Mod. 6: Segmentation

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Mod. 6: Segmentation

  1. 1. Guys, Please… Know Your Audience!!!
  2. 2. Segmentation or How to divide markets into meaningful customer groups
  3. 3. To design a winning marketing strategy, we must answer two important questions:  What customers will we serve (what’s our target market)?  How can we serve these customers best (what’s our value proposition)?
  4. 4. Understand the marketplace and customer needs and wants Research customers and the marketplace Manage marketing information and customer data Design a customer- driven marketing strategy Select customers to serve: market segmentation and targeting Decide on a value proposition: differentation and positioning Construct an integrated marketing program that delivers superior value Product and service design: build strong brands Pricing: create real value Distribution: manage demand and supply chains Promotion: communicate the value proposition Build profitable relationships and create customer delight Customer relationship management: Build strong relationships with chosen customers Partner relationship management: build strong relationships with marketing partners Capture value from customers to create profits and customer equity Created satisfied, loyal customers Capture customer lifetime value Increase share of market and share of customer
  5. 5. 1. - Selecting Customers to Serve We do this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing).
  6. 6. 2. - Choosing a Value Proposition We must also decide how we will serve targeted customers and How we will differentiate and position ourselves in the marketplace.
  7. 7. Create value for targeted customers Segmentation Divide the total market into smaller groups Targeting Select the segment or segments to enter Differentiation Differentiate the market offering to create superior customer value Positioning Position the market offering in the minds of target customers Select customers to serve Decide on a value proposition
  8. 8. Market segmentation involves dividing a market into smaller groups of clients with different needs, characteristics, or behaviors. We need to identify a way to segment the market and develop profiles of the resulting market segments.
  9. 9. Segmenting Consumer Markets •Geographic Segmentation calls for dividing the market into different geographical units such as nations, regions, provinces, parishes, cities, or even neighborhoods. A company may decide to operate in one or a few geographical areas, or to operate in all areas but pay attention to geographical differences in needs and wants. Geographic World region or country Europe, Spain, Africa, Ivory Coast, Middle East, Qatar, North America, Canada Country region East Asia, South Asia, North Asia City size Under 5,000; 5,000-20,000; 20,000-50,000; 50,000-100,000; 100,000-250,000; 250,000- 500,000; 500,000-1,000,000; 1,000,000-4,000,000; over 4,000,000 Density Urban, suburban, exurban, rural Climate Northern, southern
  10. 10. Segmenting Consumer Markets •Demographic Segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Demographic Age Under 6; 6-11; 12-19; 20-34; 35-49; 50-64; 65+ Gender Male, Female Family size 1-2; 3-4; 5+ Family life cycle Young, single; married, no children; married with children; single parents; unmarried couples; older, married, no children under 18; older, single; other Income Under € 20,000; € 20,000-€ 30,000; € 30,000-€ 50,000; € 50,000-€ 100,000; € 100,000-€ 250,000; € 250,000 and over Occupation Professional and technical; managers, officials, and proprietors; clerical; sales; craftspeople; supervisors; farmers; retired; students; homemakers; unemployed Education Primary School or less; some secondary school; secondary school graduate; some college; college graduate Religion Jewish; Muslim; Hindu; Buddhist; Christian, other Race Asian; Hispanic; Black; White Generation Baby boomer, Generation X, Millenial Nationality British, Swiss, Spanish French, German, Italian, Japanese
  11. 11. Segmenting Consumer Markets •Psychographic Segmentation divides buyers into different groups based on social class, lifestyle, or personality characteristics. People in the same demographic group can have very different psychographic profiles. Psychographic Social class Lower lowers; upper lowers; working class; middle class; upper middles; lower uppers; upper uppers Lifestyle Achievers; strivers; survivors Personality Compulsive; gregarious; authoritarian; ambitious
  12. 12. Segmenting Consumer Markets •Behavioral Segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product or service Many marketers believe that behavior variables are the best starting point for building market segments. Behavioral Occasions Regular occasion; special occasion; holiday; seasonal Benefits Quality; service; economy; convenience; speed User status Nonuser; ex-user; potential user; first-time user; regular user User rates Light user; medium user; heavy user Loyalty status None; medium; strong; absolute Readiness stage Unaware; aware; informed; interested; desirous; intending to buy Attitude toward product Enthusiastic; positive; indifferent; negative; hostile
  13. 13. For me it’s all about…Tribes
  14. 14. As Marketers we need to move away from market segments based on characteristics, and instead embrace consumer tribes, which are based on behavior. Tribes are now a part of the social landscape and companies will need to learn to engage with them if they are to be competitive.
  15. 15. In his 1997 bestseller “Sex in the Snow” Michael Adams argues that individuals' identities are increasingly defined not by traditional demographic markers such as age, race, gender, and class, but by their personal values and worldviews. For me a Tribe is a group that Shares a Given Interest
  16. 16. “The issue is not that it’s difficult to get your word out, the thing that is difficult is to get people to care, the thing that is difficult is to get people to listen. The answer is not get your word out more. The answer is change what you’re talking about”. (Seth Godin)
  17. 17. “People buy because of the story and the way it makes them feel”. “So rather than saying to everyone in the world, everyone should buy this because its best, they should just say: No. There’s only 5,000 of them. It’s not for everyone, if you’re one of the people it’s for, we’d live to hear from you. And that’s how you build a culture, a movement. Not by saying everyone must buy this”.
  18. 18. Consumer tribe members are highly influenced by consumer tribe leaders. What types of leaders head your target tribes? Who are the leaders and the followers in your target tribes?
  19. 19. One alternative view of tribal marketing is that rather than leaders, brands must become the facilitators of the conversation. “Our role as marketers as being purely one of facilitators and very hands-off - just creating a platform and possibly creating a set of rules for consumers to be able to engage on that platform, ultimately letting the communication flow between the customers”. (Jennifer Kirkby).
  20. 20. Case Study
  21. 21. The goal: “To create the world’s best long-haul flight experience, one that looks after everyone on the plane –from families to business travelers and holidaymakers”. Long-haul Flyer Segmentation
  22. 22. The story of this case started in 2005 when Air New Zealand took delivery of its Boeing 777-200ER. The new interior was configured in a three class layout of: • Business Premier, Rows 1 to 7 (26 seats) • Pacific Premium Economy, Rows 23 to 26 (36 seats) • and Pacific Economy, Rows 34 to 67 (242 seats)
  23. 23. They suppress the unprofitable First Class and added a bunch of Premium Economy Seats But after that, the Airline management board understood that they weren’t innovating And for a “small” company the only way to compete in the current market is to be more innovative and to offer customers a unique experience from the moment they make the decision to choose Air New Zealand.
  24. 24. To prepare for the launch of the new Boeing 777-300 aircraft in November 2010, Air New Zealand analized its current long-haul offering.
  25. 25. In 2007 Air New Zealand approached Research Solutions (Synovate) The challenge for Synovate’s researchers was to determine what segments do in fact exist in sufficient numbers, so that the future long haul product design could be shaped by their presence in (and their value to) the market.
  26. 26. A segmentation survey was conducted in September and October 2007 and included over 1,000 Air New Zealand long haul travelers who lived in New Zealand. They were asked about their attitudes to… • The Airline • Their personal space • General rules and processes during the flight • The Crew • What to do in-flight • Other passangers Respondents answered on a 9-point scale ranging from strongly disagree to strongly agree. They applied multi-variate analysis to determine the extent to which there were distinct segments reflecting different traveler typologies.
  27. 27. Synovate’s approach to segmentation is that segments must … • Be statistically robust (i.e. there must be a reasonable level of statistical validity); • Be sufficiently large to be useful within the dataset in which they occur; • Be useful, in the sense that they “make sense” and are distinctly different on things that matter to the client and the purpose for which the research is being conducted.
  28. 28. As a result, Synovate recommend a five-segment solution – based on the attitudinal statements developed and analyzed, as well as our general understanding of travelers, their needs, and their commitment to Air New Zealand and other competitor airlines.
  29. 29. In addition to clustering and profiling these segments, the Company brainstormed their individual characteristics, and Synovate’s Qualitative Director Grant Storry brought them to life by adding a qualitative dimension to the understanding of the different types of travelers: “I was sent the segment profiles and asked if I could interpret them. When I looked at the data I tried to visualize archetypal characters that:  shared some of these characteristics and  would be well known and help the reader “recognize” the segments. It did not take long for the Simpsons to leap out of the data. They provided the best fit and range of characters –and that’s how the segments came to life!”,
  30. 30. What Type of Flyer Are You?
  31. 31. Positivists: Marge Simpson  Planners and organizers.  Fidgety and excited. The flight is part of the holiday and they want the fun to start NOW.  Want engagement in everything.  Highly involved in the flight and the romance of travel. 10%
  32. 32. Socialites: Bart Simpson  Social, but needy.  Can’t entertain themselves so need external stimulation and direction.  Highly involved in the flight and looking to the airline experience to entertain them. 29%
  33. 33. Cocooners: Lisa Simpson  Flight is necessary part of the trip but not the trip itself.  Zone out, just get me there and let me entertain myself.  Not highly involved in the flight, but can look after themselves.  Prefer a quiet cabin away from families.  Probably snigger at ‘Positivists’. 17%
  34. 34. Disengaged: Mo the Bartender  Jaded flyers. It’s a bus trip, a way to get from A to B.  Don’t like flying so don’t try to make it special because you can’t.  Very hard to please.  Close to the ‘Cocooners’, but differ in their complete lack of enthusiasm. 18%
  35. 35. Territorialists: Mr. Burns  Want their own piece of the plane and to be left alone.  They claim their territory and form a close relationship with their space.  Highly involved in the flight, but selfishly – it’s all about me!  Weighted towards frequent flyers. 26%
  36. 36. While the research segments were used across all aspects of the long haul experience design from in-flight entertainment to food and beverage, …from segmentation…to the Simpsons…most significant influence was over the design of new seating experiences. The Company considered the needs of The Simpsons five customer profiles of airline passengers when they designed the cabin layout of its new fleet of five Boeings 777-300s.
  37. 37. The most significant shift this project has delivered is that Air New Zealand is now selling experiences rather than just seats.
  38. 38. In 2009, Air New Zealand served more than 12 million passengers, and Condé Nast Traveller ranked it as the No. 2 long-haul leisure carrier worldwide. In 2010 Air NZ was named the Air Transport World Airline of the Year by Penton Media's Air Transport World, the leading monthly magazine covering the global airline industry. Despite The uncertainty surrounding the global economic recovery, Air New Zealand has reaffirmed itself as one of the world's top performing airlines, announcing normalized earnings before taxation of $137 million for the 12 months ended 30 June 2010.

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