Targeting & Segmentation

Food Marketing EconomicsApEc 4451/5451

Fall 2008October 28, 2008

Dennis Degeneffe Research Fellow

The Food Industry Center

Introduction• 24 Year Marketing Research Career on “Client Side”:

– General Mill – Cereals, Family Flour, Food Service, and Subsidiaries– McDonald’s– Oscar Mayer – Kraft Foods– Pillsbury– General Mills

• Independent Marketing Research Company – Consumer Centric Solutions LLC since 2002; Clients:

– Consumer Packaged Food– Food Service– Financial Services– OTC Healthcare– Personal Care– Small Appliances– Auto Care

• Academic– Research Fellow at The Food Industry Center– Occasionally Adjunct at Carlson School of Management – Part time MBA program

Targeting Consumers

I want Something

light

I something exotic and interesting

I want Something

readily available

I want something to re-energize me

I want to Avoid fat & Cholesterol.

I want something indulgent.

I want something I can

carry with me

I want something easy to prepare

I want somethingon sale

I wantsomething to tide

me over.

I want Something Wholesome.

I wantfood that’s low

In fat.I want

something unique

I want an old standby

I want to avoid too

many calories

I want something That really tastes

great

I want something filling

I want something simple and basic.

I want somethingthat I crave.

I want somethingNatural/ organic

I want something that doesn’t cost a lot.

You can’t be everything to everyone.

Why Target Consumers?

Drivers of Buyer Behavior

• Who the Consumer is:– Demographics– Attitudes– Culture– Values

• The Situation a Consumer finds ones self in:– Needs Experienced– Benefit Sought

• Fundamental Elements:–Target – The Who–Benefit – The Why based on needs experienced in the situation

–Frame of Reference – The context–Support - How

Example of Positioning Statement:To Time Pressured Moms… Hamburger Helper is a great way to get an fresh hot

meal on the table in only a few minutes, that the entire family will love. That is because Hamburger Helper includes all the fixins – just add it to one pound of hamburger, simmer and serve.

Product Positioning

Targets?

Segmentation

Role of Segmentation

“Fish where the Fish Are”

Good Segmentation Approaches

• Can be used to identify targets

• Discriminates behavior

• Provides insights

• Can be used to reach targets

Ways to Segment Consumers

• Geography – e.g. Minneapolis SMSA • Demographics – e.g. College Students• Lifestage – e.g. expecting moms• Behavior – e.g. McDonald’s Heavy Users• Attitudes:

– The basis for why consumers behave the way they do – closely linked to behavior.

– The insight to develop effective Marketing programs.• Products• Services• Advertising

Approaches to Attitudinal Based Market Structure

• Consumer Segmentation – Identify groupings of consumers with similar attitudes out of a diverse population.

• Need States – Identify product usage situations with similar set of consumer needs.

• Affinity Models – Identify groups of consumers with similar degrees of commitment to a brand.

Segmenting Consumers

Attitude Segmentation Methodology

Typical approach:

• Collected by a “survey.”– Questionnaire constructed to cover

comprehensive set of attitude statements– Also collects other measures to relate to the

attitudes.

• Uses a “cluster analysis” to identify segments.

HWE2001 Consumer Segments

17%

16%

12%13%14%

14%

14%

Seven Different Consumer Types With Respect to Food Attitudes

Mainstream Nurturing Cooks

Healthy Traditional

Cooks

Healthful ExplorersWeary ProvidersFood On Demand

Mobile Munchers

Traditional Recipients

From General Mills, How We Eat 2000

Excerpts from ADA Conference

Food Segment Profiles

Mainstream Nurturing CooksMainstream Nurturing Cooks• Nurture their family through foodNurture their family through food• Meal time = quality timeMeal time = quality time• Good taste is #1 considerationGood taste is #1 consideration• Want to make the occasion specialWant to make the occasion special

Healthy Traditional CooksHealthy Traditional Cooks• Also nurtures through foodAlso nurtures through food• Emphasis is on balanced nutritionEmphasis is on balanced nutrition• Favor wholesome, traditional foodsFavor wholesome, traditional foods• Discourage snacking Discourage snacking

Weary ProvidersWeary Providers• Dinner time is family timeDinner time is family time• Meals are a balancing act, and stressfulMeals are a balancing act, and stressful• Prefer easy, quick, familiar foodsPrefer easy, quick, familiar foods• Tend to cater to kids tastesTend to cater to kids tastes

•Each Segment has a distinctly different approach to eating.

Healthful ExplorersHealthful Explorers• Actively trying to eat healthyActively trying to eat healthy• Focus on quality/freshnessFocus on quality/freshness• Creative & Experimental tastesCreative & Experimental tastes• Frequently too busy to cook, need easily Frequently too busy to cook, need easily

accessible alternativesaccessible alternatives

Food Segment Profiles

Traditional RecipientsTraditional Recipients• Want good tasting, wholesome traditional foodWant good tasting, wholesome traditional food• Rely on someone else to prepareRely on someone else to prepare

Mobile MunchersMobile Munchers• Busy, active, on-the-goBusy, active, on-the-go• Meals and snacking blur togetherMeals and snacking blur together• Looking for portable foodsLooking for portable foods

Food on DemandFood on Demand• Other activities tend to have a higher priorityOther activities tend to have a higher priority• Do enjoy foodDo enjoy food• Food must be easy, accessibleFood must be easy, accessible• ……or not at all.or not at all.

•Each Segment has a distinctly different approach to eating…

HWE2001 Consumer Segments

17%

16%

12%13%14%

14%

14%

Food Segment Summary

Mainstream Nurturing Cooks

Healthy Traditional

Cooks

Healthful ExplorersWeary ProvidersFood On Demand

Mobile Munchers

Traditional Recipients

LoveBalance

FreshCompromise

Later

GrazingCatered

Food Is …

Weary Providers • Mobile Munchers

• Healthy Traditional Cooks• Mainstream Nurturing Cooks

Scratch Pie ala ModeScratch Pie ala Mode Lighter Fruit TartLighter Fruit TartFrozen PieFrozen Pie

Pie to GoPie to Go Good Pie - Any PieGood Pie - Any Pie

Mainstream Mainstream Nurturing CooksNurturing Cooks Healthful ExplorerHealthful ExplorerWeary ProviderWeary Provider

Traditional Traditional RecipientsRecipients

Mobile Mobile MunchersMunchers

Examples:

Primary HH Shoppers

Feel About Shopping

Trip Planning

Savings / Deals

Budget Conscience

Stores Shop

Items Shop:

The Seven Consumer Grocery Shopping Styles

15%

Neat Foods, New Ideas,

Nice People … What's Not

to Like!

Love It!

Efficient(menus, lists)

CouponSavvy

Aware

Range -- Experiences

Exploration,Variety

Born To Shop

16%

Smart Shopper --

I Define The Term!

Committed

Sales / Savings

To The Max

No RealConstraints

Many … Best Prices

Sales, Deals

Savvy Game

Playing

14%

This ReallyIsn't Any Fun.

Too Many Decisions.

To Little Money.

StressfulChore

StretchBudget

Necessary -- Confusing

A MajorConcern

BestSales

Familiar

Budget Weary

16%

Careful Planning Makes All

The Difference!

Responsibility

Complete, Real Systems (menus, lists)

SupportPlanned

Purchases

No RealConstraints

Regular One

Routine

Practical & Systematic

6

39 Tue

14%

You Do What You Have To Do So You

Can Eat What You Want To Eat.

Means To End

Limited

Not WorthThe Effort

No RealConstraints

Usual One

PantryOption Loading

It’s Just Groceries

13%

Oops … I Forgot The Bread Again.

Guess I'll Just Come Back Tomorrow.

Disorganized

Ineffective

TooBothersome

SomeConcerns

Accessibility / Proximity

Sporadic, Forgetful

Haven’t A Plan

13%

Why Is It That No One But

Me Ever Buys Food For

This House?!

ActivelyDislike

Not --On The Fly

Oblivious

No RealConstraints

Wherever -- Not Loyal

Convenience

Want Out Of It

Segmenting Shoppers

Segmenting Occasions

Need State Segmentation Methodology

Typical approach:

• Collected using a “diary.”– Questionnaire constructed to cover multiple

occasions– Collects what needs consumers experience,

and the 5 W’s.

• Uses a “cluster analysis” to identify “need states.”

Need State Definition

• Hierarchy of needs surrounding usage occasions:

Consumer Needs

Nurture Others

Sensory Gratification

Nutrition

Emotional Needs

Indulgence

Hunger Satisfaction

Dinner Need States

Kid Pleasing Dinners Traditional Family Meals Budget Stretchers

Healthful Dinners Time Constrained DinnersQuality Time Dinners

Defining Needs and Benefits Sought:

Treat/reward myself and/or others 204To make the occasion special 199Fulfill a craving 191Show others I care for them 181Really enjoy eating 180To relax with 170Feel comforted 165Bring family/people together 159New and different 156Establish/maintain a family tradition 151Impress others 147Maintain a healthy lifestyle 131Enjoy the cooking experience 130

Requireing little effort or easy to prepare 69That I have always had/reminds me of the past 66Stay within my household budget 55Get a meal on the table quickly 38That can be eaten quickly 33Kids particularly like/ask for 26That can be carried away 20

Kids particularly like/ask for 217Get a meal on the table quickly 185Stay within my household budget 172Treat/reward myself and/or others 170That can be prepared at the last minute 161Show others I care for them 155Requireing little effort or easy to prepare 150Everyone would like 144Make something I frequently prepare 144That can be eaten quickly 139Easily cleaned up 138Bring family/people together 134

That I have always had/reminds me of the past 68To relax with 67Really enjoy eating 65Maintain/reduce my weight 65Feel comforted 55New and different 51Meet specific health needs 46Impress others 31Experiment 26

Are

Are Not

Quality Time Dinners Kid Pleasing Dinners

Vs.

Examples of Successful Marketing Initiatives Based on Segmentation

Affinity Consumer Structure

• Divides consumers up into groupings with varying strengths of commitment to the brand:– Devoted … Staunchly loyal to the brand.– Adopters … Use the brand along with others.– Acceptors … Willing to try the brand, or infrequent user.– Available … Know little or nothing about the brand.– Rejecters … Brand is irrelevant, no intention to try it.

• Identifies the proportion of the volume coming from each group

• Identifies reasons for their commitment level.

Reasons For Commitment Level

• Guinness – Among Devoted, brand is:– Authentic.– Mark of personal distinction.

• Highly unique product characteristics• Heritage• Says I am a beer connoisseur

• Guinness – Among Adopters, brand is:– A change of pace.– Premium imported.

• Implication … Huge opportunity to leverage brand authenticity and unique product characteristics to deliver emotional benefits to users.

Summary of Segmentation

• A powerful marketing tool.• Many different ways to segment the market.• Should:

– Identify targets– Discriminate behavior– Provide insights– Be reachable

• Three types of Attitudinal Segmentation studies:– Consumer Segmentation – People based on attitudes– Need States – Occasions based on needs– Affinity Segments – People based on relationships