View
219
Download
1
Tags:
Embed Size (px)
Citation preview
Segmentation and Targeting: Demographics
Professor S.J. Grant
Spring 2007
BUYER BEHAVIOR, MARKETING 3250
Outline
What is market segmentation? Why segment? How to segment?
DemographicsGeographicPsychographicsEthnicitySocial class
Overview of the STP Process
1. Identify dimensions for segmentation
2. Develop profiles of the resulting segments
1. Evaluate attractiveness of each segment
2. Select the target segment(s)
1. Identify positioning concepts for segment
2. Select, develop and communicate the chosen positioning
Segmentation
Targeting
Positioning
Segmentation is the dividing of a market into subsets, on the basis of similar needs, characteristics or behavior, by which any subset can be selected as a marketing target to be reached with a distinct positioning and marketing mix
Segmentation
Market Segmentation
One size fits all? Physician
• General practitioner versus cancer specialist
Lawyer• Personal injury versus corporate tax
lawyerBusiness consultant
• Specialist versus generalist
Demographic Females vs. males Teenagers vs. senior citizens
Geographic East Coast vs. West Coast Urban vs. rural
Psychographic Lifestyle, individual differences
Ethnic Class
Working class vs. middle class Nouveau Riche vs. Old Money
Commonly Used Variables
Demographics
296.4 million people in the US (2006) 85 million households
Minorities make up more than 33% of the US population Hispanic Americans African Americans Asian Americans Native Americans
Almost half the work force is women
Demographics
Generational segmentsBaby Boom Generation
• 78 million (born 1946-1964)
Generation X• 45 million (born 1965-1976)
Generation Y, or Echo Boomers• 72 million (born 1977-1994)
Demographics
Declining birth rateCouples having fewer childrenSegment of couples at child-bearing
years is smaller (Generation X)Causing a shift in age distribution
Demographics
Generation Y 60% of children under 6 have mothers who
work outside the home (compare to 18% in 1960)
60% of households with children under 7 have PCs in home
Teenage population expected to peak in 2006 with 30 million
• Highest since 1975• $100 billion in annual purchasing power
Demographics
25%23-61995-20121977-1994
17%34-241984-19941966-1976
21%45-351973-19831955-1965
14%54-461963-19721946-1954
17%72-551946-19631928-1945
5%78-731940-19451922-1927
3%88-791930-19391912-1921
Share of Population
Age in 2000Coming of Age
BornCohort
Depression
World War II
Post-War
Boomers I
Boomers II
Generation X
Generation Y
Demographics
Depression/WWII Orange juice FDR Flattops No more
butter Sunday drives Mom, Dad,
Grandma, Grandpa
Dr. Spock
Baby Boomers The Juice runs Nixon HAIR No more war
Drive-thrus Mom and Dad
Dr. Strangelove
Generations X & Y The Juice walks Reagan Skinheads No more ozone
layer Drive-bys Mom or Dad
Dr. Kevorkian
Market Segmentation
Two approaches that recognize different consumer segments require different benefits
Volkswagen
Jetta Passat Phaeton
Toyota Lexus
Corolla Camry
Geographics
Shifts in population Pre-1950s: people from rural, agricultural
areas moved to urban areas After World War II, urban dwellers began to
move to the suburbs In the 1980s, populations moved from the
Northeast (New England, New York) and Midwest (Illinois, Ohio) to the South (Georgia), West (California, Washington) and Southwest (Arizona)
Geographics
Regions in the US have distinct character – though somewhat diminished because of migratory culture, but still preserved
Psychographics
Psychographics is a quantitative investigation of consumers’ personalities, values and lifestyles
Assessing dominant values of individuals can help lead to better predictions of consumer behaviorhttp://www.sric-bi.com/VALS/types.shtml
VALS Framework
Ethnicity: Hispanic
Largest minority group – 42.7 million Significant within group diversity Acculturation levels vary
AcculturatedBiculturalTraditional
Ethnicity: Hispanic
Family orientation/extended family Strong ethnic pride/work ethic Importance of religion Younger than national average Brand loyal
Ethnicity: African Americans
Currently 2nd largest minority group – 39.7 million
Politically and morally charged role and place in US history
Ethnicity: African Americans
Representation in highest and lowest income groups is increasing
Urban – 15 largest cities Higher within-group identification Religious groups/Church membership important Preservation of cultural identity Pay more attention to ads/prestigious brands Less trust in unadvertised brands Sales force interaction important
Ethnicity: Asian Americans
3rd largest group – 14.4 million Highly significant within group diversity On average, greater discretionary income High value on education, upward mobility Emphasis on family, tradition, cooperation Strong work ethic Buy for quality Loyal to “high quality” (i.e.,expensive)
brands
Middle Class
“Do the right thing” (i.e., the “done” thing)
Influenced by popularity and current trends
Organization and neatness important Joiners Mainstay of branded products
Working Class
Oftentimes struggling to survive More locally oriented – socially,
intellectually, and geographically Because of preoccupation with
money, use price as cue to quality
Nouveau Riche vs. Old Money Nouveau Riche
Intellectual (real or perceived)
Self-expression Entrepreneurial Status from
achievement
Old Money Liberal and
socially conscious Understated, but
known status symbols
Careful search for information vs. price/brand as cue
Social Class
Trickle Down:Upscale can do downscale
Status Float:Downscale aspire to upscale
Professor S.J. Grant Spring 2007
Segmentation and Targeting: Usage
BUYER BEHAVIOR, MARKETING 3250
Outline
What is segmentation? Why segment? How to segment?
TraditionalUsage based
• Non-users, current users, competitor’s users
• Benefits
Goal of Segmentation
Why segment? Segments seek different benefits and will,
therefore, respond to different positionings Segmenting allows a firm to identify which
consumers can be most effectively reached instead of employing a broad reach
Appealing to a diverse set of users with a common product is difficult, prone to failure
Market Segmentation
Market segmentation allows firms to: Take into account consumers’ diverse needs and differing
behaviors (heterogeneity) Design marketing mix to be more closely matched with
consumer needs and deliver value by precisely meeting consumer needs (i.e., consumer propositions not diluted by intra-target variance)
Improve the efficiency and effectiveness of resource allocation, boosting profitability
How to Segment
Segmentation divides diverse set of consumers into homogeneous groups that can be addressedWith common positioningWith common benefitsWith common media vehicle
How to Segment
Criteria for selecting segments as your target? Measurable (have to be able to find them) Addressable (once you find them, must
identify media to reach them) Substantial enough to support a business
Traditional segmentation Define segments on key descriptors (sex, age) Measure response differences across segments
Usage-based segmentation Identify segments that differ on key usage
dimensions Profile resulting segments on key demographic and
psychographic descriptors
Traditional vs. Usage Segmentation
Why Segment by Descriptors?
No other information is available Most useful way of addressing
specific segments
Why Segment by Usage?
Communicating with consumers about a category is facilitated when a pre-existing knowledge structure in placeAllows storage of information that is
consistent with prior notionsPersuasion is difficult when you are
contradicting beliefs
Benefit Segmentation
Segmentation acknowledges consumer heterogeneity
Heterogeneity is represented by different ideal points
Market segments are formed by clustering individual ideal points together
Gentle
Eff
ecti
ve
Ideal Point Segment 1
Ideal Point Segment 2
Bayer
Excedrin
Tylenol
Bufferin Private Label
Anacin
Road Warriors: Generally higher-Income, middle -aged men who drive 25,000 to 50,000 miles a year . . . buy premium with a credit card . . . purchase sandwiches and drinks from the convenience store . . . will sometimes wash their cars at the carwash.
18% of buyers
True Blues: Usually men and women with moderate to high incomes who are loyal to a brand and sometimes to a particular station . . . frequently buy premium gasoline and pay cash. 16% of buyers
Generation F3 (for fuel, food and fast): Upwardly mobile men and women-half under 25 years of age-who are constantly on the go . . . drive a lot and snack heavily from the convenience store.
27% of buyers
Homebodies: Usually housewives who shuttle their children around during the day and use whatever gasoline station is based in town or along their route of travel.
21% of buyers
Price Shoppers: Generally aren't loyal to either a brand or a particular station, and rarely buy the premium line . . . frequently on tight budgets . . . efforts to woo them have been the basis of marketing strategies for years.
20% of buyers
® Mobil Oil Company
Market Segmentation Example
Segmentation Schemes
Once the benefits underlying segments are understood, organizing segments according to usage is necessary for targeting Current users
• Heavy users• Moderate users• Light users
Competitors’ users Non-users
Current Users
Current users are the most important segment to targetCurrent users have already favorable
associations to the productCustomer retention pays off, much more
cost effective than pursuing new users• Due to high cost of customer acquisition,
relationship may be profitable only after 1 year
Current Users
Current users are most likely to sustain, increase consumption
• Heavy users account for disproportionate share of brand’s volume
• 80/20 rule applies to beer drinkers• Men, age 18-34, eat several meals a week at
McDonald’s• Heavy users of Campbell’s Soup purchase
300 cans per year
• A brand’s first obligation is to address current users
Competitors’ Users
Success of a strategy that targets a competitors’ users depends on the brand’s ability to convince consumers of its superiority Difficult to change beliefsMaking a challenging claim often
encourages consumers to rehearse their own thoughts
Non-Users
Targeting non-users may be warranted if targeting other segments do not enhance opportunities for growthPoint-of-entry strategy
• Consumers who may be considering using the category, e.g. new parents, diamond ring
Category build strategy• Consumers who buy category for uses other
than conventional ones, e.g. baking soda
Segmentation: Example 1
What is the most useful way to segment diaper market?Traditional variables
• Baby’s sex• Baby’s age• Baby’s weight
Usage variables• Benefits?
Segmentation: Diapers
Pampers aims at parents who are expecting their first child
• Premium diaper• Outstanding softness• Rash-care• Sesame Street
• First-time parents have unique mindset• Nothing but the best• Cautious• Baby is precious
Segmentation: Diapers
Luvs targets parents of 2nd or 3rd child• “No leaks” point of difference• Cheaper diaper• “Live, learn and then get Luvs”• Barney Rewards loyalty program
Segmentation: Example 2
Makers of shower gels have complex segmentation schemes Category Crazies – buy all the latest products Thrifty Concerned – want gels, but price sensitive Shower Freaks – men seeking ‘squeaky clean’ Sensible Selectors – older women seeking pH
balance, buying for families Promiscuous Practicals – brand switchers Unsophisticated Bathers – prefer baths to showers Cynical Pragmatists – soap is soap
Segmentation: Example 2