Segmentation and Planning for change

Why do we need to segment? Because different consumer groups needs are different To maintain focus on the customer target segment To customise advertising according to target segment

Segmentation The analytical goal is to measure Consumer Behaviour and place each person in a group (segment) that will minimise the behaviour between each member of the segment and maximise the variance between segments

Why do we need to segment? Because people vary so much from other people – needs, motivations, decision processes, buying behaviour

Segmentation is a spectrum Concentrated marketing Differentiated marketing Mass marketing Niche marketing

Bases for segmentation Geographic Demographic Psychographic Behavioural – benefit, usage situation, extent of usage

Segmentation Strategy Demographic Usage Brand Loyalty Attitudes and benefits Psychographic or lifestyle Culture and ethnic subculture

Factors affecting size of segments Affluence Sophisticated consumer measurement and databases Custom manufacturing New forms of distribution

Micromarketing The result of understanding and relating to an increasingly fragmented market place

Criteria for choosing market segments Measurability Accesibility Substantiality Congruity

Reaching Target segments Controlled coverage Customer self-selection

Planning for change Unless managements act, the more successful a company has been in the past, the more likely it is to fail in the future. Because the basic psychological principle is that people tend to repeat behaviour for which they have been rewarded Successful strategies must fit an environment that is constantly changing. Frequently the future arrives before managers are willing to give up the present.

Consumer Analysis and Social Policy Policy issues related to macromarketing and trends in consumer decisions Behavioural/ Psychological economics economics

Enhanced Shareholder Value (ESV) The ability of a company to provide job security and satisfaction, satisfy customers, grow profits consistently, adopt sound long-term strategies, ability to weather business shocks.

3 M’s of profit Growth More markets More market share More margins

Markets have 4 components People and their needs Ability to buy Willingness to buy Authority to buy

Customer Buying Career Observing Making requests Making selections Making assisted purchases Making independent purchases

Behavioural consumer segmentation (Cohort analysis) Baby boomers Baby busters Skippies Yuppies Muppies Empty nesters ‘Young again’

Ethnocentricity Focusing on one’s own way of doing things with very little sensitivity or interest in the ways of the world Marketing practitioners need cultural empathy defined as the ability to understand the inner logic and coherence of other ways of life.

Porter’s 5 factors that characterise contemporary markets Growing similarity of countries Fluid global capital markets Technological restructuring Integrating role of technology New global competitors

Finding countries with the largest populations is not the only challenge facing companies wanting to expand profits. The greatest challenge is for the ‘rich’ countries that hope to have growing markets for their products is to assist the ‘poor’ countries in developing themselves to where they are also rich enough to be economically strong markets

Cultural analysis of global markets Cultural empathy ‘Think global, act local’ ‘Think local, act global’ ‘Glocalisation’ Therefore, standardisation is rarely possible.

Communication Problems The diversity of markets and consumers also pose several communication challenges for marketers Therefore visual language, pictures are mostly used for better universal understanding. Gestures and words can be misleading

Language problems “ Please leave your values at the desk” – Paris Hotel “ Drop your trousers here for best results” – Bangkok laundry “ Because of the impropriety of entertaining guests of the opposite sex in the bedroom, it is suggested that the lobby be used for the purpose” – Zurich hotel “ The manager has personally passed all water served here” – Acapulco restaurant “ Ladies are requested not to have children in the bar’ – Norway bar

Conceptual Equivalency “ Come alive with Pepsi” “ Come alive out of the grave” – Germany “ Pepsi brings your ancestors back from the grave” - China

Positioning What the product stands for? Mind-share Positioning and segmentation strategies must have fit. A brand must be positioned to be maximally effective in attracting the desired target segment.

Positioning strategies Product characteristics/benefits Price-quality approach Use or application approach Product class approach Product user approach Cultural symbol approach Competitor approach

Positioning strategies Identify competitors Determine how competitors are perceived and evaluated Determine the competitors positions Analyse the customers Select the position Monitor the position

Psychographically Understanding the TV User High Price/ Quality The prestige-seeker Samsung Philips Sony The technology-seeker LG The reliance-seeker Toshiba BPL Conservative Videocon Innovative Onida Akai Sansui I am very interested in new technology and gadgets The economy-seeker Aiwa Sharp Low Price/ Quality

Positioning Decision Economic analysis should guide the decision Segmentation commitment Not change for change sake. To stick with the advertising if it is working. Make it easy for customers to remember/recall. Use symbols, logos, etc. as a memory aid. Be honest.