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24 Cards in this Set

  • Front
  • Back
Segment is...
which part of market we can serve
certain segments with high probability profit..not too small
Markets are heterogenous example
like coke is different in different countries..supports different segments
Common definition of segment
a group of consumers sharing at least one characteristic that should increase their responsiveness to a marketing effort

Hetero pop and making homo segments..the more specific the better, but don't want to slice too much

At least 1, but as few as possible (more specific, the smaller the pop..remember that)

Segment composition constrained by MO/SOV decisions (big picture)
Retention/stim demand (who)
our customers
Retention/steal share (who)
multicompany users (we share)
Acquisition/steal share (who)
competitors' customers
Acquisition/stimulate demand (who)
people outside of category
Why segment?
Could engage in mass marketing instead (approach everyone with mass, same product)..like Model T

But target market size and probability of conversion are typically inversely related...we segment to increase the eff of our marketing efforts..want to find optimal balance between size and probability of conversion
4 variables on which customers are commonly segmented
Demographic (most common-age income race background edu)

Behavioral (shopping, gen. behavior)

Attitudinal (thoughts feelings, beliefs)

Aspirational (thoughts, feelings beliefs about future...concrete AND fantasies)
Order of competitive advantage (opposite of ease of obtaining) for segmented variable info
From left to right:

Dem, behave, attit, aspirational
Demographic variables
• Examples: Region, Pop. Density, Climate, Gender, Age,
Income, Occupation, Education, “Life‐Cycle” Stage
• Easy to fall in love with demo. data
– Cheap and abundant
– No need to take frequent measures
– The more data, the safer we feel
PRIZM
Potentioal rating index by zip markets

Geoclustering technique by Claritas
Takes into account location, edu, affluence, family life cycle, race, mobility

66 types of clusters: money and brains, shotguns and pickups, gray power...
3 drawbacks of segmenting on dem variables
1. potentially limits growth (marketers can't grow a dem segment), but might be able to stimulate needs

2. What is cheap and abundant for us is the same for our competitors

3. Dems are only noisy predictors of attitudes
Segmenting based on usage behavior
Common to target customers based on past usage (or lack thereof) of our product, competitors' products

This kind of behavioral segmentation is built into the earlier stages of (MO/SOV)
Segmenting on attitudes
values, attitudes, and lifestyle survey

ex: strivers, thinkers, believers...using US map for metro statistical areas
One disadvantage of attitudinal survey
never know for sure telling true
Another 3 ways to think about attitudes
• Thoughts, feelings, beliefs about the present
• Ideally these will translate to needs we can fulfill
profitably
– e.g., I am a very busy person => I have a high need for convenience
– e.g.,  It’s a dangerous world => I have a high need for safety
• Translation to needs is not always straightforward
– e.g., I think pollution is endangering the Earth
Attitudes are ________ of behavior
They are quite predictive of behavior...DESIRE to be wrinkle free is a better predictor of purchases of anti-wrinkle cream than age or # of wrinkles..however, not guaranteed

However, attitudinal data is more difficult to collect (people telling true? also requires frequent measurements because people change mind)
4 elements of aspirations
• Thoughts, feelings, beliefs about the future
• Plans
– e.g., buy a house next year
• Goals
– e.g., get the corner office
• Fantasies
4 elements that make a good segmentation variable
• Measurable
– How many people need left‐handed products?
• Generates an accessible target audience
– Difficult to talk with people who have a need for privacy
• Generates a substantial target audience
– Better to target people who have a need for convenience
than people who dislike convenience
• Tied to core competence (segmentation needs to be tied to this)
5 factors that make for an unattractive segment
Segment already contains several strong or
aggressive competitors
• Entry barriers are low and exit barriers are high
• Many substitutes for the product
• Buyers possess strong/growing bargaining power
• Suppliers possess strong/growing bargaining power
Conjoint analysis
one way to understand which attributes matter the most

rank following vacuum cleaners! (with or without good housekeeping seal)

reviews which attributes are important

How consumers perceive companies on those attributes can also be measured (how affordable are groceries at kroger? whole foods?)
Do we target only one segment?
Generally, no

Will often manage a small portfolio of segments (banks-plan for retirement, small business owners...)

Decision models (based on segment size, planning horizon) guide allocation of resources across segments
Segmentation should be more about ____
unifying customers than dividing customers!