1

Targeting different consumer groups

XV Nordic Workshop in Sensory Science on the 22nd of May 2013 in Helsinki,

Finland

Pre and post segmentation of consumers

Anne C. Bech, Consumer Insight

Agenda

• Pre and post segmentation

• Segmentation from a holistic perspective – Business model

• Theory

• Practice with examples

• Sum up

(Osterwalder & Pigneur, 2010)

4 4

State of the art 2013!!!

5 5

What is segmentation?

Market segmentation is the discipline where you segment your market into different and more homogeneous submarkets which respond differently on the marketing parameters

Demands for a good segmentation: » Relevant

» Identifiable

» Accessible

» Stable

» Useable

6 6

Hypotheses: We need segmentation at two levels:

1) Strategic level:

For better understanding of the consumers in order to develop business or social marketing.

Strategic analyses and planning of target groups (e.g. regarding overall marketing, development of new products, communication, and more) – planning of the research is essential.

» Basis for segmentation – level and content

» Other important information at descriptive level

» Sampling

» Methods for identification of consumer segments

Task – identification of consumer segments in a base-line survey – post segmentation

7 7

Hypotheses: We need segmentation at two levels:

2) Tactical and operational level

For interaction with consumers from target groups to develop better solutions (e.g. products, communication), to evaluate whether your plans are successful or not, and to adjust accordingly no matter whether you are in business or health communication.

Task – different forms of follow-up surveys - qualitative or quantitative – classification to the identified consumer segments – pre segmentation, besides confirmation of identified segments.

A marketing orientated strategic approach is needed

» We need to put more attention to the strategic use of the identified segments by shifting the attention to the quality of the first developed segmentation (post) and to the use of the segmentation as a pre- segmentation – a more knowledge and learning based approach

8 8

Segments and boxes

Natural resistance against to be put into boxes Facts

Segmentation is simplification

One segment does not contain identical items or persons still considerable variation within one segment.

Persons in one box are more similar to each other and more different from items in the other boxes on the chosen segmentation parameters – not overall

9 9

Planning of a base-line segmentation survey

Planning a base-line segmentation include:

»Objective – why?

»Basis for segmentation – level and content

What kind of model or variables are we going to use for the segmentation?

Other important information at descriptive level - what else do we want to know from the same survey – objective and use of results?

»Sampling

»Methods for identification of consumer segments

10 10

Different basis for segmentation

Value segmentation – e.g. Schwarts value segmentation Learning style segmentation – e.g. Dunn & Dunn Information processing style – central route versus peripheral route Health status – e.g. Body Mass Index Neophobia scale Food related lifestyle segmentation Behavioural segmentation – e.g. Ottesens ’Market map –

knowledge, use and preferences Demographic segmentation – women 35-44 years with children Geographic segmentation – Danish versus Italian market … and more

11 11

Common basis for market segmentation

General (regardless of market and products

Specific (related to market or product)

Direct observable (few variables)

Geographic (State, region, city

size, density, climate)

Demographic (age, gender,

income, edu., rel., ethnicity, occupation, family life cycle)

Socio-demographic – social

class

Behaviour (frequency, intensity, regularity) Usage situation Loyalty

Indirect observable (many variables)

General psychographic (values, lifestyle, personality)

Product related psychographic Attitude (pos – neutral – negative) Epidemiological (risk factor status) Readiness stage (stages of change) Benefits – motives – Perceptions Preferences

12 12

Means end chain approach: How we link product characteristics to consumers’ mind

Goal direction route

Values

Consequences

Attributes

Hierarchical categorisation process

Values

Consequences

Attributes

13 13

Lifestyle

A system of individual differences in the habitual use of certain declarative and procedural knowledge structures on both routes intervene between abstract goal states (personal values) and situation-specific product perceptions and behaviours.

This relationship between values, lifestyle and behaviour is tested.

Values

Lifestyle

Behaviour

Lifestyle: The relationship between values, lifestyle and behaviour is tested

Five domains

• Ways of shopping

• Cooking methods

• Quality aspects

• Consumption

situations

• Purchasing motives

(Scholderer et al. 2002)

15 15

Food related lifestyle segmentation

Abstract cognitions

Concrete cognitions

Purchasing motives

Consumption situations

Ways of shopping

Quality aspects

Ways of cooking

Life values

Behaviour

16 16

Planning of base-line segmentation survey

Planning a base-line segmentation include:

»Basis for segmentation – level and content

What are we going to use for the segmentation???

Other important information at descriptive level

What else do we want to know from the same survey?

»Sampling

Random – considerable size of survey

»Methods for identification of consumer segments

Latent class analyses

17 17

Segmentation:

Easy to localise but soft Difficult to localize but substantial

18 18

Segmentation – best solution:

Describe your segments

You have to decide on the appropriate number of segments

Statistical fit support the process

19 19

Follow up surveys

All possible kind of qualitative and quantitative surveys

Classification

» A sub set of best questions

» Adaptive Bayesian Classification from pc/internet – best question is selected based on the answers from the respondent

» Classification along the original survey – subset or full set of questions

20

Examples

Food related lifestyle

segmentation and other ...

Organic archetypes from 2007 to 2013 – post segmentation

Name 2007 2009 2012 2013

The idealist 17 % 20 % 20,4 % 18 %

The hedonist 30 % 19 % 21,3 % NI

The individualist 17 % NEW

The sceptical 15 % 26 % 14,7 % 15 %

The security seeking

23 % 25 % NI NI

The health oriented

27,2 % NEW NI

The traditional 12 % NEW

The discount oriented

15 % 10 % NI NI

The convenience oriented

16,3 % NEW 19 %

The uninvolved 19 %

Organic archetypes from 2007 to 2013

Økologisk Landsforening

23 23

Classification: simple with three questions

Combination Do you like to cook?

Do like to try new food

Are you willing to pay more for organic food

Segment

1 + + + Adventurous

2 + + - Modern

3 + - + Traditional

4 + - - Traditional

5 - + + Adventurous

6 - + - Modern

7 - - + Traditional

8 - - - Less involved

24 24

Basic questions:

Question

1 I like to cook.

2 I enjoy to try food I haven't tried before.

3 I'm willing to pay more for organic food.

4 I like to try new recipes.

5 It is enjoyable to try recipes from other countries.

6 It is mainly my responsibility to buy food.

7 To a great extent, it is my responsibility to cook.

8 It is important to me to eat healthy food.

9 I try to avoid additives in food.

10 I do not see any reason to buy organic food.

25 25

Brief history of Food related lifestyle segmentation

Developed at the Mapp Centre during the nineties » Tested for cross cultural validity

» Used in many surveys and countries

» Further developed and used by market research agencies 1999 – 2005 Jysk Analyse

… GFK – Danish Organic Association

Somewhat similar approaches in other countries – also company specific solutions

2010 – Consumer Insight – a pre segmentation model

» Still in use also for research purposes

26 26

Consumers are different …

27 27

But we have something in common with some other people regarding food: The Food Related Lifestyle

The adventurous

The modern

The less involved

The more traditional

What quality we value, how we shop and cook, eating habits and our motives and interests – some are very interested, knowledgeable and experienced - and some don’t care a lot about food

28 28

Target group triangle

The modern

NEW FOODS

The less involved

The more traditional

The most adventurous

← CONSERVATIVE/TRADITIONAL →

29 29

The more traditional: • A great part love to cook • Interested in health • Some interest in organic food • Traditional • Price sensitive

Food Related Lifestyle: model with four segments

The most adventurous

The less involved

The modern

The more traditional

The most adventurous : • Enthusiastic and love to cook • Interested in news, health and organic

food • Most critical • Willing to pay for quality

The less involved: • Low interest in cooking, prefer not

to or do it the easy way. • Low interest in health and organic

food • Most pragmatic and convenience-

oriented • More traditional than news

oriented

The modern: • Like to cook • Are interested in new

food • Have low interest in

health and organic food • Pragmatic • Price sensitive

News

Different consumer segments implicate that the target group shrinks or increases depending on the product and marketing

30 30

The most adventurous:

The most adventurous

They go hunting for news. Appreciate organic food, health

and quality. Love to eat fish, fruit and vegetables and perhaps a

glass of wine also. They are more willing to pay. They love to cook and master both simple and complicated

dished.

Many retailers are very interested in this very attractive and demanding

group of customers. In Denmark organic food and wines are used to attract them, they also stop by local

producers and by local foods.

31 31

Artikel af Jette Deleuran og Vibeke Lehn, foto af Jes Buusmann, Alt for Damerne nr. 36 2003.

Good food – how difficult can it be?

I’m not a fanatic buyer of organic food

32 32

The less involved

The less involved

They prefer convenience food and prefer not to cook.

Do they live alone a meal in the canteen is perfect.

Cooking is not one of their interests and they do it of necessity. They are not so

experienced and find it difficult. It is difficult to make the food

taste good in stead they buy taste.

They shop at convenience stores and they do not store so much food

at home.

33 33

Do you know this guy?

Foto: Mie Brinkmann – Politiken May 14 2011

34 34

FRL: global & food safety

China: 3 segments based on 479 participants

» Concerned 45 %

» Uninvolved 33 %

» Traditional 21 %

(Grunert et. al 2011, Appetite 56, pp 357-367)

45 %

33 % 21 %

35 35

Changes of archetype?

Yes this is possible » It takes time

» Change in attitude

» Change in knowledge

» Change in behaviour also based on learning

No » not from day to day – change in behaviour is not a change

in archetype

» You are not a different person or archetype when performing different behaviours from day to day – the circumstances are different

36 36

ELM – elaboration likelihood model

Elaboration Likelihood Model

According to how we handle information in our brain by two ’routes’ depending of situation/person

Key factors for situation: Motivation – involvement Ability - Knowledge

Central route Slow / high cognition

most likely by:

High involvement

Greater knowledge

Peripheral route Fast / impulsive

most likely by:

Low involvement

Less knowledge

The process support it self

Petty, R., & Cacioppo, J. (1986). Communication and persuasion: The central and peripheral routes to attitude change. Springer-Verlag: New York.

37 37

Valuable segmentation for:

Communication to the same or different target groups

» Messages designed for one or both information processing routes, e.g.

Label / out-door versus

Internet – pamphlet

Face book versus blog

…

» Knowledge related to other segmentations

38

Branding and marketing of

food

39 39

Strategy

Three generic marketing strategies:

» Undifferentiated

» Differentiated

» Focused /niche

”One size fits all”

Different solutions for different target groups

One solution for a smaller target group

40 40

Sum up

Many different approaches for segmentation. As basis for segmentation use e.g. a categori specific psychographic

approach as Food related lifestyle: » Not mixed with values and/ or behaviour (depending variable) » But include other relevant variables as descriptive / action oriented

For base-line use random sample of relative large sample size » Bias of panel data e.g. younger and more involved participants.

Segmentation method – latent class analysis. Build up internal capabilities for market research or use multiple external

sources not just one market research agency. A company specific solution might not be needed, it is an investment and

sharing might be an alternative solution. Use the segmentation in follow up surveys and learn to know the

consumers representing the segments, make personas, scenarios, involve the consumers.

41 41

References

Grunert, K.G.; Brunsø, K.; Bredahl, L. & Bech, A.C. (2001). Food-related lifestyle: A segmentation approach to European food consumers. In Food and people and society: a European perspective. Eds L. Frewer, E. Risvik, and H. Schifferstein, pp 211-230. Springer Verlag, Heidelberg.

Grunert, K.G. et al. (2011). Is food-related lifestyle (FRL) able to reveal food consumption pattern in non-Western Cultural environments? Its adaptation and application in Urban China. Appetite, 56, pp 357-367.

Kohli, A. K. & Jaworski, B. J. (1990). Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing 54 (April), 1-18.

Organic archetypes (2007). Økologiens hus http://www.okologi.dk/media/229976/oekologiens_arketyper_april_07.pdf

http://www.okoviden.dk/download-materiale.aspx Osterwalder & Pigneur (2010). Business Model Generation. Self published, USA –

www.businessmodelgeneration.com/book Ottesen, O. (2005). Strategisk ledelse av virksomhedens markedskommunikasjon. Handelshøjskolens

Forlag, Kbh. Petty, R., & Cacioppo, J. (1986). Communication and persuasion: The central and peripheral routes to

attitude change. Springer-Verlag: New York. Poulsen, C.S. (1997). Nyere forskning i segmentering og segmenteringsmetoder. I Ledelse’ 97, editor E.

Johnsen. Børsens ledelseshåndbøger. Børsens forlag, Denmark. http://www.business.aau.dk/~csp/CM2008/Segmentering%20og%20segmenteringsmetoder.pdf

Scholderer, J, Brunsø, K. & Grunert, K.G. (2002). Means-End Theory of Lifestyle Replication in the UK. Advances in Consumer Research. 29, pp 551-557.

42

Thank You for your attention!

The value of segmentation is not in the identification of the segments it is in the continuous strategic, and daily use of the segments … A good segmentation is like a crystal ball