Tasks in Market Segmentation

Tasks in Market Segmentation 1. Analyze consumer product relationship 2. Investigate segmentation bases 3. Develop product positioning 4. Select segmentation strategy 5. Design marketing mix strategy The first task in segmenting the market is Analyze consumer product relationships—this entail the analysis of the affect and cognition, behaviour, and environments involved in the purchase/consumption process. 3 general approaches to this task— 1. Marketing managers may brainstorm the product concept and consider what types of consumers are likely to purchase and use the product and how they differ from those less likely to buy. . Focus groups and other types of primary research can be used for identifying differences in attributes, benefits, and values of various potential markets 3. Secondary research may further investigate differences in potential target markets, determine the relative sizes of those markets, and develop a better understanding of consumers of this or si milar products Investigate segmentation bases. There are no simple way to determine the best bases for segmenting markets. Benefit segmentation. The benefits people seek in consuming a given product are the basic reasons for the existence of true market segments.Psychographic segmentation. Differences on consumer lifestyles. Activities(work, hobbies, vacations), interests (family, job community), opinions9social issues, policitcs, business) Person/situation. Market can be divided on the basis of usage situation. Example: clothes and footwear—market are divided on the basis of sex, size, usage situation or social events Geodemographic segmentation. Identifies specific households in market focusing on local neighbourhood geography (such as zip codes) to create classifications of actual addressable, mappable neighbourhood where consumers live and shop.Develop product positioning. Positioning the product relative to competing products in the minds of consumers. Objective: to form a particular brand image in consumers’ minds 5 approaches to positioning strategy: 1. Positioning by attribute. Most common positioning strategy associating a product with an attribute, a product feature, or a customer feature. Example: toothpaste –fights cavity, whitens teeth 2. By use or application. Represents a 2nd or 3rd position designed to expand the market. Example: Cellphone—texting, 2nd videocam, 3rd–email 3. By product user or class user.Associating with a specific lifestyle profile. Example: alcohol—pampamilya na pangsports pa 4. By product class. Example: camay—beauty soap, safeguard—family soap, ivory-mild soap for sensitive skin 5. By competitors. To convince consumers that a brand is better than the market leader or another well-accepted brand on important attributes. Commonly done in advertisement where competitor is compared. Example: tide compared with brand x and brand y Positioning Map. A visual depiction of cons umers perceptions of competitive products, brands, or models.It is done by surveying consumers about various product attributes and developing dimensions and graph indicating the relative positions of competitors. Select Segmentation Strategy Four Basic Alternatives 1. The firm may decide not to enter the market. This may mean there are no viable market niche for the product or brand or model. 2. The firm may decide not to segment but to mass marketer. This may be appropriate in three situations— a. When the market is so small that marketing to portion of it is not profitable b.When heavy users make up such a large proportion of the sales volume that they are the only relevant target. c. When the brand is dominant in the market and targeting to a few segments would not benefit sales and profits. 3. The firm may decide to market to only one segment 4. The firm may decide to market to more than one segment and design a separate marketing strategy each. Three Important Criteria to Base Segmentation Strategy Decisions: 1. Measurable. Be able to measure size and characteristics. Example: income 2.Meaningful. Segment is large enough to have sufficient sales and growth potential to offer long-run profits. 3. Marketable. Can be reached and serve profitably. Consumer Behavior and Product Strategy Product affect and cognition: Satisfaction and dissatisfaction. Consumer satisfaction is critical in marketing thought and consumer research. Satisfied more likely to purchase the product; dissatisfied more likely to switch products or brand. Expectancy disconfirmation with performance approach is a current approach in studying satisfaction.This approach views consumer satisfaction as the degree to which a product or service provides a pleasurable level of consumption-related fulfilment. It is a degree to which a product performance exceeds the consumers expectations. Prepurchase expectations are consumers beliefs about anticipated performance of the product. Postpurcha se perceptions are consumer’s thoughts about how well the product performed. Disconfirmation refers to difference between the two perceptions. 3 types of disconfirmation: 1. Positive disconfirmation occurs when product performance is better than expected.This lead to satisfaction or a pleasurable level of fulfilment. 2. Negative disconfirmation occurs when product performance is lower than expected. This thought lead to dissatisfaction. 3. Neutral disconfirmation occurs when performance perceptions just meet expectations. Product Behavior Major objective of marketing is to increase the probability and frequency of consumers coming into contact with products, purchasing and using them and repurchasing them. Two classes of consumer behavior: 1. Product Contact. Involves behavior such as locating the product in the store, examining it, and taking it to the check out counter.A consumer may receive free sample in the mail, or on the doorstep on be given sample in the store, borrow product from a friend and use it, receive a product as a gift, or simply see someone else sue the product and experience it vicariously. 2. Brand Loyalty/Variety Seeking. For consumers to be brand loyal, they must not only purchase the same brand repeatedly but also has cognitive commitment to do so. Brand must have sufficient meaning for them that they purchase it not because of convenience or deals but because the brand represents important benefits or values to them.Brand loyalty is an intrinsic commitment to repeatedly purchase a particular brand. It is differentiated from repeat purchase behaviour because it focuses only on the behavioural action without concern for the reasons for the habitual response. Variety seeking is a cognitive commitment to purchase different brands because of factors such as the stimulation involved in trying different brands, curiosity, novelty, or overcoming boredom with the same old thing. Useful strategies for loyal customers: 1. If the only profi table segment is the brand loyal heavy user, focus on switching consumer loyalty to the firm’s brands 2.If there is sufficient number of brand loyal light users, focus on increasing their usage of the firm’s brand 3. If there is a sufficient number of variety-seeking heavy users, attempt to make the firm’s brand name a salient attribute and/or develop a new relative advantage. 4. If there is a sufficient number of variety-seeking light users, attempt to make the firm’s brand name a salient attribute and increase usage of the brand among consumers, perhaps by finding sustainable relative advantage. Product Environment Refers to product-related stimuli that consumers attend and comprehend.Majority of this stimuli are received through the sense of sight. Example: How a cloth feels so smooth influences consumer affect, cognition, and behavior. Two types of environmental stimuli: 1. Product attributes. Major stimuli that influence consumer affect, cognition, a nd behavior. Consumers may evaluate these attributes in terms of their own values, beliefs, and past experiences. 2. Packaging. Element of the product environment on which marketers spend billions annually. Packaging objectives: 1. Should protect the product as it moves through the channel to the consumer. 2.Should be economical and not add undue cost to the product 3. Should allow convenient storage and use of the product by consumer 4. Can be used effectively to promote the product to the consumer. Package sizes can influence not only which brands consumers choose but also how much of a product they use on particular occasions. Package colors are thought to have an important impact on consumers affect, cognition, and behavior. Colors can connote meaning and can be used strategically. Brand identification and Label Information on the package provide additional stimuli for consideration by the consumer.It simplifies purchase and for the consumer and make the loyalty development proc ess possible. Label information includes instructions, contents, lists of ingredients or raw materials, warnings for use and care of the product. Product Strategy. Designed to influence consumers in both the short and long run. In the short-run, new product strategies aim to influence consumers to try the product; in the long run, product strategies are designed to develop brand loyalty and obtain large market shares. A critical aspect of designing product strategies involves analyzing consumer-product relationships.This means consumer product-related affect, cognition, behavior, and environments should be carefully considered in new-product life cycle. Characteristics of Consumers; 1. Innovators 2. Early adopters 3. Early majority 4. Late majority 5. Laggards Characteristics of Products 1. Compatibility. How will does this product fit consumers’ current affect and cognitions, and behaviours? –degree to which product is consistent with consistent with consumers current affect, cognition and behavior. 2. Trialability. Can consumers try the product on a limited basis with little risk? -degree of which product can be tried on a limited basis or divided into small quantities for an inexpensive trial. 3. Observability. Do consumers see or otherwise sense this product? –degree to which products or their effects can be sensed by other consumers.4. Speed. How soon do consumers experience the benefits of the product? –refers to how rapid consumers experience the benefits of the product. 5. Simplicity. How easy it is for consumers to understand and use the product? –the degree to which a product is easy for a consumer to understand and use. 6. Competitive advantage. What makes this product better than competitive offerings? -the degree to which an item has sustainable competitive advantage over other product classes, product forms, and brands. 7. Product symbolism. What does this product mean to consumers? –refers to what the pr oduct or brand means to the consumer and what the consumer experiences in purchasing and using it. Consumer researchers recognize that some products possess symbolic features and that consumption of them may depend more on their social and psychological meaning than on their functional utility. 8. Marketing strategy. What is the role of other marketing mix elements in creating a functional or image-related relative advantage?Favorable image is created through the other elements of the marketing mix. Promotion in the form of advertising is commonly used to create a favorable image for the brand by pairing it with positively evaluated stimuli such as attractive model. Price. Create brand images as well as provide functional competitive advantage. Consumers perceived a relationship between price and quality. Price can position a brand as a good value for their money. Distribution. Good site locations and a large number of outlets are important advantage esp in the food markets