Good morning,I am Wystan Robertson director of marketing and sales of the leading telecommunications provider in Guyana (GT&T).The session we are about to embark on is entitled Marketing Segmentation strategies a topic I would like to call seperating the sheep from the Goat.
As I stand between you and your lunch , I would like to ask, how many members of the audience are coffee drinkers; how many are starbucks enthusiast.
We all know of Starbucks and the successes it has in the market space of gourmet coffee. (11,000 outlets and $6.1 billion in revenues) Many an article and book has been written about the success of Starbucks, its marketing and sales strategy and of course, the company’s ability to identify a market segment for which their product has been able to succeed.Given the success of starbucks , would you want to enter the gourmet coffee space?
Well here are five brands that have been able to enter the gourmet coffee space and have been able to successfully present to the market a coffee product, that has been able to provide the retursGreen Mountain Coffee Roasters – sells organic coffee through a small number of outlets, as a wholesaler with 8,000 accounts, and is growing their officer service business. Revenues $162 million, 51% growth rate on organic coffee revenues. Coffee Bean & Tea Leaf – 400 outlets. Innovative products and wide selection. Invented ice-blended coffee, and chai latte. Is colonizing markets where Starbucks has not yet arrived. All drinks are certified kosher. Revenues are $150 millionCosta – 617 outlets, based in London. Growing in India. Menu is adapted to Indian tastes. Costa outlets in the middle east and is expanding into China. Revenues $270 millionPeets, appeals to the coffee connoisseurs, they roast their beans in small batches and replaces coffee every 30 minutes and never re-streams milk. Also sells their beans in 4000 grocery stores.Caribou: 416 outlets, based in Minneapolis. Cafes look like mountain lodges with fireplaces. Motto: “Life is short. Stay awake for it”. Sells a lifestyle brand. Revenues $198 million(Marketing is about relationship management, we identify a need in the market and we attempt to fulfill that need with a product or service.)
What strategies were employed for the successes of these alternative coffee houses?It is a fact that Nearly all markets include people with different product needs and preferences, so as marketers it helps to be able to define needs and wants more precisely, this allows our decision-makers to be able to define objectives and allocate resources more accurately.(Market segmentation: the process of dividing a market into groups of similar consumers and selecting the most appropriate group(s) of individuals for the firm to serve)
So what is market segmentation?Marketing strategy planning tries to match opportunities in the market to the company’s resources (what it can do) and its objectives (what top management wants to do). Most Successfulstrategies get their start when an attractive market opportunity is identified. (Market segmenting is the process with the help of which a company divides the market into distinct groups who have distinct needs, wants, behavior or who might want different products & services (AminjonovMirhabibjon, "Marketing Introduction"(2009)))
So here is another definition : (Assuming that any broad product-market (or generic market) may consist of submarkets, One submarket might focus on people who want basic transportation, another on people who want exercise, and so on. So we see that in the generic “transporting market” , we might see differentproduct-markets of customers for bicycles, motorcycles, cars, airplanes, ships,buses, and “others.”This follows that Marketing-oriented managers think of segmenting as an aggregating processclustering people with similar needs into a “market segment.” A market segment isa (relatively) homogeneous group of customers who will respond to a marketing mixin a similar way.)
So is the process of market research similar to Market segmentation strategy? No, Market segmentation is a much more strategic tool than traditional market research. WhileMarket research explores and identifies existing markets; market segmentation creates and invents new markets.The role segmentation plays in marketing strategic planning involves first the narrowing down of broad opportunities to a specific target market and the planning of a marketing mix.
Lets look at some steps to segment the market; two broad processes are involved; (1) naming broad product-markets and (2) segmenting these broad product-markets in order to select target markets anddevelop suitable marketing mixes.
The stages to getting to the development of a suitable market mix involves the disaggregation of the market space using one of five traditional bases.(There are generally five bases for segmentation that would form the basis of narrowing down the opportunities within a market place.Broadly speaking, then, in the early stages of a search for opportunitieswe’re looking for customers with needs that are not being satisfied as wellas they might be. Of course, potential customers are not all alike. They don’t allhave the same needs nor do they always want to meet needs in the same way.Part of the reason is that there are different possible types of customers with manydifferent characteristics.)
Psychographics classify consumers by their values and lifestyles.A lot of emphasis in marketing has been placed on this aspect of segmentation; it’s a qualitative look at the consumer within the market place with an effort to identify the personality within the segment and the product that would be most marketable to that lifestyle.So Forexample, while a demographic profile might suggest that the target group between the ages of 18 -25 are the best prospects for a particular product, say the Ipad; The psychographic profile would extend the analysis by noting that the best prospects for this product would be innovators who have abundant resources at their disposal (have the highest incomes), have high self-esteem, and Image is important to them as an expression of taste.(Psychographics classify consumers by their values and lifestyles. Thoughpsychographic classifications are now abundant, among the best known are VALS 2 andLOV. Psychographic studies range from the general profiling of lifestyles to the productspecific segmentation based on psychographic elements. Psychographic variables areclassified into three categories: product attributes, lifestyle attributes, and psychologicalattributes.The study of lifestyles is largely explained in terms of the AIO's: attitudes,interests, and opinions. These are a reflection of a mix of economic, cultural and socialvalues. Values in turn are largely shaped by early lifetime experiences. Among thestrongest forces forming values are the triad of institutions (family, religion, and school),media, and government (Gunter 1992).)
VALS, (for "Values, Attitudes and Lifestyles") is a psychographic segmentation tool,derived from the theoretical basis of Maslow’s work. The main dimensions of the segmentation framework are primary motivation (the horizontal dimension) and resources (the vertical dimension). (It was developed in 1970s and inaugurated in 1978 by Arnold Mitchell at SRI International.)VALS places U.S. adult consumers into one of eight segments based on their responses to the VALS administered questionnaire.According to the VALS Framework, groups of people are arranged in a rectangle and are based on two dimensions. The vertical dimension segments people based on the degree to which they are innovative and have resources such as income, education, self-confidence,intelligence, leadership skills, and energy. The horizontal dimension represents primary motivations and includes three distinct types: Consumers driven by knowledge and principles are motivated primary by ideals. These consumers include groups called Thinkers and Believers. Consumers driven by demonstrating success to their peers are motivated primarily by achievement. These consumers include groups referred to as Achievers and Strivers. Consumers driven by a desire for social or physical activity, variety, and risk taking are motivated primarily by self-expression. These consumers include the groups known as Experiencers and Makers. At the top of the rectangle are the Innovators, who have such high resources that they could have any of the three primary motivations. At the bottom of the rectangle are the Survivors, who live complacently and within their means without a strong primary motivation of the types listed above.(VALS Framework and SegmentInnovator. These consumers are on the leading edge of change, have the highest incomes, and such high self-esteem and abundant resources that they can induldge in any or all self-orientations. They are located above the rectangle. Image is important to them as an expression of taste, independence, and character. Their consumer choices are directed toward the "finer things in life."Thinkers. These consumers are the high-resource group of those who are motivated by ideals. They are mature, responsible, well-educated professionals. Their leisure activities center on their homes, but they are well informed about what goes on in the world and are open to new ideas and social change. They have high incomes but are practical consumers and rational decision makers.Believers. These consumers are the low-resource group of those who are motivated by ideals. They are conservative and predictable consumers who favor American products and established brands. Their lives are centered on family, church, community, and the nation. They have modest incomes.Achievers. These consumers are the high-resource group of those who are motivated by achievement. They are successful work-oriented people who get their satisfaction from their jobs and families. They are politically conservative and respect authority and the status quo. They favor established products and services that show off their success to their peers.Strivers. These consumers are the low-resource group of those who are motivated by achievements. They have values very similar to achievers but have fewer economic, social, and psychological resources. Style is extremely important to them as they strive to emulate people they admire.Experiencers. These consumers are the high-resource group of those who are motivated by self-expression. They are the youngest of all the segments, with a median age of 25. They have a lot of energy, which they pour to physical exercise and social activities. They are avid consumers, spending heavily on clothing, fast-foods, music, and other youthful favorites, with particular emphasis on new products and services.Makers. These consumers are the low-resource group of those who are motivated by self-expression. They are practical people who value self-sufficiency. They are focused on the familiar-family, work, and physical recreation-and have little interest in the broader world. As consumers, they appreciate practical and functional products.Survivors. These consumers have the lowest incomes. They have too few resources to be included in any consumer self-orientation and are thus located below the rectangle. They are the oldest of all the segments, with a median age of 61. Within their limited means, they tend to be brand-loyal consumers.)
So how do weknow that we have arrived at an appropriate market segment
Marketing-oriented managers think of segmenting as an aggregating processÑclustering people with similar needs into a “market segment.” A market segment isa (relatively) homogeneous group of customers who will respond to a marketing mixin a similar way.It is especially important that segments be operational. This leads marketers toinclude demographic dimensions such as age, income, location, and family size. Infact, it is difficult to make some Place and Promotion decisions without such information.
STP Segmentation, targeting, and positioning together comprise a three stage strategic marketing process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way.SegmentationTargetingFocus on segment(s) providing the most valuePositioningshaping the product & developing a marketing programme so that product is perceived to be (and is) different from competitors’ products.Positioning map: to show differences in consumers’ perceptions of competing productsReposition: marketing strategy to change a product’s position in consumers’ minds relative to positions of rival productTo Quote Susan Abbott from Abbot research, “For segmentation to be useful, you must be able to act on it,Then you need to coordinate action in the organization”As we said before the effective marketing concept involves the following;Grouping your customers into segments based on their needs and preferences Targetsegment(s) analysing how you can best meet their needs and preferences This includes targeting and competitive analysis Positoning and BrandingProviding superior service or products to meet your targeted customers' needs and preferences.
The Six rings of value works with the psychographic segmentation to manage the customer’s experience. To find out what the customer values, needs and desires are and their emotional reactions to the company and its products.The six rings of value are how you create a customer experience that meets these needs.for each segment the marketer wouldhave a line that reflects each one of the six rings, and each one of the touchpoints with the customer. The goal is to be able to say what you are going to do differently (if anything), for each one.A company isn’t likely to get a competitive advantage if it just meets needs in the same way as some otherfirm. So, in evaluating possible strategies the marketing manager should think aboutwhether there is a way to differentiate the marketing mix.In this context when you hear the word differentiation, you should think “benefits segmentation”. IF there are no differences in the benefits that consumers are interested in, then you don’t have segments, and there is nothing to differentiate on.
So how do we translate all this to the real world, lets look at the experiences of a rural town in Guyana.Guyana, country on the northern coast of South America, west of Suriname and east of Venezuela. Its area is 215,000 sq km (83,000 sq mi). Georgetown is the capital and principal port. Guyana has a population of 711,759 (1997 estimate). Guyana, a country of exceptional natural beauty, is a splendid combination of the Caribbean and South America, with fascinating touches of a sometimes turbulent past. Perched on the north-east corner of the South American continent, Guyana stretches 450 miles from its long Atlantic coastline into dense equatorial forest and the broad savannah of the Rupununi. Guyana has launched its Low Carbon Development Strategy. This Strategy outlines Guyana’s approach to promoting economic development while at the same time combating climate change.MabarumaInterior town in the north west district of GuyanaAdministrative centre for the administrative region one
The index is weighted by the number of households inthe enumeration area.High marginality index value indicates high level of poverty.The indices were computed using selected variables fromthe 2002 population census.Variables used:1. Proportion of adults - who are illiterate.2. Proportion of adults - working in the primary sector.3. Proportion of children not attending school full-time.4. Proportion of dwellings not having piped water.5. Proportion of dwellings that do not have a W.C. linked to sewer.6. Proportion of dwellings that do not have electricity.7. Proportion of dwellings that do not have garbage collectionservice, or do not use compost, or burying.8. Overcrowding.
The slide on the left shows the age distribution of the population in Guyana; the image on the right represents the area region 1 that Mabaruma is administrative head for. The comparative graph shows that Mabaruma has a youthful population, the workforce is significantly less than the national average. The community is a largely agraian and populated largely by the indigenous peoples of Guyana.
Distribution of the sexes in the region, approximately 24,000 persons in the region with 13,000 males
The mabaruma town was served with a fixed line service (Nortel DRX) that supported approximately 471 services in the region.Incumbents have an advantage when it comes to using market research for segmentation purposes. The historical usage and phone calling patterns form Part of the implementation strategy involved studyinSoit makes it easy to be able to identify the most and least valuable markets and to execute sales and marketing strategy based on that.Segmentation exercise to determine;Customers to target for high value productsForecast revenue returns
Class A:Identify the most valuable segment of the population, these are the subscribers we wanted to ensure we retained and kept on the network. Fully cognizant that there would be some substitution of revenues (from land to mobile) and wanted to ensure that this traffic remained with GTT.Class B: subs with the greatest potential to grow the sub base in a meaningful way.Class C: business as usual with these subscribers.
Mobile service commissioned in May 2008A key objective of marketing is to satisfy the needs of some group of customersthat the firm serves. Broadly speaking, then, in the early stages of a search for opportunitieswe’re looking for customers with needs that are not being satisfied as wellas they might be. Of course, potential customers are not all alike. They don’t allhave the same needs nor do they always want to meet needs in the same way.Part of the reason is that there are different possible types of customers with manydifferent characteristics. For example, individual consumers often have differentneeds than organizations, and people with certain attitudes or interests have differentpreferences for how they spend their time, what shows they watch, and the like.In spite of the many possible differences, there often are subgroups (segments) ofconsumers who are similar and could be satisfied with the same marketing mix.Thus, we try to identify and understand these different subgroupsÑwith market segmentation.
So to target the low resource segment as well as the young trendy segment the following promotion was devised with the objectives of the promotion
So remember, market segmentation provides an in depth analysis of a group of people with common characteristics, ideas, and activities. It provides guidance to positioning your product or service in the marketplace relative to competitors and to customer desires. It is useful in identifying new products and services to offer.
Market Segmentation Strategies in Telecoms Industry
Market Segmentation Strategies
Presentation for CARICAM Wireless 2010
What is Market Segmentation?
Market segmentation is used for strategic planning;
examining which markets the company should go,
and what offerings should be made. Segmentation
will also help to identify the potential of markets,
including share, profit and the potential return on
From Another Herd
• The process of dividing a heterogeneous
group into smaller, homogeneous clusters or
segments who contain people with similar
needs within each segment and significant,
meaningful differences between each of the
The importance of
• Nearly all markets include people with
different product needs and preferences.
• It helps to define needs and wants more
• Decision-makers can define objectives
and allocate resources more accurately.
• More precise objectives = better planning of
Steps to Segmenting and market
Select a market for study.
Choose bases for segmentation.
Profile and analyse segments.
Select target markets.
Design, implement and maintain
Bases of Segmentation
Characteristics of individuals,
groups that organisations used
to divide a total market
into segments (variables).
Segmenting markets by ;
region of the country ,
Some benefits of Regional segmentation
New ways to generate sales in
sluggish and competitive markets.
Scanner data allow assessment of
best-selling brands in region.
Regional brands appeal to local
React more quickly to competition.
Family life cycle
Market segmentation on the basis of personality,
motives, lifestyles and Geo-demographics.
How time is spent
Segmenting potential customers
into neighborhood lifestyle
demographic and lifestyle
VALS – a psychographic theory
(Values, Attitudes and Lifestyles) tool to determine the
placement of a given product to a target segment
The process of grouping
customers into market
segments according to
the benefits they seek
from the product.
“Features Tell Benefits Sell”
Dividing a market by the amount of product
bought or consumed.
Pareto Theory - A principle holding that 20 per cent of
all customers generate 80 per cent of the demand.
Value segmentation – Pareto Theory - illustrations
The 80/20 rule
Non User of
Source: Garth Hallberg
Appropriate Market Segmentation
Segment must be large
enough to warrant a special
Segments must be identifiable and their size
Members of targeted segments must be
reachable with marketing mix.
Unless segment responds to a marketing mix
differently, no separate treatment is needed.
Appropriate Market Segmentation
the customers in a market segment should be as
similar as possible with respect to their likely
responses to marketing mix variables and their
the customers in different segments should be as
different as possible with respect to their likely
responses to marketing mix variables and their
the segmenting dimensions should be useful for
identifying customers and deciding on marketing
Developing a Market Mix for each segment – Six Rings of value;
integrating the customer’s experience
751,223 (Census 2002)
214,970 square km
Between 1o & 9o North
Latitude and 57o &
GMT - 04:00
Guyana Dollar (G$)
Per capita GDP 2009
Nominal GDP 2009
Real GDP 2009
Inflation Rates (%)
Rate (Mid Rate)
Jan - Jun '10: 2.0
Aug '09: 3.1
Sept '09: 3.4
Dec '09: 3.6
G$202.40 to US $1
G$202.34 to US $1
G$202.47 to US $1
Applying Pareto Theory to Value
Segmentation to Mabaruma
Market / Product Mix Strategy
mabaruma prepaid Voice
Free SMS package
Designing a loyalty Scheme for Low ARPU
– Consumers who are motivated by achievements.
– They have values very similar to achievers but have
fewer economic, social, and psychological resources.
– Style is extremely important to them.
– Young consumers are who are motivated by selfexpression.
– They are involved in physical exercise and social
– They spend heavily on clothing, and other youthful
favorites, with particular emphasis on new products
– These consumers are the low-resource group of those
who are motivated by self-expression.
– They are practical people who are focused on the
familiar-family, and physical recreation.
– As consumers, they appreciate practical and
Loyalty Scheme for Low ARPU Markets
• Promotion encourages
customers to recharge &
purchase a handset.
• Recharges made by a
subscriber would see a 10%
of the amount going to a
• The money in the phone
fund would be applied as a
discount to the cost of the
• Three month Promotion.
• Redemption only after
2000 points accumulated in
• The Average usage for airtime
is around USD$5.00.
• The number of subs recharging
more than USD$10.00 per
month 2% of the subbase
• Brand Loyalty
• Number of subscribers
Qualifying over the
period : 56%
• Number of Handset
• Promotion increased
prepaid ARPU by
• Undertaking a segmentation,
Targeting and Positioning
process is probably one of the
most important processes
management should undertake
both at the onset of a new offer
creation as well as part of a
periodic revision of the
portfolio of offers and strategies
used by the organization. The
process can be one that tests
one’s ability to think creatively