Segmentation Strategic Marketing for Nonprofit Organizations - PowerPoint

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					                      Segmentation
Strategic Marketing for Nonprofit Organizations
             Strategic Marketing for Nonprofit Organizations
                    Alan R. Andreasen & Philip Kotler
                         Chapter 6 (p. 142-160)




                             Ken Nash



  Segmentation                                   1             10/7/2010
             The First Element
          of Marketing Strategy:
     Approach toward market targets or
           Market Segmentation
                 (Andreasen & Kotler, p.143)



2 Fundamental Challenges of Nonprofit Marketers:
1. Choose Audiences – the segmentation problem
2. Choose Behavior – the positioning problem



  Segmentation
                                          2    10/7/2010
            The Marketing Choice:
      Economy of Scale - OR - Diversity
     One Size Fits All - OR - Segmentation

                THE GOOD NEWS:
 “Technology has made individualized approaches
 fostered by target marketing or segmentation to
be much more cost effective – e.g. Internet, direct
         mail and sophisticated software.”
                 (Andreasen & Kotler, p.143)



 Segmentation
                                               3   10/7/2010
     Two Stages of Segmentation Strategy:
               (See Figure 6-1   Andreasen & Kotler p. 144)

   DEVELOPING MARKET SEGMENTS
    1. Bases for Segmenting:
         Profiles of resulting segments
         Measures of segment attractiveness
    2. Conceptualization & Research Stage
   TARGET MARKETING
    1. Selecting – 1 or more market segments
    2. Deciding – how many resources & of what kind to apply
    3. Developing – positioning & marketing mix strategy for
           each

Segmentation
                                              4               10/7/2010
                 Three Decisions of
               Segmentation Strategy:

   QUANTITY –             resources: How much financial,
    human and mental resources will be devoted to targets?

   QUALITY –           approach: How will each segment be
    approached – offerings, communications, place of offering,
    prices?

   TIMING –         When will segments be targeted? Will some
    be targeted sooner and some later?

                       (Andreasen & Kotler, p.144)



Segmentation
                                                     5       10/7/2010
          Characteristics of an Optimal
             Segmentation Base :
   MUTUAL EXCLUSIVITY – Are segments able to be
    conceptually separated?
   EXHAUSTIVENESS – Is every potential target member
    included?
   MEASURABILITY – Are size, motivation, ability to act able
    to be measured?
   REACHABILITY – Can segments be effectively reached and
    served?
   SUSTAINABILITY – Are segments large enough to pursue?
   DIFFERENTIAL RESPONSIVENESS – Can responses
    be measured and compared in terms of amounts, types and
    timing of strategy?
                      (Andreasen & Kotler, p.144-145)


Segmentation
                                                    6    10/7/2010
               Segmentation Bases
       “At the outset of a segmentation process,
      reachability and responsiveness often must be
                        estimated.”
                (Andreasen & Kotler, p. 147)

     “Variables that have been used to segment
     markets in particular cases vary according to
     whether they were primarily chosen to reflect
       expected differences in responsiveness or
               differences in reachability.”
                (Andreasen & Kotler, p. 147)


Segmentation
                                          7    10/7/2010
                  Two-by-two Matrix
          BASES FOR MARKET SEGMENTATION
                                                          BEHAVIOR-
                               GENERAL
                                                           SPECIFIC
                                                        Past Behavior:
                              Age, income, sex,
                                                      Purchase quantity,
  OBJECTIVE                  place of residence,
                                                         Outlet/brand
  MEASURES                 status change, family
                                                      preference, Loyalty.
                           life cycle, social class
                                                         Decision role
                               Personality
                                                      Beliefs, perceptions,
  INFERRED                 Psychographics/lifest
                                                      BCOS drivers, Stage
  MEASURES                  yles (e.g. PRIZM)
                                                           in decision
                           Values (e.g. VALS 2)
                   Categorization of segmentation approaches
               (Frank, Massy & Wind in Andreasen & Kotler p.146)


Segmentation
                                                      8               10/7/2010
               Segmentation Categories
   GENERAL VARIABLES – those that apply to any
    exchange

   BEHAVIOR-SPECIFIC – those that are unique to one
    type or class of behaviors

   OBJECTIVE MEASURES – those that are easily
    determined and verifiable. (Preferred - available secondary
    sources e.g. Census Bureau data, etc.)


   INFERRED MEASURES – those that are subtle
                       (Andreasen & Kotler, p.146)


Segmentation
                                                     9    10/7/2010
         1. Objective General Measures

    A. DEMOGRAPHIC SEGMENTATION
        1) Age
        2) Generation
        3) Sex
        4) Income
        5) Race and Ethnicity

    B. GEOGRAPHIC SEGMENTATION
        1) Figure 6-2 (Andreasen & Kotler p. 142) - PRIZM
        Cluster Categories
        2) Geo-clustering (PRIZM, ACORN, Cluster Plus
        2000 & Micro Vision 50)
                   (Andreasen & Kotler, p.147-154)


Segmentation
                                               10    10/7/2010
 Complex General Objective Measures

    SOCIAL CLASS – standardized divisions of society
    grouped according to similar values, interests and
    behavior.

    6 Typical Social Classes (Andreasen & Kotler, p.154):
    1) upper uppers
    2) lower uppers
    3) upper middles
    4) lower middles
    5) upper lowers
    6) lower lowers



Segmentation
                                           11               10/7/2010
     Complex General Objective Measures
                             (continued)

 FAMILY LIFE CYCLE – phases of family life (e.g.
 marriage, career, birth and age of children) that impoacts
 consumer behavior.

 8 Typical Stages (Andreasen & Kotler, p. 155):
      1. Young Single (under 40, unmarried, childless at home)
      2. Newly Married (young, married, childless)
      3. Full Nest I (young, married, youngest child under 6)
      4. Full Nest II (young, married, youngest child 6 to 13)
      5. Full Nest III (young, married, children 14 or older)
      6. Empty Nest I (older married, no home child, head working)
      7. Empty Nest II (older married, no home child, head retired)
      8. Solitary survivor (older single, working or retired)


Segmentation
                                           12              10/7/2010
     Complex General Objective Measures
                             (continued)


MULTIVARIATE SEGMENTS – statistical procedures to
    develop customized sets of objective predictors that,
    when considered together, best segment target markets.

   A parsimonious subset that jointly does the best job of
    predicting the behavior in question.

   A measure of the relative contribution of each variable to
    the final predictions.

                     (Andreasen & Kotler, p.155)




Segmentation
                                             13         10/7/2010
          Multivariate Segments Example:
               Multiple Discriminant Analysis Equation
               (Beik & Smith in Andreason & Kotler, p.156)



          Y1 = .5832 X1 + .53414 X3 + .31493 X4


Y1 = donate $50+ to medical charities (1=yes, 0=no).
X1 = proportion of households with income > %15,000.
X3 = proportion of households > 55 years of age.
X4 = proportion of households in managerial, professional
   or entrepreneurial positions.




Segmentation
                                                14           10/7/2010
          2. Objective Behavior-Specific
                    Measures
   Past behavior is many times the best predictor
    of future responsiveness.

OCCASION – when they engage in the behavior
USER STATUS – nonusers, ex-users, potential users, first-
time users and regular users.
USAGE RATE – light-, medium-, heavy-user groups for the
offer (volume segmentation)
LOYALTY STATUS – strength of the consumer’s preference
for an entity.
                      (Andreasen & Kotler, p.156-157)


Segmentation
                                                  15    10/7/2010
          3. Inferred General Measures
   Personal predispositions many times affects
    consumer choice and behavior.

PERSONALITY – highly subjective & unreliable
VALUES – organize/evaluate individual behavioral choices
       1. Instrumental Values – guide ongoing behavior to
       achieve certain end states
       2. Terminal Values – guide choices among end states
LIFESTYLES - Several Approaches:
       1. AIO: activities, interests and opinions
       2. Psychographics: lifestyle measures combined with
       demographic measurements
       3. Lifestyle compatibility – possibly the more profound
       explanation to socioeconomic indicators.

Segmentation
                (Andreasen & Kotler, p.158-159)   16             10/7/2010
               4. Inferred Behavior-Specific
                         Measures
  STAGES OF CHANGE – Consumers of “high-involvement”
  markets within the processes of change.

  BENEFIT SEGMENTATION - Consumers drawn to one
  strong desirable benefit or to a grouping of benefits

  SACRIFICE SEGMENTATION - Exchange of benefits
  outweighing costs.



                       (Andreasen & Kotler, p.159-160)



Segmentation
                                                   17     10/7/2010
 Inferred Behavior-Specific Measures
                                (continued)


      The Extended Fishbein Attitude Model

                                 n            m
               Behavior = BIj = (Σbijai) W1 + Σ NBkj * MCk) W2


A very useful research framework in lieu of unavailable original field
         data where consumer behavior is highly involving.



                           (Andreasen & Kotler, p.159)



Segmentation
                                                         18      10/7/2010
      Inferred Behavior-Specific Measures
                               (continued)
          The Extended Fishbein Attitude Model
   j:     the exchange alternatives in the consideration set
   i:     the criteria used to evaluate the alternatives
   ai:    the pattern of weightings applied to the criteria
   bij:   beliefs about consequences of tasking particular action
          alternatives
   k:     the significant others whose views about the behavior
          might influence behavioral intentions.
   MCk:   the pattern of motivations to conform to the views of
          those significant others.
   NBkj:  perceptions of the behavioral expectations of specific
          significant others.
   W1/W2: the relative weight of the person’s own attitude versus
          the perceived views of significant others in affecting
          behavioral intentions.
                       (Andreasen & Kotler, p.159)



Segmentation
                                                 19         10/7/2010
                   Conclusion


    A central theme of this text is that, whether a
    nonprofit marketer is undertaking
    organizational-level or campaign level planning,
    the central issue is – or ought to be – how to
    induce desired behavior from target audiences.
                 (Andreasen & Kotler, p. 143)
    Segmentation is a major part of this issue.



Segmentation
                                        20        10/7/2010