This document discusses market segmentation strategies. It begins by outlining elements of an effective segmentation strategy, including being specific in selecting discriminations according to objectives and needs. It then introduces the "gravity of decision spectrum" tool, which focuses on the relationship between consumer behavior and products based on how deeply consumers' values and emotions are engaged in purchase decisions. The document emphasizes that meaningful segmentation depends on understanding patterns in actual customer purchasing behavior through relevant data collection and analysis. It stresses tailoring segments to address specific strategic questions and accommodate changes in markets and consumer behavior over time.

1. Rediscovering Market
Segmentation
Winter Session 2012
Marketing Strategy
Professor: C. Koritos
Alexandros Kossivas
Dimitra Votsari
George Theodorou
Venetia Koronidi

2. OUTLINE OF THE ARTICLE
A. Describe the elements of a smart segmentation
strategy.
B. Present the several possible discriminations of a
segmentation strategy & the importance of being very
specific and precise when selecting this specific one
according to your objectives, goals & needs.
i.e. strengthen brand image & associations VS identify which
markets to target as attractive
C. Introduce a tool called “gravity of decision spectrum”
which focuses on the relationship/connection between
consumers’ behavior and a product or a product

3. The beginning of Psychographics
In 1964, D. Yankelovich with his article “New Criteria for Market
Segmentation” asserted that:
 Traditional demographic traits (age, sex, education, income) were
no longer enough to serve as a basis for marketing strategy.
 Non-demographic traits (values, tastes, preferences) were more
likely to influence consumers’ purchases
 Marketing Strategy actually & essentially depends on identifying
segments that were potentially receptive to a particular
brand/product category.
The idea was to broaden the use of
segmentation in order to inform about product
innovation, pricing, choice of distribution
channels…

4. The beginning of Psychographics
 By 1960s consumers were becoming less predictable in
their buying habit
i.e. people without much education had become affluent &
those with sophisticated tastes had become very price
conscious
 Tastes and purchasing patterns no longer aligned with
age and income, thus demographic segmentations lost
their ability to guide companies' decisions
 The attraction & stimulation were starting to focus on
things like status or lifestyles
i.e. segmentation & advertising in the fashion industry
reflecting the segments’ personal inner characteristics &

5. The Values & lifestyles program
(vals)
VALS ("Values, Attitudes and Lifestyles") is the most accepted research
method used for psychographic market segmentation.
VALS was developed in 1978 by social scientist Arnold Mitchell and his
colleagues at Stanford Research Institute based heavily upon the work
of Harvard sociologist David Riesman and psychologist Abraham
Maslow.
VALS through both attitudinal & demographic questions, categorize adult
consumers into 9 lifestyle types:
• survivors (4%),
• sustainers (7%),
• belongers (35%),
• emulators (9%),
• achievers (22%), The questions were weighted using data developed
from a sample of 1,635 Americans and their
• I-am-me (5%), partners, who responded to an SRI International
• experiential (7%), survey in 1980.
• societally conscious (9%),

6. The weaknesses of Psychographic
segmentation
 Psychographics may capture some truth about real
people’s lifestyles, attitudes & aspirations BUT such
segmentation is very weak at predicting what & how these
people are likely to purchase or give any idea of how to
keep existing customers or gain new ones.
 Research shows that even though psychographic
segmentation can be a good basis for advertising (can
generate stimulation), it usually does not enlighten
companies with significant and precise information
(who, which, what & how…)
 Thus, the authors of this article suggest the following
example of discrimination of psychographic

7. Different segmentations for
different purposes
Segmentations to develop Segmentations to develop
advertising new products
Populations Users of the product to be Users of related products
studied advertised that already meet similar
needs, partners such as
distributors + retailers
Data sources Attitude surveys Purchase and usage data on
consumers, supplemented by
surveys; analyses of
consumers’ finances and
channel preferences
Analytical tools Statistical analysis of survey Analysis of customers who
results remain loyal and those who
switch to competing
offerings
Outputs Segments that differ in their Segments that differ in their
responses to a given purchasing power, goals,
message aspirations, and behavior

8. A meaningful segmentation
A meaningful segmentation depends on finding patterns in your
 A meaningful segmentation depends on finding patterns
customers’ actual buying behavior through relevant data in your
customers’ actual buying behavior through relevant data
Depending on the question you seek to answer, you would need to:
 Depending on the question you seek to answer, you would need to:
① Gather info about which benefits & features matter to your
① customers about which benefits & features matter to your
Gather info
customers
② Know which customers are willing to pay higher prices or
② demand lower ones
Know which customers are willing to pay higher prices or
demand lower ones
③ Learn about the advantages/disadvantages customers identify
③ in yourabout the advantages/disadvantages customers identify in
Learn offerings
your offerings
④ Gather data on emerging social, economic & technological
④ trends data on emerging social, economic & technological trends
Gather
⑤ Use qualitative research to explore customers underlying motives
⑤ Use qualitative research to explore customers underlying
motives & needs
& needs
⑥ Use quantitative research to understand completive strengths & &
⑥ Use quantitative research to understand completive strengths
opportunities
opportunities
⑦ Reexamine the sales data you already have in order to reveal the
⑦ Reexamine the sales data you already have in order to reveal the

9. The outputs of a meaningful
segmentation
Armed with such data, you can fashion segments that are bot revealing
Armed with such data, you can fashion segments that are
and applicable
both revealing and applicable
Such segments will:
Such segments will: strategy;
 Reflect the company’s
1. Reflect the company’s strategy

2. Indicate where sources of revenue or profit may lie; may lie
Indicate where sources of revenue or profit
3. Identify consumers’ values, attitudes, and beliefs as they relate they
 Identify consumers’ values, attitudes, and beliefs as
specifically to product or service offerings;
relate specifically to product or service offerings
4. Focus on actual customer behavior;
 Focus on actual customer behavior
5. Make sense to top executives
 Accommodate executives;
6. Make sense to top or anticipate changes in markets or
consumer behavior
 Accommodate or anticipate changes in markets or consumer
behavior

10. 6 Approaches of a meaningful
segmentation
1. What are trying to do:
• The goals of CMOs change as they change (leave the company)
• CMOs don’t understand how segmentation would benefit their companies
strategic decisions:
• Identify groups large enough and lucrative to justify pursuit
2. Which customers drive profits:
• Companies can rank their existing customers based on profitability
• Find new potential customers who have common attributes with their
existing profitable customers (Research is important based on types of
data such as: Demographic, Behavioral, Attitudinal)
3. Which attitudes matter to the buying decision:
• Psychographics -Personality traits are not enough (stable) for the buying
decision
• Lifestyle attitudes, self-image , aspirations, customers values and
environment crucial because they are constantly changing

11. 6 Steps for a meaningful
segmentation
4.What are my customers actually doing:
• Further research is advised on Customers heaviness of use, brand
switching, retail format and channel selection
• Before a product launch use of laboratory simulations e.x. conjoint analysis. It
involves presenting the customers with combinations and features and try to
find out how “interesting” those features are, how willing are the customers to
pay and at what price
5.Will the segmentation make sense to senior management:
• Only if it simply disseminated, and justified
6.Can our segmentation register change?
• Yes, but when is it part of an ongoing process and not a one-time
effort, because:
• Consumers’ needs, attitudes and behavior can easily change
• Markets are changing (new technologies, emerging consumers
niches, fluctuating economics)

12. The Spectrum
 Is a tool that can facilitate identifying which specific expectations,
motives or concerns lie behind a consumer’s particular behavior
or transaction.
 We can perceive it as a continuum, where any product, purchase
activity, attitude or incentive can be positioned upon the following
axis:Low High
Middle
End End
 Low/Shallow End: consumers are seeking products/services with low
perceived cost & risk, which they think will save them time, effort or
money (i.e. toilet paper, credit card).
 Middle: consumers are actively concerned, but for issues such as
design, status, quality or complexity. (i.e. car, pc)
 High/Deep End: consumers’ emotional investment is great & their core
values are actively engaged. (i.e. health care issues)

13. The gravity of decision Spectrum
1. Motives: small-daily decisions for items which are
seen as non-investment purchases and give little but
significant value as an extra touch (Razor example
and its expansions-editions)
2. Concerns: thoughts which drive customer’s behavior
and come from cultivation-own philosophy for life
(Toyota hybrid cars and the environmental concern)
3. Emotions: totally personal factors which influence
consumer’s behavior. Cannot be characterized as
clever or nonsense purchases but as beneficial or
harmful investments. Need of the highest value
(CCRC’s- ‘to avoid being a burden on their loved ones’)

14. The gravity of decision Spectrum
Issues the business Consumers’ concerns What the
wants to address segmentation
-Whether to make small -How relevant and -Buying and to find out
should try usage
improvements to existing believable new-product behavior
Shallowest Products claims are -Willingness to pay a
-How to select targets of a -How to evaluate a given small premium for
decisions
media campaign product higher quality
-Whether to change prices -Whether to switch -Degree of brand
products loyalty
-How to position the brand -Whether to visit a clinic -Whether the
Middle-of- -Which segments to about a medical consumers being
the pursue condition studied are do-it-
-Whether to change the -Whether to switch yourself or do-it-for-me
spectrum
product fundamentally one’s brand of car -Consumers’ needs
decisions -Whether to develop an -Whether to replace an -Their social status,
entirely new product enterprise software self-image, and lifestyle
system
-Whether to revise the -Choosing a course of -Core values and
business model in medical treatment beliefs
Deepest response to powerful -Deciding where to live related to the buying

15. Implications for marketing
strategy
• Different starting points means different applied
segmentation.
objectives, goals, situation, conditions, overall
strategy
• Effective segmentations focus on just one or two issues,
and they need to be redrawn as soon as they have lost
their relevance.
Be specific, definite & constantly revised/reviewed
• Only with the appropriate in each case, precise data,
someone can invent or reach revealing, actionable &
applicable segments.
• Combine demographic & psychographic analysis in a