Download marketing - Pennsylvania State University

Consumer Behavior
Market segmentation and target marketing
Market Segmentation
and
Target Marketing
Consumer Behavior
Market segmentation and target marketing
Outline
• The concept of market segmentation
• Segmentation bases
– general vs. product-specific
– observable vs. latent
• Data sources for segmentation
• Segmentation criteria
• Target marketing
Consumer Behavior
Market segmentation and target marketing
Market segmentation
Partitioning a market that is characterized
by heterogeneity in consumers’ response
to the marketing mix into more homogeneous submarkets.
Consumer Behavior
Market segmentation and target marketing
Differences in consumer response
Response
B
B2
A2
A1
B1
A
x1
x2
marketing
variable
Consumer Behavior
Market segmentation and target marketing
Segmentation bases
General
Observable
Observable features
of the physical and
social environment
(esp. demographics)
Latent
Values, lifestyles and
psychographics,
personality variables
Product-specific
Behavioral characteristics (user status, loyalty
status, usage rate)
Usage situations
Awareness
Attitude (beliefs,
evaluations)
Intentions
Consumer Behavior
Market segmentation and target marketing
In-class exercise:
Segmentation in the toothpaste market
Go to the web sites for Crest and Colgate and
study what types of toothpastes they offer to
appeal to different market segments. Use the
information provided on the web sites, or any
other information that you can find, to come
up with a list of variables that companies use
to segment the toothpaste market.
Consumer Behavior
Market segmentation and target marketing
Segmentation bases
General
Observable
Observable features
of the physical and
social environment
(esp. demographics)
Latent
Values, lifestyles and
psychographics,
personality variables
Product-specific
Behavioral characteristics (user status, loyalty
status, usage rate)
Usage situations
Awareness
Attitude (beliefs,
evaluations)
Intentions
Consumer Behavior
Market segmentation and target marketing
Segmentation by behavioral characteristics
Category users
• Other brand loyals
• Other brand switchers
Our consumers
Heavy users
Light users
Loyals
Switchers
Nonusers (potential users)
Nonusers (Potential users)
Consumer Behavior
Market segmentation and target marketing
Examples of behavioral segmentation
Nonusers
Light
Medium
Heavy
(% of total)
(% of total/
volume)
(% of total/
volume)
(% of total/
volume)
Toothpaste
4.1
33.5/16.0
42.7/48.3
19.8/35.6
Cola
39.8
21.2/4.0
21.4/23.9
17.7/72.1
Beer
69.8
13.3/1.7
9.6/18.4
8.3/79.9
Toilet
tissue
4.8
30.0/6.9
23.7/16.5
41.5/76.6
Consumer Behavior
Market segmentation and target marketing
Segmentation bases
General
Product-specific
Observable
Observable features
of the physical and
social environment
(esp. demographics)
Behavioral characteristics (user status, loyalty
status, usage rate)
Usage situations
Latent
Values, lifestyles and
psychographics,
personality variables
Awareness
Attitude (beliefs,
evaluations)
Intentions
Consumer Behavior
Market segmentation and target marketing
Attitudinal segmentation
+++
-
Expensive
Whitens
teeth
Crest
Colgate
Gentle on
gums
-/+
Toothpaste
Fights
cavities
Mentadent
++
Consumer Behavior
Market segmentation and target marketing
Segmentation bases
General
Observable
Observable features
of the physical and
social environment
(esp. demographics)
Latent
Values, lifestyles and
psychographics,
personality variables
Product-specific
Behavioral characteristics (user status, loyalty
status, usage rate)
Usage situations
Awareness
Attitude (beliefs,
evaluations)
Intentions
Consumer Behavior
Market segmentation and target marketing
The VALS 2 typology
Consumer Behavior
Market segmentation and target marketing
VALS 2
VALS classifies consumers on the basis of two dimensions:
– self-orientation (primary motivation):
• Ideals (principle-oriented consumers): those who are guided in
their choices by abstract, idealized criteria (quality, integrity,
tradition);
• Achievement (status-oriented consumers): those who are guided
in their choices by the expected reactions, concerns, and desires
of groups to which they belong or aspire to belong;
• Self-expression (action-oriented people): those who are guided
in their choices by a desire for social or physical activity, variety,
and risk taking;
– resources: refers to the full range of psychological,
physical, demographic, and material means and capacities
people have to draw upon (age, education, income, selfconfidence, energy, intellectualism, novelty seeking,
innovativeness, impulsiveness, etc);
Consumer Behavior
Market segmentation and target marketing
A segmentation scheme for toothpastes
Sensories
Sociables
Worriers
Independents
principal
benefit
behavioral
characteristics
demographics
flavor, product brightness of
appearance
teeth
decay
prevention
low price
users of spear- smokers
mint flavor
heavy users
heavy users
children
large families
men
psychographics
high selfinvolvement,
hedonistic
teens, young
adults
high
sociability,
active
hypochondriac, high autonomy,
conservative
value-oriented
Consumer Behavior
Market segmentation and target marketing
Data sources for segmentation
• Simmons Market Research Bureau
–
–
–
–
Product usage (by category and brand)
Demographics
Media behavior
Psychographics
• Mediamark Research
– Similar to Simmons
Consumer Behavior
Market segmentation and target marketing
1998 Mediamark data for toothpaste
(user status by gender)
Total U.S.
(‘000)
A
‘000
B
% down
C
% across
D
Index
All adults
195,192
187,163
100.0
95.9
100
Men
93,553
88,936
47.5
95.1
99
Women
101,639
98,228
52.5
96.6
101
Base:
Adults
Consumer Behavior
Market segmentation and target marketing
1998 Mediamark data for toothpaste
(usage rates overall and for Glamour readers)
Base:
Adults
Total U.S.
(195,192)
Glamour
(12,741)
A
‘000
B
% down
C
% across
D
Index
Heavy
users in
general
n.a.
38,596
100.0
19.8
100
Heavy
users,
Glamour
readers
n.a.
3,619
9.4
28.4
144
Note: Heavy users use toothpaste more than 14 times per week.
Consumer Behavior
Market segmentation and target marketing
1998 Mediamark data for toothpaste
(usage rates overall and for Glamour readers)
Base:
Adults
Total U.S.
(195,192)
Glamour
(12,741)
A
‘000
B
% down
C
% across
D
Index
Light
users in
general
n.a.
65,292
100.0
33.5
100
Light
users,
Glamour
readers
n.a.
3,074
4.7
24.1
72
Note: Light users use toothpaste fewer than 11 times per week.
Consumer Behavior
Market segmentation and target marketing
• A segment of consumers interested in sporty cars would
like to purchase a car like the Porsche 911 at the price of a
Mazda Miata.
• A researcher investigating response to sales promotion
offers distinguishes coupon-prone from rebate-prone
shoppers, but finds that consumers in the coupon-prone
segment are as responsive to rebates as to coupons.
• There are two kinds of consumers who see higher prices in
a positive light, those who associate higher prices with
higher quality and those who feel good about being able to
buy products that not everybody can afford. However, a
producer of luxury goods has no way of knowing whether
a given consumer belongs to the first or second group.
Consumer Behavior
Market segmentation and target marketing
• A company discovers that dieters are extremely fickle in
their food preferences over time.
• The break-even point for selling a piece of software at a
profit is 100,000 units and the company feels that there is a
segment of consumers who are interested in this product.
However, it proves difficult to determine how big the
potential market is.
• It is known that some consumers are more responsive to
factual appeals and others are more responsive to
emotional appeals. An advertiser has developed factual
and emotional ads to target the two kinds of consumers,
but cannot find print media to reach the two segments.
Consumer Behavior
Market segmentation and target marketing
Segmentation criteria
differentiable: market response is homogeneous within
segments and heterogeneous between segments;
identifiable: individuals can be assigned to a segment based
on a meaningful profile of segment characteristics;
stable: segments and segment membership do not change in
the short run;
measurable: the size and purchasing power of relevant
segments can be determined;
actionable: the company is able to develop a marketing mix
that will appeal to the members of a given segment;
accessible: members of a segment can be reached with the
appropriate marketing mix;
Consumer Behavior
Market segmentation and target marketing
Target marketing
• evaluation of the attractiveness of each market
segment and selection of target segments;
• evaluation of market segments based on
– market segment characteristics
– industry competition
– company objectives and resources
• selection of target segments can result in
– undifferentiated (mass) marketing
– differentiated marketing
– concentrated marketing