Segmentation And The Marketing Mix


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Segmentation And The Marketing Mix

  1. 1. Chapter 5 <ul><li>Segmentation and the Marketing Mix </li></ul>
  2. 2. Chronologically <ul><li>MASS PRODUCTION </li></ul><ul><li>PRODUCT DIFFERENTIATION </li></ul><ul><li>MARKET SEGMENTATION </li></ul><ul><li>Now some movement towards micro segmentation </li></ul>
  3. 3. Definition <ul><li>“ Market segmentation is the subdividing of a market into distinct subsets of customers, where any subset may conceivably be selected as a target market to be reached with a distinct marketing mix” </li></ul>
  4. 4. <ul><li>Segmentation recognises that people differ </li></ul><ul><li>Different tastes, needs, lifestyles, etc. </li></ul><ul><li>What products or markets can you think of which have been segmented, i.e. different variations of the same product are offered to different identifiable groups of customers? </li></ul>
  5. 5. Segmentation leads to marketing strategy that may result in: <ul><li>Changes in products </li></ul><ul><li>Changes in promotional appeals </li></ul><ul><li>Changes in distribution </li></ul><ul><li>Changes in pricing </li></ul>
  6. 6. Criteria for effective segmentation <ul><li>In order for segmentation to be viable, the market must be: </li></ul><ul><ul><li>Identifiable, definable and measurable </li></ul></ul><ul><ul><li>Accessible or reachable </li></ul></ul><ul><ul><li>Substantial or sizeable </li></ul></ul><ul><ul><li>Relatively stable </li></ul></ul>
  7. 7. Segmentation bases <ul><li>Geodemographic – descriptors </li></ul><ul><li>Behaviourist </li></ul><ul><li>Psychographics </li></ul>
  8. 8. Descriptors – demographic, geographic and personality Market segmentation in the menswear market: an example based on simple descriptors Income Age Low Medium High 16–25 A B C 26–35 D E F 36–55 G H I 56+ J K L
  9. 9. Market segmentation descriptor variables Variable Potential categorisation Gender male/female Age <2, 2-5, 6-10, 16-25, 26-35, 36-45, 46-64, 65+ Marital status single, with partner, divorced, widowed Occupation A B C1 C2 D E manual or non-manual full or part-time employment Income In decile bands, i.e. top 10%, next 10% etc. Net wealth In decile bands or other bands, e.g. £0–4999, £5000–14,999 Education Terminal age of education, e.g. <15, 16, 17, 18 ,19, etc.
  10. 10. Variable Potential categorisation Customer size in height, weight, dress/suit sizes, e.g. petite, large Religion Atheist, Christian, Muslim, Jewish, etc. Youth subcultures Goths, Charvers, Mods, Skaters, etc. Family life-cycle Young single Young couple with no children Young couple with children Older couple with children Older couple with no children Older couple Older single Type of neighbourhood/ Urban/rural or for e.g. ACORN housing area
  11. 11. Variable Potential categorisation Region/country e.g. north east, south west; UK, France, etc. Climate Hours of sunshine, rainfall, temperature
  12. 12. Behavioural or benefit segmentation <ul><li>The key concern is with how the consumer behaves and the benefits he/she seeks from the product </li></ul>
  13. 13. Market segmentation; behavioural and benefit variables Variable Potential categorisation Purchase loyalty Brand loyal, switchers to non-committed Purchasing mode From comparison shopping to convenience outlets only Usage rates Heavy users, medium users, light users, occasional users, non-users Expenditure High spenders to low spenders in deciles Usage situation Working clothes, leisurewear, evening wear, formal wear Price sensitivity Very price aware and conscious to least price sensitive Benefits Easy care garments, environmentally friendly fabrics, and/or durability, etc.
  14. 14. Psychographic segmentation <ul><li>Divides the market up by the way people think and the things that motivate them </li></ul><ul><li>Asks questions of people about: </li></ul><ul><ul><li>How individuals spend their time on activities </li></ul></ul><ul><ul><li>Their major interests </li></ul></ul><ul><ul><li>Their opinions about themselves and the world in general </li></ul></ul><ul><li>Leads to lifestyles </li></ul>
  15. 15. Lifestyle analysis of the British cosmetics market <ul><li>SELF-AWARE: concerned about appearance, fashion and exercise </li></ul><ul><li>FASHION-DIRECT: concerned about fashion and appearance, not about exercise and sport </li></ul><ul><li>GREEN GODDESSES: concerned about sport and fitness, less about appearance </li></ul><ul><li>UNCONCERNED: neutral attitudes to health and appearance </li></ul><ul><li>CONSCIENCE-STRICKEN: no time for self-realization, busy with family and responsibilities </li></ul><ul><li>DOWDIES: indifferent to fashion, cool on exercise, dress for comfort </li></ul>
  16. 16. Lifestyle Analysis of the British Cosmetics Market Behaviours and Descriptors Cosmetic use index Blush use index Wallis Miss Selfridge Etam Age (15–44) Social class Self-aware 162 188 228 189 151 51% 60% Fashion- directed 147 166 153 165 118 43 56 Green goddesses 95 76 74 86 119 32 52 Unconcerned 82 81 70 89 74 44 64 Conscience-stricken 68 59 53 40 82 24 59 Dowdies 37 19 17 22 52 20 62
  17. 17. Segmentation strategies <ul><li>Undifferentiated marketing </li></ul><ul><li>Concentrated marketing </li></ul><ul><li>Multi-segment marketing </li></ul>
  18. 18. A multi-segment strategy Segment No. of outlets Target customer Menswear : Burton 485 Men aged 20-45, mainstream fashion Top Man 303 Men aged 15-25, young fashion Principles for men 124 Men aged 20-45, updated classics Womenswear: Dororthy Perkins 626 Women, 18-40, mainstream fashion Top Shop 275 Women, 15-25, young fashion Principles 214 Women, 25-45, sophisticated fashion Evans collection 245 Women, 25-60, size 14+ Department stores : Debenhams 79 Mainstream fashion for individual and home Harvey Nichols 3 Exclusive and avant-garde for individual and home Sport & Leisure: Champion sport 112 Sports clothing, footwear for men and women <35, and children
  19. 19. Target Marketing <ul><li>Market Information </li></ul><ul><li>Market Segmentation </li></ul><ul><li>Market Targeting </li></ul>
  20. 20. Top Man Target Markets CORE PRIMARY SECONDARY Male aged 18–24 Male aged 18–24 Male aged 15–17 Fashion innovator Fashion follower Budding innovator Not price sensitive Price sensitive Intro latest trends Market size: £183 m Market size: £354 m Market size: £168 m Top Man share 1.7% Top Man share 4.6% Top Man share £1.5%
  21. 21. Top Man Ranges Moto Casual streetwear brand Customers aged 18–24 Fashion followers Primary segment Moto menswear Coordinated range for fashion innovator aged 19. Design and quality important. Not price sensitive Core segment W & G Clubbing range for fashion innovators in-between Moto menswear and Wilson Secondary segment Wilson Smart clothing for work and sometimes play. Aimed at the price-sensitive fashion follower Primary segment Shoes Range includes: Levi’s, Po, Ben Sherman, Wrangler & Skechers Core, primary, secondary
  22. 22. The Marketing Mix is the ‘tool kit’ that marketers use to do their job <ul><li>It is the appropriate combination of the four key elements – the Four P’s – that are at the heart of a company’s marketing programme. </li></ul><ul><li>  The Four P’s are made up of:- </li></ul><ul><ul><li>PRODUCT </li></ul></ul><ul><ul><li>PRICE </li></ul></ul><ul><ul><li>PLACE </li></ul></ul><ul><ul><li>PROMOTION </li></ul></ul>
  23. 23. Under each of the four P’s are a variety of concerns <ul><li>PRODUCT </li></ul><ul><ul><li>Product features </li></ul></ul><ul><ul><li>Quality </li></ul></ul><ul><ul><li>Brand name </li></ul></ul><ul><ul><li>Packaging </li></ul></ul><ul><ul><li>Services </li></ul></ul><ul><ul><li>Warranties </li></ul></ul><ul><ul><li>Size </li></ul></ul>
  24. 24. Price <ul><li>List price </li></ul><ul><li>Discounts </li></ul><ul><li>Credit terms </li></ul><ul><li>Payment methods </li></ul>
  25. 25. Place <ul><li>Channels </li></ul><ul><li>Locations </li></ul><ul><li>Distribution method </li></ul><ul><li>Coverage </li></ul>
  26. 26. Promotion <ul><li>Advertising </li></ul><ul><li>Personal selling </li></ul><ul><li>Sales promotion </li></ul><ul><li>Publicity </li></ul>