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Tutorial: New Ideas in Customer Groups

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A tutorial aid for the discussion of some new ideas in the field of defining customer groups

A tutorial aid for the discussion of some new ideas in the field of defining customer groups

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  • 1. Report G: Customer Groups BUS 5001 Contemporary Business
  • 2. We shall be looking at: 1 Segmentation strategy 2 New developments in segmentation 3 Brand Value
  • 3. Report Outcome One: Segments addressed and segmentation strategy
  • 4. What is segmentation? Market segmentation involves dividing large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. Kotler
  • 5. Segmentation techniques
  • 6. Segmentation techniques i. Demographic ii. Geographic iii. Geodemographic iv. Psychographic v. Behavioural vi. Usage vii. Customer Benefit viii. Loyalty ix. Buyer Readiness x. Adoption Model
  • 7. Targeting Options: Undifferentiated Supplier Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 One product / brand for all customer segments
  • 8. Targeting Options: Differentiated Supplier Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Differentiated products for targeted segments
  • 9. Targeting Options: Focused Supplier Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Single product / brand for a single segment
  • 10. Targeting Options: One-to-one Supplier Modified marketing mix for each individual customer (Customisation / Individualisation / ‘Mass Customisation’)
  • 11. Report Outcomes One and Three: New ideas in customer segmentation
  • 12. Socio-Economic Groups A: ‘Upper Middle Class’ Higher managerial, administrative and professional B: ‘Middle Class’ Intermediate managerial, administrative and professional C1: ‘Lower Middle Class’ Supervisory or clerical, junior managerial, administrative and professional C2: ‘Skilled Working Class’ Skilled manual workers D: ‘ Working Class’ Semi-skilled or unskilled manual workers E: Subsistence Pensioner, widowed, casual and lowest grade workers
  • 13. The Family Life Cycle Young singles Few financial burdens. Focus on recreation Young married Financially strong. Focus on home. Full Nest: Young couple, child < 6yrs Financially burdened. Credit users, child focused. Full Nest: Young couple, child > 6yrs Financially stronger. Child focus. Full Nest: Older couple, dependent child Better financial position. School focus. Empty Nest: Children left home, working Financially strong. Focus on travel & leisure Empty Nest: Children left home, retired Financially weaker. Focus on health. Solitary survivor Reduced spending. Focus on health, hobbies, care.
  • 14. A classification of Residential Neighbourhoods (http://www.caci.co.uk) ‘Wealthy Achievers’ Affluent suburbs, achievers, prosperous retirement areas 25% of UK households ‘Urban Prosperity’ Affluent professionals 11% of UK households ‘Comfortably Off’ ‘Starters’, secure and settled families, prudent pensioners 26% of UK households ‘Moderate Means’ Older families, ethnic communities, ‘blue collar roots’ 15% of UK households ‘Hard Pressed’ Council housing, inner city, high unemployment 23% of UK households
  • 15. A new look at segmentation
  • 16. Generations X, Y and Z
  • 17. Veterans Born prior to 1946. Tend to be disciplined, respect law and order and they like consistency. This generation is not comfortable with change. They have fixed views on the role of each gender, and in the workplace are comfortable with a directive, command and control management style.
  • 18. Baby Boomers Born between 1946 and 1964. The largest population of any generation. Open-minded and rebellious youth, but more conservative in their 30’s and 40’s. Job status and social standing conscious. Tend to be optimistic, ambitious, and loyal, and believe that employment is for life.
  • 19. Generation X Born between 1965 and 1979. Exposed to daycare and divorce. Well-educated , many having tertiary qualifications. Resourceful, individualistic, self reliant and sceptical of authority. Focused on relationships, their rights and skills. Tend to change jobs and careers.
  • 20. Generation Y Born between 1980 and 1995 (Millennium or Net Generation.) Very technology wise and are comfortable with ethnically diverse groups. Optimistic, confident, sociable, and have strong morals and a sense of civic duty. Not brand loyal , flexible, style consciousness, likely to change employers.
  • 21. Generation Z Born after 1995. (Digital Natives) Used to instant action and satisfaction. Children of Generation X and are born into smaller families with older mums. Communication is mainly through online communities and social media – join large scale online groups. May not perform well in public speaking.
  • 22. Tribal marketing:
  • 23. THE TIME OF THE TRIBES
  • 24. (POSTMODERN) TRIBES A tribe, in the postmodern sense of the term, is a group of individuals •who are not necessarily homogenous (in terms of objective social characteristics), •but are inter-linked by the same subjectivity, the same passion, •and capable of taking collective action, short-lived but intense.
  • 25. “Brand Tribe: A group of people who share their interest in a specific brand and create a parallel social universe ripe with its own values, rituals, vocabulary and hierarchy” Wipperfürth, 2005 BRAND TRIBES/COMMUNITIES
  • 26. DIFFICULT TO IDENTIFY “Tribes are not easy to identify. They are fuzzy: more societal sparkles than socioeconomic certainty. They are shifting aggregations of emotionally bonded people, open systems to which a person belongs and yet doesn't quite belong. Their underlying logic is made up of shared experience, interpretations and representations” Le Quéau, 1998
  • 27. From segments of consumers With feedback effect • Consumer • Client • User • Buyer • Members • Fanatics • Adepts • Connoisseurs • ....• .... To tribes of enthusiasts THE LOGIC OF TRIBAL MARKETING
  • 28. • Focus on customer- company relationship • The company as a pole of the relationship • Loyalty cards, bulletin boards… • Mainly cognitive loyalty Individualistic approach to consumer loyalty Tribal approach to consumer loyalty • Focus on customer- customer relationship • The company as a support of the relationship • Rituals, brandfests, sacred places… • Mainly affective loyalty TRIBAL LOYALTY
  • 29. It can go wrong… This who Burberry would like their customers to be…
  • 30. It can go wrong… But this is who the brand has become associated with…
  • 31. Report Outcome Three: Identifying new market segments
  • 32. Ethnic Minority Segments http://www.hispanic-advertising-agency.com/
  • 33. Only 5% of ads on UK TV in 2010 featured actors from ethnic minority backgrounds
  • 34. LGBT Segments
  • 35. Identifying International Market Segments http://www.gapminder.org/labs http://www.oecd.org/statistics/ http://www.imf.org/external http://www.guardian.co.uk/global- development/datablog/2012/nov/09/developing-economies- overtake-west-2050-oecd-forecasts?intcmp=239#data
  • 36. Report Outcome Two: Brand Value
  • 37. Definitions of ‘brand value’ or ‘brand equity’ “A brand has positive customer-based brand equity when consumers react more favourably to a product and the way it is marketed when the brand is identified than when it is not”. Keller (2008) “The set of assets and liabilities linked to a brand’s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or that firm’s customers” Aaker (1996)
  • 38. How is brand value measured?
  • 39. In the mind of the customer In market performance In shareholder value
  • 40. In the mind of the customer: • Awareness – Brand recall and recognition • Associations – Brand benefits and uniqueness • Attitudes – Perceptions of quality and satisfaction • Attachment – Brand loyalty • Activity – Purchase, information search, word-of-mouth
  • 41. In market performance: • Price premiums • Price elasticities – Inelastic to increase, elastic to decreases • Market share • Expansion success – Success in line and brand extensions • Cost structure – Ability to save in marketing costs • Profitability
  • 42. In shareholder value: • Stock price • Price to Earnings multiple – Market price of share divided by the annual Earnings per Share • Market capitalisation – Total value of all shares outstanding
  • 43. Brand evaluation consultants: http://bavconsulting.com/ http://www.wpp.com/wpp/marketing/brand
  • 44. Sources: Aaker, D., 1996. Building Strong Brands, Free Press Keller, K.L., 2008. Strategic Brand Management. Pearson Press