Identify and profile distinct groups of buyers who differ in their needs and preferences.
Select one or more market segments to enter.
Establish and communicate the distinctive benefits of the market offering.
Four Levels of Micromarketing
Segment Marketing Targeting a group of customers who share a similar set of needs and wants.
Flexible Marketing Offerings
Product and service elements that all segment members value
Some segment members value
Options may carry additional charges
The Experience Economy
Customerization Combines operationally driven mass customization with customized marketing in a way that empowers consumers to design the product and service offering of their choice.
Segmenting Consumer Markets
Market Segmentation Occupation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Climate Density of area City Size Region Karnataka, Punjab, Haryana, Rajasthan Major metropolitan areas, small cities, towns Urban, suburban, exurban, rural Temperate, hot, humid, rainy Demographic Segmentation Income Marital status Sex Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Male, female Single, married, divorced, living together, widowed Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Professional, blue-collar, white-collar, agricultural, military
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Learning-involvement Perception Personality Needs-motivation Shelter, safety, security, affection, sense of self-worth Extroverts, novelty seeker, aggressive Low-risk, moderate-risk, high-risk Low-involvement, high-involvement Psychographic Subcultures (Race/ethnic) Religion Cultures (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers American, Italian,Indian, Chinese, Mexican, French, Pakistani Catholic, Protestant, Jewish,Hindu, Muslim, other African-American, Caucasian, Asian, Hispanic Family life cycle Social class Lower, middle, upper Bachelors, young married, full nesters, empty nesters Attitudes Positive attitude, negative attitude Sociocultural Segmentation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Brand loyalty Awareness status Usage rate Heavy users, medium users, light users, non users Unaware, aware, interested, enthusiastic None, some, strong Use-Situation Segmentation Location Objective Time Leisure, work, rush, morning, night Personal, gift, snack, fun, achievement Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money Geodemographics Based on geography and demography Demographic/ Psychographics Combination of demographic and psychographic profiles of consumer segments profiles SRI VALS TM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler Hybrid Segmentation
Four groups with higher resources
Innovators - Successful, sophisticated, active, take charge people with high self esteem.
Thinkers -Mature, satisfied and reflective people who are motivated by ideals and value order, knowledge, and responsibility.
Achievers -Successful goal-oriented people who focus on career and family.
Experiencers- Young, enthusiastic, impulsive people who seek variety and excitement.
Four groups with lower resources
Believers – Conservative, Conventional, and traditional people with concrete beliefs.
Strivers - Trendy and fun loving people who are resource constrained.
Makers – Practical, down-to-earth, self sufficient people who like to work with their hands.
Survivors – Elderly passive people who are concerned about change.
Steps in Segmentation Process
Segment acid test
Marketing mix strategy
Effective Segmentation Criteria
Is Mass Marketing dead?
Think of various product categories. How would you classify yourself in terms of the various segmentation schemes? How would marketing be more or less effective for you depending on the segment involved? How would you contrast demographic versus behavioral segment schemes? Which ones do you think would be most effective for marketers trying to sell to you?
HSBC is known as world’s local bank.
Established in 1865 to finance the trade between China and the United Kingdom.
Second largest bank in the world.
Serves 100 million customers through 9,500 branches in 79 countries.
The company is organised by business line:
Personal financial services
Corporate investment banking and markets
HSBC is organized by the geographic segment:
Sir John Bond in November 2003:
Our position as the world’s local bank enables us to approach each country uniquely, blending local knowledge with a world wide operating platform.
HSBC in New York
HSBC held a “New York City’s most knowledgeable Cabbie” contest. The winning cabbie gets paid to drive full time for HSBC for the year and HSBC’s customers win too. And they get a free ride in the HSBC branded Bankcab.
HSBC in Hong Kong
During the Severe Acute Respiratory Syndrome(SARS) outbreak, HSBC launched a program to revitalise the local economy.
HSBC’s niche marketing venture
Proides Pet Insurance which in 2003 was growing at the rate of 125% per year.
Dealing with Competition
Five Forces Determining Segment Structural Attractiveness
Industry Concept of Competition
Number of sellers and degree of differentiation
Entry, mobility, and exit barriers
Degree of vertical integration
Degree of globalization
Industry Concept of Competition
Share of market
Share of mind
Share of heart
Expanding the Total Market
Six Types of Defense Strategies
Other Competitive Strategies
Market Challenger Strategies
Define the strategic objective and opponents
Choose a general attack strategy
Choose a specific attack strategy
General Attack Strategies
Specific Attack Strategies
Intensive advertising promotion
Market Follower Strategies
Pick an industry. Classify firms according to the four different roles they might play: leader, challenger, follower and nicher. How would you characterize the nature of competition? Do the firms follow the principles described above?
Stareted as the consulting arm of the accounting firm Arthur Andersen.
They were called “Administrative Accouting Group” and then became Management Information Consulting Division.
In 1989, Andersen Consulting separated from Arthur Andersen in order to position itself against its IT services competitors. At the time Andersen Consulting already doing a $1 billion a year in business, but it was mistakenly associated with accounting.
The IT consulting marketplace was crowded with competitors ranging from nuts-and-bolts hardware/software providers like IBM to leading strategy firms like Mckinsey and Boston Consulting Group.
Came out with an advertising campaign.
In 2000, following arbitration against its former parent, Andersen Consulting was granted full independence. It had three months to find, implement, and introduce the world to a new corporate name. This effort went on to become one of the largest and most successful re-branding campaigns in corporate history.
A consultant from the Oslo office coined the Accenture name because it rhymed with adventure and connoted an “accent on the future”. The name emerged as the winner because it was catchy and distinctive and embodied bold growth and innovation.
In 2002, Accenture launched the “Innovation Delivered” campaign to distinguish itself from the commpetition. Competitors in the IT arena, such as IBM lacked broader business consulting expertise and weren’t seen as knowledgeable in business strategies and processes. They tended the firms from the IT level. Competitors like McKinsey had brand strength associated with strategic thinking.
Accenture saw its differentiator as the ability to provide both innovative ideas and execute them too.
“ Unless you can provide both transformational consulting and outsourcing capability, you are not going to win”
“ Innovation Delivered” campaign. “from innovation to execution, Accenture helps accelerate your vision”.
In 2002, the climate changed, after the dot-com crash and the economic downturn, innovation was no longer enough. “High performance Delivered” campaign with Tiger Woods as the spokesperson.