Similar principle also applies to geographical area’s. Not every local market is valuable to a manufacturer. Not every local market holds the same potential for a product. The competition might not be as severe in every local market. So again , it really makes sense to be able to identify the most and least valuable geographical markets and to execute your sales and marketing strategy based on that.
Summary Overview Computer-aided methods afford marketers additional help in segmenting markets. The ability of the computer to record, sort, recombine, and analyze a great many variables relating to consumer behaviour at the same time allows marketers to develop much more sophisticated market segments. More Sophisticated Techniques for Segmentation and Positioning Clustering . Clustering techniques try to find similar patterns within sets of data. Patterns of behaviour can be combined into new needs analysis and product design and marketing communications can focus on how these needs can be filled. Database Sorting . Past customer behaviour is often the source of information about new purchase opportunities or identification of cyclical buying habits. Teaching Tip: Database sorting is especially helpful in providing services. For example, a financial advisor enters a great deal of information about a client in a database. By contacting the client before key events, such as an wedding anniversary, the advisor demonstrates to the client the importance of their continuing relationship and how well the advisor has internalized what is important to the client. Differentiation . Differentiation refers to how the marketer tries to distinguish her or his offer in the marketplace -- how it is set off from the competition in hopefully meaningful ways. Positioning . Positioning refers to how customers think about proposed and/or present brands in a market. Marketing managers must always remember that it is the customer’s perception of where a product or brand is in relation to the other choices that is important.
Value segmentation – Pareto - illustrations Brand User Loyal Switchers 20% 20% Revenue/Profits . 80% The 80/20 rule 20% 40% 20% Semi-Loyal Source: Garth Hallberg Competitive Brand User Non User of Category
local distribution channels or catering to different age, income & education groups
Product/service design--different models + different features
Special products (sizes and quality) or services
Special financial terms
divides U.S. consumer into 14 groups & 66 segments. Urban Uptown Midtown Mix Urban Cores Elite Suburbs The Affluentials Middleburbs Inner Suburbs 2nd City Society City Centers Micro-City Blues Landed Gentry Country Comfort Middle America Rustic Living
Main Inhabited Areas in Canada Geographic segmentation - Canada
Dividing overall market into homogeneous groups by location
Can identify general patterns but not all consumers in a location will make the same buying decision.
Major brands get 40-80% of sales from core regions
Climate is a segmentation factor e.g.
Northerners eat more soup than Southerners
Southerners use more swimming pool chemicals than Northerners
% Distribution of Canadian Population by Province 2001
Provincial and Territorial Populations, 1981, 1991, 2001 POPULATION (THOUSANDS) Source: Statistics Canada Website http://geodepot.ca/English/Pgdb/People/Population/demo05.htm. Region 1981 1991 2001 Newfoundland 568 568 513 Prince Edward Island 123 130 135 Nova Scotia 847 900 908 New Brunswick 696 724 729 Quebec 6 438 6 896 7 237 Ontario 8 625 10 085 11 410 Manitoba 1 026 1 092 1 120 Saskatchewan 968 989 979 Alberta 2 238 2 546 2 975 British Columbia 2 744 3 282 3 908 Yukon 23 28 29 Northwest Territories 46 36 37 Nunavut n/a 21 27 Canada 24 343 27 297 30 007
Urban - Rural Population Distribution, 1871-2001
segmentation according to the different benefits that consumers seek from the product
focus on ‘why’ a customer purchases rather than ‘what’
Benefits that we seek when we buy
attributes we seek in a good or service
benefits we expect to receive from that good or service
Usage rates for a product e.g.
heavy-, moderate-, light-user segments
80/20 principle (“Pareto’s Law”) 80% of a product’s revenues comes from a relative small, loyal % of total customers
Consumer brand loyalty toward product e.g. AirMiles, ClubCard points
Band-Aid offers “flex” as a benefit to consumers.
Benefit Segmentation Applied to Yogurt Attributes of Yogurt Source: Adapted from Marco Vriens and Ter Hofseted, “Linking Attributes, Benefits, and Consumer Values,” Marketing Research, Chicago, Fall 2000, V. 12(3) pp. 4-10. Reprinted with permission by the American Marketing Association. Provides choice for family members X X Convenient to use X Tastes good X X Good quality X X X X Healthy X X X X Helps digestion X Helps diet X Spend less money X BENEFITS SOUGHT FROM YOGURT Individually packaged With fruit High- priced Mild Organic Contains bio-bifidus Low fat Low- priced
The Market Segment for Radio by Age & Benefit Age Benefit Teens Middle Adults Senior Young Adult Information Entertainment Companionship This matrix is too simple. How would we classify today?
Hypothetical Middle Adult Segment for Radio Early Retiree Hourly Employee Business Owner Professional Information X X X Entertainment X X Companionship X Desired Benefit Middle Adults
Hypothetical Middle Adult Segment for Information Radio Early Retiree Hourly Employee Business Owner Professional Breaking news X X Political commentary X X Financial market commentary X X X Desired Information Focus Advice X X Weather X X Call-in X Gossip X Middle Adults
Hypothetical Positioning Map: CBC versus Commercial Radio Informational Music Challenging Entertaining Commercial Talk Radio Commercial Talk Radio *As it Happens CBC local* *This Morning After Hours* *CBC News *Ideas Disc Drive* Take 5*
Positioning of Soap “ Product Space” Representing Consumers’ Perception for Different Brands of Bar Soap Deodorant High moisturizing Nondeodorant Low moisturizing 1 2 4 5 7 8 6 3