Targeting Research: Segmentation Birds of a feather flock together, i.e. people with similar characteristics tend to exhibit similar behaviors Characteristics on which to segment include: – Demographics – Geographics – Psychographics – Attitudes and behaviors relevant to a brand of product category

Demographic Segmentation Age: only useful when appropriate ranges are used to define age group segments Too broad (18-45) blurs differences between segments Too narrow (18-20) results in too many small segments Gender Household characteristics Life stage: combination of all of the above (see page 447) Race and Ethnicity Social Class: comprised of education, occupation, and income

Geographic Segmentation Region – East, North, West, South – Pacific, Mountain, West North Central, West South Central, East North Central, East South Central, South Atlantic, Middle Atlantic, New England Population Size – MSA, PMSA, CMSA Population Density Climate

Psychographic Segmentation Attitudes and Values – Different attitudinal segments typically require different advertising messages – Different attitudinal segments often have different media habits, requiring different media plans Motivations – Reasons for purchase, i.e. pregnancy tests Lifestyle

Category and Brand Related Attitudes and Behaviors Product Usage – Brand usage – Product usage – Quantity of consumption – Situation of consumption Brand Loyalty Benefit

Performing Segmentation Research (figure 19.2, p. 456) Determine basis for segmentation and descriptive variables – Segmentation variables are the variables used to create subgroups, or market segments – Descriptive variables are used to describe differences between the subgroups Identify range of segmentation and descriptive variables Collect data Form groups using cluster analysis Describe each cluster or segment using descriptive variables – Radar charts are very useful for this Name and describe each segment Relate segments to particular brand behaviors Select a segment to target

Determine the Basis for Segmentation Select segmentation variables – Relevant to product category – Related to category, product, or brand related perceptions or behaviors – Have a high likelihood of being causal factors of category, product or brand choice and usage

Identify Descriptive Variables Equivalent of dependent variables Used to further describe or identify segment members Necessary to provide an understanding of the internal characteristics of each segment

Identify the Range of Segmentation and Descriptive Variables There are no “Standard” categories or ranges for segmentation variables – Specific to the researchers informational needs Language use Use to guide content and form attitude or other scales

Sample and Survey the Population Random or stratified random sampling Mail or telephone surveys Typically likert scale questions

For groups using cluster analysis Respondents with similar patterns of response to segmentation variables are placed in the same group Frequencies (cross tabs) on segmentation variables used to summarize differences between groups Use a radar chart to present a better descriptor of segments

Example Radar Chart from Table 19.5 data (partial)

Final Steps Describe each sentence in narrative, without using the numbers Describe segments further based on descriptive variables Relate Segments to Brand specific behaviors Select a segment

Cluster Analysis in SPSS Identify segmentation variables – Be sure to tell SPSS to save cluster assignments as a variable SPSS automatically cross-tabulates data on each segmentation variable for each cluster Identify defining characteristics for each cluster, now called a segment Compare meaningful descriptive variables across segments

Group Practice Page 479, Exercise #3 Each group pick three product categories For each, determine the most important segmentation type Identify at least four segmentation and descriptive measures Craft the specific items to measure those variables

Q-Methodology Method of targeting using a large set of statements (q-sample) that respondents are asked to rank based on their agreement with the statements Factor analysis is used to identify groups Typically results in groups based on perceptions and attitudes

Q-Methodology Process Develop, Edit, and Select Q-sort statements Select type of sort Determine Sample Characteristics Create Instructions Administer and Record the Sort Analyze data Apply findings to decision

Selection of statements Prior projects Prior survey research Responses to open ended, in depth interview questions Volunteered comments in focus groups Responses to projective stimuli such as sentence completion and picture projection Brainstorming or idea-generation sessions

Statement Selection Range of statements – Must be unbiased, i.e. same number of positive, negative and neutral statements – If more than one concept, equal number of statements for each concept Item appropriateness Item Clarity Item independence

Types of Q-sorts Forced – A predetermined number of cards are to be placed on each point of the scale Unforced – Any number of statements may be placed on any point of the scale Little agreement about which type is better, so use whichever you prefer

Select the sample Due to the difficult nature of the task, samples tend to be small, yet representative of the population – Number of popluation variables that are important – Number of required replications (between 3-5) – See table 20.1, page 493

Create Instructions, Administer Sort Establish and communicate sorting criteria – “sort the statements to reflect how much you think each is ‘most like my point of view’ or ‘most unlike my point of view’.” Record placement of each statement using numerical scale position – Depending on the number of statements, you may have anywhere from 7 to as many as 11 points on the scale

Analysis of Q-sort data Variables are individuals, cases are statements Factor analysis then groups the individuals Examine attitudinal characteristics by comparing mean scores of individual statements across factors (groups) Once group attitudes are identified, demographics, brand related behaviors or other salient characteristics of individuals in each group are compared

Group Practice Page Application exercises 1, 2, and 4