OF MARKET SEGMENTATION

French Adult Population

(51 million)

Criteria 1: attitude towards having breakfast

Criteria 2: type of users of breakfast products

SEGMENT 1 SEGMENT 2

NO = ANC (10,200,000 persons)

YES = potential consumers (current customers + NRC) =

40,800,000 persons

Users of spreads (23,868,00 persons)

Users of self-sufficient products

(16,932,000 persons)


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IDENTIFYING THE RELEVANT CRITERIA FOR SEGMENTATION

The market is segmented by means of CRITERIA which must enable significant differences in behaviour to be identified.

Several types of criteria linked to:

1 - the general characteristics of the consumer,

2 - the psychological characteristics of the consumer,

3 - goods and services consumption situations


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1 – Criteria linked to the general characteristics of the consumer:

1.1 - factors of the geographic environment:

. Region, type of residence, size of accommodation, climate, etc.

Example: the type of vacuum cleaner chosen varies depending on the type of residence (house or apartment)


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1.2 - sociodemographic factors:

. Age,

. Sex,

. Family size,

. Level of education,

. Generation,

. Etc.

Example: the size of the family determines the choice of family car


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1.3 – economic factors:. Income,

. Profession.

NOTE: bipolar consumption interferes with segmentation by income.

The consumer is prepared, for example, to:make certain financial sacrifices in order to purchase products for pleasure.become attached to the use value of a product when this product is only of functional value to him, independent of his income.


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2 – Criteria linked to the psychological characteristics of the consumer:

2.1 – factors linked to the individual:. His personality,

. His values,

. His beliefs,

. Etc.

Example: depending on the relationship the individual has with his pet, he will adopt a specific behaviour in the choice of feed. If the animal is thought of as a “child” of the family, his master will not choose an industrial feed. He will prefer to give it feed he prepares himself.If he places him in the role of family “pet”, he will instead opt for industrial feed by buying him biscuits.


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2.2 – factors linked to stages in the decision-making process:

. Stage of becoming aware of a need

Example: some men are aware of the need to use personal products.

. Stage of information research to satisfy a need

Example: when purchasing a computer, the information research process will vary depending on whether it is a 1st purchase or a renewal purchase.


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3 – Criteria linked to goods or services consumption situations:

These criteria are the ones we choose most often nowadays due to the specific nature of contemporary consumption which is often bipolar.


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This segmentation is referred to as SITUATIONAL.

The criteria chosen depend on the consumption situations or the use of the products.

3.1 – factors linked to the benefits sought by the consumer:

Pleasure / Functionality

Example: in the mobile telephone market, some people consider mobiles as utilitarian products while others think of them as an extravagance.


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3.2 – factors linked to types of use of the product:

. Regular use / Occasional use

Example: if the consumer uses a hair iron periodically, he will choose a simple, inexpensive device; if, however, he uses one almost daily, he will prefer a sturdy, easy-to-use product.


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. Usage times

Example:

If the consumer wishes to eat compote:

- during a break in his working day

compote in cups

- at the end of a family meal

compote in bulk containers

- at the end of a meal as a special dessert

in individual containers


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NOTE: in situational segmentation, a single individual no longer belongs to one segment and one segment only; he switches between several segments depending on the situations of consumption or use.

He is referred to as a “chameleon”.


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IMPLEMENTING OF MARKET SEGMENTATION

1 - Benefits of the segmentation process:

* more adequately matches the product offerings of companies to the fulfilment of customers’ needs

* optimises the allocation of marketing efforts

*highlights new commercial opportunities


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Highlighting new commercial opportunities: prepaid cards for non-

holders of bank cards


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Y

2 – Conditions for meaningful market segmentation:

. The segments will be relevant and uniform if and only if: the groupings show actual differences in purchasing behaviours.

. The relevant criteria for segmenting the market are those identified on the basis factors that influence the consumer’s behaviour.


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2 -(continued) Conditions for meaningful market segmentation

. The segments must be accessible: the company must direct its commercial activities towards the segments.

. The segment must have enough potential to justify specific commercial activities.

. The segments must be stable over time: the differences in behaviour must not be short-lived.


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3 - Problems in choosing segmentation criteria:

. The most illustrative criteria are often the least operative (i.e., enabling the company to effectively communicate with the sectors).

RELEVANCE OPERATING VALUEPersonality, values, age, sex, profession,

Information research, etc. income, etc.


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ULTIMATELY,

it consists in constructing a SEGMENTATION TREE

based on segmentation CRITERIA in order to show the various market SEGMENTS.

Criteria will be chosen on the basis of their ability to highlight differences in behaviours.

Each segment will comprise individuals with like or similar behaviour in consumption or use of the product.

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CONSTRUCTION OF A SEGMENTATION TREE(example)

Segmentation criterion n°1

Segmentation criterion n°2

The total population is segmented on the basis of 2 criteria which identify 6 market segments and therefore 6 categories of consumers with different behaviours in the EC market.


Total population

Consumer group 1

Consumer group 2

Segment 1

Segment 2

Segment 5

Segment 6

Segment 3

Segment 4

Documents

- Understanding the concept of segmentation - Knowing its implications - Identifying the relevant criteria for segmentation - Implementing market segmentation