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Segmentation Powered By Docstoc
      Dr. Mary Wolfinbarger
    Common Segmentation Types
 Demographics
 Geographics
 Usage Rate
 Benefits Sought
 Psychographics
 Lifestyle
 “The statistical characteristics of the
 Most common segmentation method in
            Family Life Cycle
   Combines marital status, age and
    presence/absence of children
    Traditional Family Life Cycle
   Young, single
       How are young, single people different in the
        way they shop and consume?
          The effects of being young in any generation –
           what are young people interested in?
          Cohort effects (e.g. digital, connected generation,
           more “tribal”)
            Family Life Cycle
   Young, married, no children
     How do expenditures change after marriage?
     How does decision making change after
            Family Life Cycle
   Young, married, youngest child under six
     How do expenditures change after having
     What issues are unique to households with
      young children?
            Family Life Cycle
   Young, married, youngest child 6 or over
    How might expenditures change now?
          Family Life Cycle
Older, married, children still at home
How might expenditures change now?
                Family Life Cycle
   Older, married, children gone (“empty
    nest”) and older singles
        From1984-1999, median net worth of 65+ HH
        grew 69%
             For 45-54, median net worth fell 23%
        Seniors   have twice the discretionary income of
         their children
        Americans 65+ control 70% of country’s assets
        Watch more TV, spend more time reading
          Selling to Seniors
 Seniors aged 65 tend to see themselves
  as 15 yrs younger
 A 30-yr old copywriter will choose
  someone 75 when asked what 60 looks
 65 year olds can expect to live 18 years
  more on average
            Family Life Cycle
   Older single
     More likely to be what sex?
     How do purchases change now?
            Family Life Cycle
   What segments are left out of the
    traditional family life cycle?
   American Demographics: a magazine
    used mainly by marketing
    professionals which focuses on
        Geographic Segmentation
 People in different areas of the country
  and world tend to consume differently
 Can adjust marketing and products for
  regional tastes
 At the limit of small units of geography,
  there is “store-specific” marketing
       Adjust mix of products for the tastes of
        consumers of specific stores
         Benefit Segmentation
   The benefits can serve as a basis for the
    unique selling proposition (USP) in
             Usage Rate
 Separates market into heavy and light
 The “80-20” rule of thumb: 20% of
  consumers consume 80% of a product
 Heavy Half/Light Half
LO4         Example of Usage-Rate
          Segmentation and Marketing
    Sprint fired customers for excessive use of
     customer service
         Read article
    Psychographic Segmentation
   Purpose: to better understand consumer
Psychographic Segmentation
 One well known scheme -- VALs
 Stanford Research Institute (SRI)
     Includes religious and political beliefs,
      social values, etc.
     8 categories
     Based on Maslow to a degree
    (used to be called Actualizers -- 8%)
   Exhibit all three primary motivations
   Most income and college (95% have attended
   Established leaders in biz and gov
   Wide range of interests
   Continually seek challenges
   Into growth, development and self-expression
       “Their lives are characterized by variety. Their
        possessions and recreation reflect a cultivated taste
        for the finer things in life.” – VALs website
        (used to be called Fullfilleds -- 11%)
   Primary motivation: Ideals
   Mature, satisfied, comfortable, responsible
   Well educated
   Content with career, families
   Conservative, practical
   Like durability, functionality
       “Thinkers have a moderate respect for the status quo
        institutions of authority and social decorum, but are open to
        consider new ideas. Although their incomes allow them many
        choices, Thinkers are conservative, practical consumers; they
        look for durability, functionality, and value in the products they
        buy.” – VALs Website
               Believers (16%)
   Primary motivation: Ideals
   Conservative, conventional
   Family, church and country
    “They are conservative, conventional people with
      concrete beliefs based on traditional, established
      codes: family, religion, community, and the
      nation...As consumers, Believers are predictable;
      they choose familiar products and established
      brands. They favor American products and are
      generally loyal customers.” – VALs website
                  Achievers (13%)
 Primary motivation: Achievement
 Successful, career-oriented, conventional
 Status-conscious
“They value consensus, predictability, and stability over risk, intimacy,
    and self-discovery…Image is important to Achievers; they favor
    established, prestige products and services that demonstrate
    success to their peers. Because of their busy lives, they are often
    interested in a variety of time-saving devices.” VALs website
                     Strivers (13%)
   Primary motivation: achievement
   Seek approval
   Low on economic resources
   “Money defines success to them, but they don’t have enough of it.
    They favor stylish products that emulate the purchases of people
    with greater material wealth. Many see themselves as having a job
    rather than a career, and a lack of skills and focus often prevents
    them from moving ahead…Strivers are active consumers because
    shopping is both a social activity and an opportunity to demonstrate
    to peers their ability to buy.” – VALs website
             Experiencers (12%)
 Primary motivation: self-expression
 Young, active, outdoorsy
 Spend heavily on clothes, music, trends
 Like what’s new, offbeat, risky
     “Experiencers are avid consumers and spend a
      comparatively high proportion of their income on fashion,
      entertainment, and socializing. Their purchases reflect the
      emphasis they place on looking good and having "cool" stuff.”
      – VALs website
                  Makers (13%)
   Primary motivation: self-expression
   Self-sufficient, non-materialistic
   Focus on family, work and physical recreation
   Like practical, functional possessions
   Like using their hands
       “Makers are suspicious of new ideas and large
        institutions such as big business. They are
        respectful of government authority and organized
        labor, but resentful of government intrusion on
        individual rights. They are unimpressed by material
        possessions other than those with a practical or
        functional purpose. Because they prefer value to
        luxury, they buy basic products.” –VALs website
    (Used to be called strugglers -- 14%)
   No primary motivation
   Low income, low resources
   Older consumers
   More females
   Brand loyal
       “They are comfortable with the familiar and are
        primarily concerned with safety and security.
        Survivors are cautious consumers. They represent
        a very modest market for most products and
        services. They are loyal to favorite brands,
        especially if they can purchase them at a discount.”
        VALs website
       Advantages of VALs
 Can understand consumers’ emotional
  bond with products
 Useful in ad copy development
        Disadvantages of VALs
 May oversimplify consumer personalities
 Some consumers are hard to classify into
  one category
 VALs is too broad
     It is difficult to tie general motivations to
      specific purchases
     Context changes the expression of
     Developing psychographic
    schemes for a specific market
   Examples: car buyers
           PRIZM Clusters
 Zip code based, but includes everything
  and the kitchen sink about zip codes
 “Birds of a feather flock together”
 Contains 66 classifications currently
                  PRIZM Clusters
Segment: “Blue Blood Estates” (.59% of households)
    “Blue Blood Estates is a family portrait of suburban wealth, a
      place of million-dollar homes and manicured lawns, high-end
      cars and exclusive private clubs. The nation's second-
      wealthiest lifestyle, it is characterized by married couples with
      children, college degrees, a significant percentage of Asian
      Americans and six-figure incomes earned by business
      executives, managers and professionals.” (

   Zip codes include Bel-Air and Lake Forest, Illinois
   “Upper Crust” is an even richer segment
          Lifestyle Segmentation
 Psychographic and Claritas PRIZM are
  considered forms of Lifestyle
 But – bases are potentially endless – e.g.
  vegetarians, outdoor lifestyle, healthy
  lifestyle, urban arts lovers….
 “Lifestyle” brands
       Example: Sundance Catalog
                Segment Profiles
   A description of the “typical” customer in a
    segment – sometimes quite detailed
       Example: A home electronics retailer profiles
        heavy spending customers: “Dwight is a
        married male making over $100K who wears
        an expensive watch. Dwight likes to impress
        his friends by buying the latest home
          What’sthe point of using these profiles?
          What might be the problem with these profiles?
  Developing Lists of Probable
      Segment Members
“I’ve been saving my junk mail for four years
   to write this story…My names actually. To
   find out who was selling me to whom, I
   started using slightly different aliases for
   each new subscription and catalog order I
  Developing Lists of Probable
      Segment Members
“Melinda F., who subscribed to Fortune, is
  showered with “wellness” letters (to ease
  corporate stress?), offers of unsecured
  loans, gold MasterCards, investment
  guides and invitations to test-drive a turbo-
  charged Porsche.”
  Developing Lists of Probable
      Segment Members
“No one begs Melinda S., reader of Savvy --
  a magazine “For the Successful Woman” -
  - to take a spin in a Porsche. She is urged
  to save on “slightly imperfect
  panythose!…She is encouraged to take
  classes to develop “power communication
  skills” and “a more appealing professional
  Developing Lists of Probable
      Segment Members
“Then there’s Melinda O., who subscribed to
  Organic Gardening. She gets predictable
  offers of back-yard tillers but also a cheery
  -- and a very premature --come-on from
  the American Association of Retired
  Developing Lists of Probable
      Segment Members
“...Each Melinda has her own
   characteristics, based on what she buys.
   Organic Gardening’s Melinda O., if she’s
   typical, is an older lady, 55-ish, with a HH
   income of about $34,000. Fortune’s
   Melinda F. is rather more successful, with
   HH income exceeding $118,000.”
                   Group Exercise
You get an internship on campus. Your assignment? Increase sales of
   tickets to Dirtbag games. I believe tickets are free to students, so
   you may want to target other groups.
1. Review the various segmentation methods. Brainstorm ways to
   segment the market. Try to get at least one idea for each
   segmentation method (for some you may have a few ideas)
        Demographics
        Geographics
        Benefit Segmentation
        Product Usage
        Pyschographics
        Lifestyle
2.    List your brainstorming ideas (yes, some of them won’t turn out
     to be good ideas, but you want to consider as many alternatives
     as possible before narrowing your choices).
3.   Which one or two segments on your list would you choose to target
     and why have you chosen these segments?
4.   How would you reach the segment(s) you have chosen?
5.   How would you position Dirtbag games for the segment(s) you