"Best Buy Marketing Segmentation"
Strategic Marketing 1. Imperatives for Market-Driven Strategy 2. Markets and Competitive Space 3. Strategic Market Segmentation 4. Strategic Customer Relationship Management 5. Capabilities for Learning about Customers and Markets 6. Market Targeting and Strategic Positioning 7. Strategic Relationships 8. Innovation and New Product Strategy 9. Strategic Brand Management 10. Value Chain Strategy 11. Pricing Strategy 12. Promotion, Advertising and Sales Promotion Strategies 13. Sales Force, Internet, and Direct Marketing Strategies 14. Designing Market-Driven Organizations 15. Marketing Strategy Implementation And Control Chapter 3 Strategic Market Segmentation Strategic market segmentation (1) * Levels and types of market segmentation 3-3 Levels and types of market segmentation Vision Strategic Strategic intent Segmentation Product benefits Resource allocation Alignment Managerial Planning Segmentation Marketing programs Operational - Advertising Segmentation - Sales - Distribution 3-4 Best Buy segmentation strategy * Jill’s - “soccer moms” * Barry’s - wealthy professionals * Buzz’s - “tech enthusiasts” * Ray’s - the family man * Mr Storefront - the small business customer * Carrie’s - young, single females * Helen and Charlie’s - older couples whose children have left home 3-5 From Mass Markets to Micro Markets OLD NEW CONSUMERS Passively receive Empowered media users whatever TV control and shape content networks thanks to TiVo, iPod and broadcast Internet ASPIRATIONS To keep up with To standout from the the crowd crowd TV CHOICE Three networks Hundreds of channels plus maybe a plus video on demand PBS station MAGAZINES Age of the big Age of the special interest glossies: Time, magazine for every age Life, Newsweek and affinity group ADS Everyone hums Talking to a group of the Alka-Seltzer one, ads go ever jingle narrower BRANDS Rise of the big, Niche brands, product ubiquitous brands extensions and mass from Coca-Cola customization mean many to Tide product variations Source: Anthony Bianco, “The Vanishing Mass Market”, Business Week, July 12 2004, 58-62 3-6 Strategic market segmentation (2) * Market-driven strategy and segmentation * Market segmentation, value opportunities and new market space * Market targeting and strategic positioning 3-7 Segmentation and Market-Driven Strategy SEGMENTS VALUE OPPORTUNITIES CAPABILITIES/ SEGMENT MATCH TARGET(S) POSITIONING STRATEGY 3-8 Strategic market segmentation (3) * Market-driven strategy and segmentation * Market segmentation, value opportunities and new market space * Market targeting and strategic positioning * Activities and decisions in market segmentation 3-9 Market Segmentation Activities and Decisions Market to be Segmented Strategic Analysis Decide How of Segments to Segment Finer Form Segmentation Segments Strategies 3-10 Strategic market segmentation (4) * Market-driven strategy and segmentation * Market segmentation, value opportunities and new market space * Market targeting and strategic positioning * Activities and decisions in market segmentation * Defining the market to be segmented 3-11 Product Variant Segmentation Product Type Segmentation Generic Segmentation 3-12 Strategic market segmentation (5) * Identifying market segments * Segmentation variables * Characteristics of people and organizations * Consumer markets * Organizational markets * Product use situation segmentation * Buyers’ needs and preferences * Consumer needs * Attitudes * Perceptions * Purchase behavior 3-13 Segmentation Variables Purchase Behavior Buyers’ Needs/ Characteristics Preferences of People/ Organizations Use Situation 3-14 Illustrative Segmentation Variables Consumer Industrial/ Markets Organizational Markets Characteristics Age, gender, income, Type of industry, size, of people/ family size, lifecycle geographic location, organizations stage, geographic corporate culture, stage of location, development, producer/ lifestyle intermediary Use situation Occasion, importance of Application, purchasing purchase, prior Procedure (new task, experience with product, modified rebuy, straight user status rebuy Buyers’ needs/ Brand loyalty status, brand Performance requirements, preferences preference, benefits sought, brand preferences, desired quality, proneness to make features, service a deal requirements Purchase Size of purchase, Volume, frequency behavior frequency of purchase of purchase 3-15 Strategic market segmentation (6) * Forming market segments * Requirements for segmentation * Response differences * Identifiable segments * Actionable segments * Cost/benefits * Stability * Approaches to segment identification * Customer group identification * Forming groups based on response differences 3-16 Miller Brewing’s beer brand targets * Miller genuine draft - “mainstream sophisticates” * Milwaukee’s Best Light - “hardworking men” * Pilsner Urquell - “beer afficionados” * Miller Icehouse - for “drinking buddies” 3-17 Requirements for Segmentation Identifiable segments Response Actionable differences segments Segmentation Requirements Stability Favorable over time cost/benefit 3-18 Approaches to Segment Identification CUSTOMER IDENTIFIERS RESPONSE OF CUSTOMER PROFILE GROUPS Characteristics Use Situation of People and Organizations Buyers Needs and Preferences Purchase Behavior and Loyalty 3-19 Segment Dimensions for Hotel Lodging Services 3-20 Illustrative Example: Gasoline Buyers Higher-income, middle-aged men, drive 25- Road 50000 miles a year… buy premium with a 16% of Warriors credit card … purchase sandwiches and drinks buyers from the convenience store… will sometimes use carwash Men and women with moderate to True high incomes, loyal to a brand and 16% of Blues sometimes a particular station … buyers frequently buy premium, pay in cash Generation Upwardly mobile men and women - F3 (Fuel, half under 25 years of age - 27% of Food & Fast) constantly on the go … drive a lot buyers snack heavily from the convenience store Usually housewives who shuttle Homebodies children around during the day and 21% of use whatever gas station is based on buyers town or on route of travel Price Not loyal to brand or station and 20% of Shoppers rarely buy premium … frequently on buyers tight budgets. 3-21 Illustrative Consumer Perception Map Expensive GROUP • Brand E II • Brand A • Brand B GROUP V High Low GROUP Quality I Quality GROUP • Brand C • Brand D III GROUP IV Inexpensive 3-22 Strategic market segmentation (7) * Finer segmentation strategies * Logic * Customized offerings * Diverse customer base * Close customer relationships * Finer segmentation strategies * Micro-segmentation * Mass customization * Variety-seeking strategy 3-23 Strategic market segmentation (8) * Selecting the segmentation strategy * Deciding how to segment * Strategic analysis of market segments * Customer analysis * Competitor analysis * Positioning analysis * Estimating segment attractiveness * Segmentation “fit” and implementation 3-24 Strategic Analysis of Market Segments Customer Analysis Financial and Competitor Market Analysis Attractiveness Positioning Analysis 3-25 Segmentation “Fit” for Implementation Segment Attractiveness and Internal Compatibility Internal Compatibility High Low Attractive segments Attractive segments High that match with but with poor match company with company capabilities capabilities Market Segment Attractiveness Unattractive segments Unattractive segments Low but with match to that do not match with company company capabilities capabilities 3-26