...Data Analytics: A Marketing Segmentation Case Study T. Evgeniou, INSEAD J. Niessing, INSEAD The Iterative Process Cycle Data Preparation & Exploration Analysis Goal of Analysis Performance Assessment Segmentation Methodology – A(nother) Process 1 2 3 4 5 6 Identify Business Issues Clarify Scope and Dimensions Generate and Refine Hypotheses Decide on Data to use / Collect Needed Data Build the Segmentation Framework Link to Marketing & Business Strategy A Segmentation (micro-)Process • Segmentation solution is created through a rigorous and iterative process Data Processing/ Factor Analysis Cluster analyses Review and refine Why Segmentation? • SEGMENTATION is a critical enabler to achieve business objectives and realize benefits • SEGMENTATION is critical to identify white spaces for new products/offerings • SEGMENTATION helps organizations to optimize their retention and acquisition strategy • SEGMENTATION is often used to optimize pricing across different products • SEGMENTATION enables organizations to become more customercentric • MARKET DYNAMICS make segmentation critical to business success. Questions You Might Hear… These are only some of the issues that clients may raise that clue you in to appropriateness of segmentation Growth & New Opportunities Market Structure Product Development Channel Deployment Resource Allocation Retention...
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...egmentation, Targeting, and Positioning Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment andcommunicating that we have made the choice to distinguish ourselves that way. Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that “You can’t be all things to all people,” and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. In the undifferentiatedstrategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really can’t offer much that another one can’t. Usually, this is the case only for commodities. In the concentratedstrategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low...
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...Chapter 1 Segmentation A segmentation strategy begins by selecting the bases representing the core attributes of a group of existing potential customers. 1. It must be noted that a single characteristics is never used alone and that virtually all segmentation plans are in the forms of hybrid segmentation that include attributes from 2 or more. | |Consumer-rooted |Consumption-specific | |Facts |Demographic factors |use-related characteristics | | |Geographic factors |use-situation factors | |cognitions |Psychological factors |benefit sought | | |Psychographic (lifestyle) characteristics |hybrid segmentation | | |Sociocultural variables | | 1. Facts can be determined from direct questioning and categorized by a single objective measure. (Quantitative) 2. Cognitions...
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...Introduction: There are many ways for developing and adopting m market segments. Once the company identified its market segments opportunities, it must decide how many and which ones to target. To be effective in the market segmentations, market segments must be: • Measurable • Substantial • accessible The important component of Market segmentation is a market-based plans and strategy. Market segmentation allows businesses to concentrate on different needs of the costumers and different interest of certain goods and services in a different way from one another. “Market segmentation is the process of splitting customers, or potential customers, in a market into different groups, or segments, within which customers share a similar level of interest in the same, or comparable, set of needs satisfied by a distinct marketing proposition” (McDonald & Dunbar, 2004). The basic and main reason for dividing the market into small segments is make more profit and to make it easier to address the requirements of smaller groups of customers and try to create different and other related products according to their intense lifestyles. Some of the basis of Market Segmentation depends on and affected by the following factors: • Gender: Men and women are different in their consuming habits and likings. Marketing strategy is required to address each market and each costumers. Producing bikes for females will be different that for males. Making bike helmets with pink colors and making helmets...
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...Market Segmentation of Kwality Walls Cornetto HUL had entered the ice-cream market through acquisitions of approximately 150 crores. It acquired Dollops from Cadbury’s in 1993 while it bought Kwality and Milkfood in 1995. Since Amul has entered into the ice-cream market, Walls has lost a huge market share to Amul. To again gain the lost market share, HUL has modified their market segmentation. On the basis of Density, it has segmented Indian market into Urban and rural area. It has decided to focus only on the urban segment specifically the top 6 metros of India. Over the years, it has expanded to the top 30 cities. The philosophy behind this decision is that the top 30 cities has 70% of total ice-cream consumers in India, i.e. the 30:70 principle. Kwality walls just want to increase the consumption of ice-creams in the markets in which they are present rather than entering into new market. HUL has also segmented the market based on demographics into three categories: Kids, Teenagers and Families. Cornetto as a brand Is targeted at teenagers while Paddle pop is for kids while red tub is for families. This kind of segmentation has allowed to create more consumption opportunity for different segments. For e.g. teenage hangouts for promotion of Cornetto. This segmentation also allows pricing based differentiation for the three segments. Paddle pop is sold at Rs.5 to Rs. 10, Cornetto for youth is priced between Rs. 20 and Rs. 30 while the family pack ice-creams are priced between...
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...continued profitability- viewing this discipline and its related practices as ‘discretionary’. The article ‘rediscovering market segmentation’ focuses on understanding and assessing various aspects of consumer behavior as one of the key factors to effective marketing, sales and customer satisfaction. Once you know your customer segmentation by personality type, you can create personality type. This knowledge of individual preferences related to a respondent’s personality can be leveraged to create more effective marketing campaigns and increase sales. Market segmentation is a marketing strategy that involves dividing a broad target market into subsets of consumers, who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them. Market segmentation involves dividing up the potential market for a product into groups of people who have similar needs, and then addressing these needs in a focused way. Market segments allow companies to create product differentiation strategies to target them. The concept was introduced in early 1960’s not just to advertise but also bring about product innovation, pricing, choice of distribution channels etc. A broader aspect of segmentation is the term psychographics. Psychographic profiles are used in market segmentation as well as in advertising. Psychographics is...
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...following: * Geographic characteristics * Demographic characteristics * Psychographic characteristics * Behavioral characteristics These characteristics all combined can identify the exact group of end-users that are targeted by companies like Netflix. Geographic characteristics Geographic characteristics, also known as geographic segmentations, include the details the operation area of the company. Netflix is viewed on an international market, which implies that the operating area is the global streaming market, at least in this case. Netflix doesn’t focus on all countries yet, their main focus is, according to the recent data, on the following countries: * * USA * Canada * Ireland * UK * Norway * Sweden * Denmark * Finland * The Netherlands Another detail of the operation area of Netflix is the internet. Netflix is mainly operating and generating cash flows from the World Wide Web. This identifies the customers to only the potential customers that have access to the World Wide Web. Demographic characteristics Demographic characteristics, also known as the Demographic segmentations, include the details of the customer’s categories that are targeted by the companies. These categories are for example: age, gender, income, education etc. Age and family life cycle The services of Netflix vary from children programs to thrillers and other 18+ movies. So the bottom line of the age characteristic is around 8. The upper line...
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...The concept of market segmentation. The conception of market segmentation is a marketing approach that consists of dividing a wide target market into subcategories of consumers, who share common needs, by planning and applying strategies to target their needs and wants to utilize media channels and other promotional elements that facilitate reaching the focused customers. Additionally, market segments allow businesses to design different marketing approaches to target them. However, reaching a market by recommending different, desirable, and competing products, that is in the outlooks of the target consumers. In which, buyers behaviors in numerous markets diverge in their wants or needs, incomes, localities, purchasing attitude, and buying habits. Within market segmentation, corporations break up large, diverse markets into smaller sectors that can be influenced more effectively with products and services that are compatible their individual needs. Furthermore, a marketer has to point various segmentation variables, to obtain the safest technique to analyze the targeted market structure; where, these market segmentations are classified in four different variables that are geographic, demographic, psychographic, and behavioral (Kotler & Armstrong, 2010, p 191). An example is the Coca Cola Company; this company had expanded its business worldwide servicing over 200 countries and with a total of $35 billion in revenues annually (10-k: The Coca Cola Company). In fact...
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...1. How would you define market segmentation? ( 5 marks) A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another. Generally three criteria can be used to identify different market segment. Homogeneity 同质化, common needs within segment. Distinction区别, unique from other groups.Reaction活跃, similar response to market.For example, an athletic footwear company might have market segments for basketball players and long-distance runners. As distinct groups, basketball players and long-distance runners will respond to very different advertisements. 2. How do geographic segmentation and demographic segmentation differ? (10 marks) Geographic segmentation is based on climate, density, market size, world or states. Many companies use climate if their products or services rely on the weather, such as snow shovels, melting pavement salt, wave runners and boats. For example, USA is more interested in targeting geographic locations that are located near the park in a 100-mile radius. They believe some customers will fly in from out of state, so in addition, they will target large-density areas nearby. However, demographic segmentation is extremely important to all marketing departments since the data is easily available...
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...Starbucks 1.Using the full spectrum of segmentation variables, describe how Starbucks initially segmented and targeted the coffee market.? 2. What changed first—the Starbucks customer or the Starbucks Experience? Explain your response by discussing the principles of market targeting.? 3. Based on the segmentation variables, how is Starbucks now segmenting and targeting the coffee market? 4. Will Starbucks ever return to the revenue and profit growth that it once enjoyed? Why or why not? - Starbucks had made a goal and their initially segment was a Demographic segmentation -Starbuck or Schultz intentions to open 10,000 new stores in just four years and then push Starbucks to 40,000 stores. -In 20 years time, Schultz grew the company to almost 17,000 stores in dozens of countries. Starbucks targeted the customer who fell in love with the Starbucks Experience who was: -Wealthier, better educated, and more professional than the average American. - More likely to be female than male. - Between the ages of 24 and 44. Starbucks customer changed first. There simply were not enough traditional customers around to fuel the kind of growth that Schultz sought. Starbucks became a less attractive place to hang out. The new breed of customer was less affluent, less educated, and less professional. As the customer profile evolved, the Starbucks Experience grew to mean something different. To the new breed of customer, it meant good coffee on the run. It was a place to meet and...
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...Segmentation, Targeting, and Positioning Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment andcommunicating that we have made the choice to distinguish ourselves that way. Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that “You can’t be all things to all people,” and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. In the undifferentiatedstrategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really can’t offer much that another one can’t. Usually, this is the case only for commodities. In the concentratedstrategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low...
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...STP template Instructions: What’s it for? To prepare for tutorial 2.When is it due? Bring it along to the tutorial 2.By whom? Do it as a group. If you do not get a chance to sit as a group, do it individually before the tutorial.Is it compulsory? No, the “Memo” was compulsory. However, having this completed will be a great help in preparing for your coursework and the time spent during the tutorial will be much more productive!Tips: fill in as much as you can. When filling up the template always think of the arguments you have to support your decisions (you will need to demonstrate your argumentative and critical skills in the coursework). | Segmentation Identify key segmentation variables and segment the market into three segments.Key segmentation variables (think through as many as possible):‘Umbrella’ variable (e.g, benefits sought, lifestyle, age, income etc.):Your identified three distinct segments (they shouldn’t overlap): * Segment 1: People with chronic back pain. - Segment 2:People over the age of 55 * Segment 3:People who are of mid-level income , they don’t want to perform surgery since expensive and want a substitute with is of same quality but at a more acceptable cost. | Targeting Evaluate market segments and choose the target segment.Market attractiveness criteria (segment size, segment growth, segment profitability etc.):Business strength criteria (resources, skills and competencies etc.):How would you rank the segments based on the...
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...1. Would consider Demographic segmentation, because she just starting her own small business, which is a sole priority ship. Which is for people working as an entrepreneur as herself. So she would have base some of it off of who like chocolate and who doesn’t also she need to know which chocolate people would buy more often, and where should she open her business. So that was demographic segmentation is when you want to know things about your consumer to get there interest in what you’re doing and if the location is right for that. So when you’re starting your own business you have to do a lot of things before you can even see progress from it. So it takes over time before you’re business start’s going unless you brand with another business which will be a b2b because that can get you off your feet with this business as well. 2. A segment would be concerted strategy because it focus on one aspect which is pet supply store. So it’s targeting animal’s owner to come to a store that can have deals for them that they will enjoy for their animals. Because the customer is always right. It also fall into value proposition, which give the customer a good perspective on they want as I proclaimed. They can also now in days buy their product online and walk into the store. 3. Micromarketing is basically when you have a specific item that you want and you’re interested in the product. People have lots of reason to be specific maybe for special occasion or just have a great day by...
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...Segmentation, Targeting, and Positioning Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment andcommunicating that we have made the choice to distinguish ourselves that way. Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that “You can’t be all things to all people,” and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. In the undifferentiatedstrategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really can’t offer much that another one can’t. Usually, this is the case only for commodities. In the concentratedstrategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices...
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...SEGMENTATION – TARGETING – POSITIONING Fragmentation of mass markets segments Consumers: variety of needs & preferences Marketers: offer variety of choices via multitude of marketing offerings Marketing segmentation: Needs Action Linking market needs to an org’s marketing program Market needs Segmentation/Targeting MM A market segment: Group of consumers with homogenous profile & common needs will similarly respond to a marketing program Segmentation – targeting – positioning 1 Using market-product grids: see how Reebok use different Reebok shoes to reach segments of customers with different needs Single product multiple market segments e.g. TIME magazine multiple geographical mkts multiple products multiple segments firm offers variations of the basic product to high-end and low-end users e.g. GAP with Old Navy, Banana Republic segments of one mass customization built to order Segmentation – targeting – positioning 2 How to segment and target markets: 1. Group potential buyers into segments 2. Group products into categories 3. Develop a Market-Product Grid and estimate size of the market 4. Select target markets 5. Take marketing actions to reach target markets Segmentation – targeting – positioning 3 Criteria used in defining segments: 1. profitability 2. similarity of needs of potential buyers within a segment 3. differences of needs and buyers across segments 4. potential of a marketing action to reach a segment 5. simplicity...
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