Segment Marketing
Targeting a group of customers who share a similar set of needs and wants
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A small example of cluster analysis
Friendly Stagnant distances Cluster (X02) (X08) John Bob Cathy John-Bob John-Cathy Bob-Cathy 5 1 4 4 1 3 1 5 2 4 1 3 A B A 8 2 6
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Cluster Profiling: (Hypothetical)
Cluster 1: ”Ecological Shopper”
Cluster 2: “Traditional Shopper”
Buy ecological food Advertisements funny
Low price important
1 = Totally Agree
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2
3
4
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Note: Finally the clusters’ respective media-behavior needs to be uncovered
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Other segmentation systems
CCA - GfK Minerva - AIM/Nielsen
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Segmentation Study for Danish Tourist Board
More than 4000 respondents were interviewed Each respondent provided answers to more than 100 statements on tourist related topics like:
lodging,
package tourism, rain, cost, comfort, culture, children, security, Denmark/Mediterranean, discovery, relaxation, flirt/party, etc.
The Data were analyzed using statistical methods (cluster analysis) As many as 8 Life-style segments were identified Finally, segments were profiled and a target marketing strategy was developed by management
For basics of the original study (based on four segments) see:
http://www.mic.cbs.dk/marcus/GBPapers/Nashvil/NASHVIL.htm
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”Home-Sweet-Home”: (5%)
ChildrenOriented: (14%)
Activities: (17%)
Excursions: (7%)
Security: (14%)
Discovery: (17%)
Relax: (9%)
LetsParty: (17%)
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The marketplace isn’t what it used to be….
Changing technology Globalization Deregulation Privatization
Empowerment Customization Convergence
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The prosumer concept
In his 1979 bestselling book ”The Third Wave” futurist Alvin Toffler suggested that the traditional concepts of a producer and of a consumer will merge. Consumers will want to take aktive part in the design of the product/service he/she is considering to purchase. And the producer will be happy about it because it enables him to deliver a tailormade product. Today a person can download software from IKEA’s website and virtually ”build” and thus design one’s own kitchen.
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Conjoint analysis is another popular technique for involving consumers (a sample of respondents) in the developing new product concepts
(See Kotler and Keller page 646-48)
Needs and Trends
Fad
Trend
Percentage of Danes that are smokers
Megatrend
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Loyalty
A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.
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Product and Service Quality
Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs
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Customer equity
The total discounted lifetime values of all of the firm’s customers. The more loyal customers, the higher the customer equity
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Gyldendals Book Club
(Gyldendal is Denmark’s biggest publisher of books)
Baby book club Childrens book club Collector’s book club Thriller book club Ordinary book club Teachers book club Nurse’s book club Pysician/Doctor’s book club
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Primary target group
30+ years Mostly (but not exclusively) females Middle class income Modern oriented Interest in Culture Readers of Alt for Damerne, Billed Bladet etc. (Females’ weeklies)
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Direct Mail Campaign (1)
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Cost-benefit/Profitability Analysis
Campaign in Politiken (Daily) 22.8. 2004 New club members gained: 1437 Dropouts after x months: 27% Gross profit: 321.700 DKK Campaign costs: 219.000 DKK Net profit: 102.700 DKK
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Brand
A name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors
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The Role of Brands
Identify the maker Simplify product handling Offer legal protection
Signify quality Create barriers to entry Serve as a competitive advantage Secure price premium
Bread Producer Schulstad’s brand Skovmand (heavy advertised in TV commercials years back) is an example of a commodity that is been branded so that the consumer can identify the company’s brand
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A strong brand: Kellogg’s
Some years ago the big Scandinavian retail chain Coop decided to cease selling Kellogg’s brands (due to disagreement about financial issues) It turned out that there was an unexpected brand loyality among kids. They simply refused to eat substitute brands Finally, Coop decided to sell Kellogg’s products again
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Another strong and successful brand concept: Build-A-Bear
6 shops in Denmark. This one is placed next to the main entrance of Tivoli
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What makes Build-A-Bear a strong brand?
Kids are witnessing (live) the ”creation” of the bear (the fur is filled with foam, the heart is put in etc.) They feel that they are actively taking part in the design of the final product (recall Al Tofflers prosumer concept) The Bear is ”individualized”. Equipment (say, Spiderman T-shirt, shoes, hat, etc.) is very expensive (profitable) The kids must ”solemnly” swear to treat the bear well The corporate mission reminds this author of a strange mix between McDonalds and Scientology A lot of copyright protection helps keeping competition at a distance
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Build-A-Bear (like Senseo) is a ”classic” example of Blue Ocean Strategy
The authors presenting in front of an audience of business people
Don’t compete with rivals. Make them irrelevant
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Brand Equity and extension
Markets Old Old
Products New
New Market development
Diversification
Penetration
Product development
Can Lego’s strong brand image be used for selling, say, T-shirts?
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Markets Old New
Old Products New
Penetration Product development
Market development Diversification
Marlboro cigarettes
Camel cigarettes
Marlboro Classics Shoes, travel gudies etc.
House of Prince
Carlsberg, Fakta
Fashion, perfume?
Charter tours?
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A new brand-launch may cannibalize the company’s existing brand (2)
”This is how you stimulate me”
”This is how you take her”
Existing brand
New brand
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A new brand-launch may cannibalize the company’s existing brand (3)
(Combined) circulation in ’000 It turned out that consumers could not see any difference between the two magazines. A few weeks after the introduction, Expres’ cannibalization of Rapport was almost 100%. Indeed, for some months after the withdrawal of Expres, Rapports sales where lower than it had been before the launch of Express.
Launch of Expres
Expres withdrawn from market
Time
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Marketing Research Defined
Systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing a company.
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Research Approaches
Observation Focus group Survey Behavioral Data Experimentation
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Figure 4.3 A female focus group dealing with a skin care product
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Figure 4.4 The client and consultants following the focus group
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Assume that the management’s actual segmentation strategy is to segment along geographic dimensions: Scandinavia, Western European islands and coasts, etc. Based on this positioning map – what do you think about managment’s strategy?
City-Holiday
Dimension II (X2-Axis)
2
Culture and art
New York
Paris
Venice
1
Athens Tunisia
Moscow
0 -2 -1 -1 0
Majorca
Crete
1 Costa del Sol
2
Ireland
Lake Garda
Sun, swin, relax
Finland
Nature
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Dimension I (X1-Axis)
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Fitting statements into product space
New York
Venice
Paris Athens
Moscow
Tunisia
Crete
Majorca
Costa del Sol
Lake Garda
Finland
Ireland
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A selection of alcoholic bitters brands available on the Danish market at the time of the study
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Typical forecasting problems:
How will the new brand perform? How will the existing product do? How will the market evolve? How will the state of the economy evolve? Is our company prepared concerning the key upcoming issues (threats and opportunities)?
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