CHAPTER 3 - CONSUMER BEHAVIOUR

MARKET SEGMENTATION AND STRATEGIC TARGETING• Market segmentation is the opposite of mass marketing • before the emergence of the marketing concept, the prevailing way of doing business was

mass marketing WHAT IS MARKET SEGMENTATION NECESSARY?

• Mass marketing would be a logical strategy if everyones strategy wassimilar• The majority of marketers cannotfollow an undifferentiated marketing approach• Segmentation, targeting, and positions enables producers to avoid head-on competition in

the marketplace by differentiating their offerings on the basis of such features like price, styling, packing, promotional appeal, method of distribution, and level of service

• Market segmentation, strategic targeting, and product positioning are the key elements of marketing most consumer goods

CRITERIA FOR EFFECTIVE TARGETTING • Before describing how market segments are identified, we must point out that not every

segment that can be identified is viable or profitable • To be an effective target, a market segment should be identifiable, sizeable, stable,

accessible, and congruent with the marketers objectives and resources• IDENTIFIABLE

o To divide the market in separate segments on the baiss of common or shared needs or characteristics that are relevant to the product or service, a marketer must be able to identify those characteristics

• SIZEABLE o In order to be a viable market, a segment must consist of enough consumers to

make targeting its profitable o Segment can be identifiable and stable but not be large enough to be profitable

• STABLEo Many marketers prefer to target consumer segments that are relatively stable in

trerms of lifestyles and consumption patterns and avoid fickle segments that are unpredictable

• ACCESSIBLEo To be targeted, a segment must be accessible, which means that marketers must be

able to reach that market segment in an economical way • CONGRUENT WITH THE COMPANYS OBJECTIVES AND RESOURCES

BASES FOR SEGMENTATION• Segmentation strategy begins by selecting the bases representing the core attributes of a

group of existing or potential customers• A single charachteristic is never used alone and that virtually all segmentation plans are

in the forms of hybrid segmentation that includes attributes from two or more of the four quadrents

• The four groupings stem from dividing consumers characteristics along two criteria: facts, and consumer rooted features

• CONSUMER ROOTED SEGMENTATION BASES

o Group includes two types of personal attributes: facts that are evidence based and cognitions which can mostly be determined through indirect tests

o Ones social class is defined by computing an index based on three quantifiable variables

o On the other hand, psychographics consist of activities, interests, andopinions o Demographic Segmentation: core of almost all segmentations is demographics,

due to the following reasons: demographics are the easiest and most logical way to classify people, and demographics offer the most cost-effective way to locate and reach segment s

Gender Marital Status Age Family life cycle Income, education, and occupation

o Geodemographic Segmentation: hybrid segmentation scheme based on the premise that people who live close to one another are likely to have similar financial means, tastes, preferences, lifestyles, and consumption habits

o Personality Traits: people are unlikely to disclose their personality traits either because they are guarded or because they do not consciously recognize them

o Sociocultural Values and Beliefs: sociological and antrhopological variables provide further bases for market segmentation

Culture and Subculture Cross cultural or global marketing segmentation

CONSUMPTION SPECIFIC SEGMENTATION BASES• Includes two types of consumption specific bases for segmentation: facts about actual

consumption behaviour and cognitions consumers have about products and services in the form of attitudes, preferences, and thre like

• Usage behaviours examined include usage rate, and usage situation• Segmentation bases in the form of consumption specific cognitions include benefit

segmentation and brand loyalty and relationship • USAGE RATE SEGMENTATION

o This segmentation stems from differences among heavy, medium, and light users, and nonusers of a specific product, service, or brand

o Targeting heavy users is a common marketing strategy and it can certainly be more profitable than targeting other user categories

o A sophisticated approach to usage rate involves identifying the factors that directly impact the usage behaviour

• USAGE-SITUATION SEGMENTATIONo Products are promoted for special usage occasions

• BENEFIT SEGMENTATIONo Benefits that consumers seek from products and services are the essence of

benefit segmentation and many believe also the core of all segmentation strategies o Sought benefits represent unfilled consumer needs whereas buyers perceptions

that a given brand delivers a unique and prominent benefit results in loyalty to that brand

o Five brand benefits: functional, value for the money, social benefit, positive emotional benefits, and negative emotional benefits

o Media benefits • BRAND LOYALTY AND RELATIONSHIP

o Brand loyalty consists of two components: behaviour and attitudeo Most common applications of brand loyalty are frequency award programs

Where marketers offer rewards and special benefits to buyers who purchase their offerings consistently

IMPLEMENTING SEGMENTATION STRATEGIES• Due to the rapidly increasing sophisticated of data collection and analysis technologies• Firms using market segmentation can pursue a concentrated marketing strategy or a

differentiated marketing strategyBEHAVIOURAL TARGETING

• Methods termed microtargeting and behavioural targeting are capable of providing the kind of specificity that enables marketers to deliver personalized advertising messages to buyers

MICROTARGETING• Markerters recognized that they were reaching a lot of consumers who were neither

interested in nor ever likely to purchase the products advertised• Microtargeting is aggregating individual consumers into relatively small groups, base don

data available about them from many different databases and targeting them with tailor made messages

• The individualized messages are transmitted via narrowcosting - the opposite of broadcasting

CONCENTRATED VERSUS DIFFERENTIATED MARKETING• Once an organization has identified its most promising market segments, it must decide

which ones to target and how to do so • Targeting several segments using individual marketing mixes is called differentiated

marketing • A company may choose to target just one segment with a unique marketing mix, and this

strategy is called concentrated marketing COUNTERSEGMENTATION

• Companies must reconsider the extent to which they segment their markets because, over time, some segments may have contracted and no longer warrant individually designed marketing programs

• Research aimed at discovering a more generic need or consumer characteristic applicable to the members of two or more segments should be undertaken

• If a more generic need or characteristic is identified, two or more segments can be combined and targeted with a redesigned marketing mix