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Difference between consumers L5 Ing. Jiří Šnajdar 2013 Difference between consumers People behaviour and consumer behaviour effect some influences. Their penetration and final repercussion in particular purchase decision is unique – individual. However : some are in their purchase behaviour in some spheres more similar then others. This similarity is very sought and used value in firm marketing. It enables at the same time also higher satisfaction of need of some group of consumers. The task of market segmentation, one of resources of decision about marketing strategy, is to discover segments, how to recognise in which segments belong which customers and what is specific for segments. Market segmentation (in the meaning state) can businessman use : • Intuitively, • on base of experience, • systematically and purposely. The same is valid for market segmentation in meaning of segment uncovering. It is possible to progress on base of intuition, experience, experiments or to analyse consistently potential segmentation positions on base of most objective information. Segmentation of consumable market (in the meaning process) is searching for such groups of consumers on given market, which fulfil two basic conditions : consumers inside segment are most similar with their market presentation on given market – it is a condition of homogenous segments, market presentation of different segments on given market are mutually most different - it is a condition of heterogeneous segments. Homogenous segments secure inside segment bigger probability of similar reaction on marketing impulse, shaped by appropriate way. Heterogeneous segments mean, that segmentation has marketing importance, sense, that different groups, segments are different to each other in relation to given category of product, that they will react differently. Exist other practical conditions to use strategy based on segmentation : • segments are enough big, • segments are accessible by media and marketing tools, • segments are adequately fixed, in time stabile, • segments are measured in other necessary positions. The way to uncover segments in the form which is usable for decision about market orientation, composes from four phases : delimination of given market, covering of important criterions, usage of important criterions (own uncovering of segments), development of segment profile. 5.1. Dimensions of investigated market It is a characteristic of market space, where we want to uncover market segments. 5.2. Segmentation variables Those criterions are chosen, which lead to the best fulfil of homogenous and heterogeneous conditions. Following overview shows complex of criterions (also signed as segmentation variables), which enforce markedly at market segmentation. Descriptive criterions – based on characteristics Traditional segmentation variables demographic segmentation • age • sex • family size • family life cycle (household) • education • profession(also called social economic criterions) • income Participation of age cohorts as segments is sometimes marked as generation marketing. ethnographic segmentation comes out from connection of ethnographic characteristics on different consumer behaviour. In view of variables it is : • • • • • nationality, race, religion, ethnic group, subculture. Participation of last mentioned criterion already overlaps into psychological segmentation. physiographic segmentation is connected with that our physiographic situation predetermines often form of necessities : • physiographic, physiological dispositions • health condition Although physiographic segmentation is not mentioned very often in literature as specific group of segmentation criterions, has large sphere of influence from toothpaste to healthy food, sport shoes, clothes, … geographical segmentation comes out of that changes, differences in consumer behaviour are conditional on geographical characteristics. The use mainly variables, as : • • • • • • • • world territory, countries, regions, town extent, town segmentation, density of settlement (town, suburb, country) landscape morphology, climate. It is spoken about geo-demographics. Non-traditional psychographic segmentation Differences in purchase behaviour are connected with social and psychological influences. Consumers with the same “traditional” characteristics behave on market different. Criterions : Social class : different social classes represent different segments. Warner stratification schema of social classes Social classes: Upper Uppers, Upper classes, Lower Uppers, Upper Middlers, Middle classes, Lower Middlers, Upper Lowers, Lower classes, Lower Lowers As the base are gates of following variable : education of the head of household position at work of the head of household highest finished education of the head of household. Lifestyle : uncovered different lifestyles can represent relevant market segments. Complex approach represents research of lifestyle repeated every two years by AISA agency : (11 lifestyles) protagonists of old orders, authoritative head of family, modest grandmother, family from prefabricated block, buck passers, ageless, hustlers, good family, emancipated modern woman, manager, young people Value orientation – research of lifestyle (value structure : 150 statements) • intellectual (birds-eye-view) • manager (business spirit) • senior (prudent) • mother (family type) At integrating of lifestyle into role of market segments it is necessary to take into consideration extent of its homogeneity from view of marketing against given product category. There is a reserve against lifestyles – they are too abstractive. Personality : is understood in marketing maybe to simply as relatively constant reaction of person on the surroundings. At segmentation are different approaches, based on research of different attributes of personality (dominant, submissive, … - impulsive, rational, …melancholic, flegmatic …) and joins to typology. It is not commended to use personality as only one segment criterion. Then segments have not adequate homogenity. Profile of segment “ influential young” Geography : map with signed areas of high, better than average, average and subnormal occurrence. Example U.S. Basic demography : - yupee of suburban inner circles - mainly white, singles and couples without children - high school education - white collars Politics : - dominated ideology : moderate voting in presidential votes 84 : Reagan (61%) key problems : fiscal conservatism, nuclear weapons Segmentation criterions of market exposures Segmentation according to behaviour – specific market situations - has two main positions : • criterions based on reasons (question why) • criterions based on description (question how) Criterions type “WHY” based on reasons (also segmentation according to use) • segmentation according to expecting value – expected benefit (benefit segmentation) : what consumer expect from product category, what benefits. Basic phases of scale : price – quality – social effect . According to concrete situation is especially quality followed more in detail. Here belong also purposes of use (consumer motivation) and parameters of decision about purchase. • segmentation according to perceived value : based on how the customers differences in perceiving of certain products, marks • segmentation according to opportunity (time, social, fashion relations, context of possible use of product) • segmentation according to attitudes – segmentation according to marks preferences and according to ideal product. Criterions type “HOW” based on describing of use, on view site of consumer behaviour Users status (users – non users, past users, potential users) Rate of use (frequency, volume) : strong, average, subnormal users. • Loyalty : as incline to purchase and use the same mark is for needs of segmentation follow as in position : * frequency – always the same mark, so * unit – share of purchase of a mark and use of category, • Rates of diffusion process (intake of new products) : according to placing in scope of diffusion graph it is possible to differentiate segments of innovators, early accepting, fast majority, slow minority, latecomers). • Knowledge of products, marks. How the consumers differentiate in knowledge of marks (as on general level, so in given product category). Criterions of reaction on marketing tools Criterions of reaction on marketing tools belong to one of most important spheres of criterions, cultivating segments profiles. Example of segmentation according to reaction on tools of purchase support are segments, which discovered in 1997 in Great Britain agency AC Nielsen : Lapsed to support, Searching for low prices, Impassive, Pillars of marks and EDLP (Easy distribution Low Prices). Criterions of reactions on marketing tools belong to one of most important sphere of criterions, cultivating profile of segments Definition of important criterions The base of uncovering of market segments is to affect bindings between followed criterions. In marketing perspective are the decisive measure of differences between consumers – define criterions. To define criterions we search the most appropriate explanatory variables – describing criterions. Describing criterions explain or associate movements of define criterions. Customer goes for lunch to exclusive restaurant, because he belongs to upper lower class, young family equips household with things of long term consumption. So first we decide : which define criterions we will examine, which we will integrate in own segmentation research. Further what we use as criterions uncovering segments. Then we try to find out, which describing criterions have the strongest binding on define criterions. By gradual selection we come to important criterions. Also are followed bindings between criterions mutually defining. Methodically are used in simple situations cross relations, tables, corresponding association rates, group indexes, affinities. From more complicated methods of multidimensional statistics is used factor analysis “R” type. Uncovering of market segments Segmentation A priory : in advance we choose one of criterions, which determines membership to segment. Can arise two situations : 1. We know in advance how many segments we obtain – at use of one basic define criterion with fixed and final scale (strong – average – subnormal users = 3 segments) or mutual eliminating situation (variants). 2. A priori choice of one define criterion, which is multidimensional, does not lead immediately to, what in the number of segments. Segmentation Post hoc: Number of segments is not given in advance. At uncovering of segment are followed connections between important criterions, examining their combinations and consequential is chose those, which provide such elements, which suit the conditions of homogeneity and heterogeneousness best. At a priory and post hoc segmentation we can use mentioned “ forward segmentation” or “backward segmentation”. • When for uncovering of segments are used criterions of behaviour towards product, this process is sometimes called “forward segmentation”. • Sometimes it is possible to proceed from effort to use difference in described variables, which attend to differentiation of possible market segments. But always follows verification if hypothesis about impact of describing criterions on different consumer orientations on given market were confirmed. Such approach is characterised as backward segmentation. Problem can be lower homogeneity of segments in relation to product. Appropriate cross tables and analysis of obtained data – tree disintegration gradually defined profiles of segments according to investigated criterions to homogeneity and heterogeneousness. From multidimensional statistic is used cluster analysis (is followed similarity of consumers at current view of all important criterions). Picture of market segments In this phase we renew view of segments with other useful information considering : • further show of consumer behaviour of segments (example following media), • needs of choice between segments (size of segments and development, …) Usage of discrimination analysis if we chose process a priory segmentation ore cluster analysis. Steps of process of consumer segmentation - Delimitation of given market (geographical dimension and product category) Exploration of famous criterions : exploration phases groups interview secondary information (statistic of families accounts, data mining of agency data etc.) interview of professionals primary solutions : interview (decision about content and form of questionnaire in connection with way of analysis, kind of selection and selected units,…) • analysis - verifications of criterions (cross tables, analysis of diffusion, factor analysis and other multiply statistic methods) - Uncovering of segments (cross tables, cluster analysis, factor analysis of Q type and other multiply statistic methods) - Expansion of segment profiles (backwards cross tables against new variable in segment, discrimination analysis) Interpretation of results and evaluation results of segmentation : • By interpretation to take into consideration conditions of successful segmentation : - corresponding homogeneity and heterogeneousness of segmentation, - measurement of segments, - importance of segments, - dynamic of segments, stability - objectivity • Segmentation maps - difference evaluating criterions, - contractor's expanse Stated ways of segmentations are called inductive – searching for variables to segments designation. Problem solution from other side – deduction. According to firm behaviour on given market. Then we follow : • what product mix offers the firm, • in which price levels, • what distribution ways (what kind of shops their articles are sold), • what media they use, • what kind of communication reports. For two last levels are useful content analysis. Is obvious selected orientation of firm on given market in meaning of purpose marketing ? If yes, then : • What segmentation variables they use ? • What segments of consumers try to accost other relevant companies ? • What are their characteristics ? • Is used segmentation of market comprehensive ? • Are used ways of segmentation of market most effective, most accurate ? If no, then should follow own effort to uncover the most appropriate criterions and segments – transition to inductive way of market segmentation.