Consumer Behavior, Eighth Edition SCHIFFMAN & KANUK

Chapter 3 Market Segmentation

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Market Segmentation

The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

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Three Phases of Marketing Strategy • Phase 1: Market Segmentation • Phase 2: Target Market and Marketing Mix Selection • Phase 3: Product/Brand Positioning

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Table 3.1: Sodexho’s Segmentation of College-age Eating Patterns Star Gazers • Light, healthy foods • Price insensitive • Brand conscious • Employed full-time over summer • Active, out-going • Family income > 100,000

Fun Express • Variety, taste, and nutrition • Price conscious • Work part-time over summer • Value leisure time • Family income $30,000 - 60,000

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“Best” Customer Segmentation High High

Current Share

Low

HiHighs (stroke)

LowHighs (chase)

HiLows (tickle)

LoLows (starve)

Consumption

Low

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Segmentation Studies • Designed to discover the needs and wants of specific groups of consumers in order to develop specialized products to satisfy specific group needs (e.g., Centrum) • Designed to guide the repositioning of a product (e.g., Nintendo) • Used to identify the most appropriate media for advertising (e.g., People and Teen People) 3-6

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Bases for Segmentation • • • • • • • • •

Geographic Segmentation Demographic Segmentation Psychological Segmentation Psychographic Segmentation Sociocultural Segmentation Use-Related Segmentation Usage-Situation Segmentation Benefit Segmentation Hybrid Segmentation Approaches

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Table 3.2 Market Segmentation SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Geographic Segmentation Region Southwest, Mountain States, Alaska, Hawaii City Size Major metropolitan areas, small cities, towns Density of area Urban, suburban, exurban, rural Climate Temperate, hot, humid, rainy Demographic Segmentation Age Under 11, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+ Sex Male, female Marital status Single, married, divorced, living together, widowed Income Under $25,000, $25,000-$34,999, $35,000-$49,999, $50,000-$74,999, $75,000-$99,999, $100,000 and over Education Some high school, high school graduate, some college, college graduate, postgraduate Occupation Professional, blue-collar, white-collar, agricultural, military 3-8

Table 3.2, continued SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Psychological Segmentation Needs-motivation Shelter, safety, security, affection, sense of self-worth Personality Extroverts, novelty seeker, aggressives, low dogmatics Perception Low-risk, moderate-risk, high-risk Learning-involvement Low-involvement, high-involvement Attitudes Positive attitude, negative attitude Psychographic (Lifestyle) Segmentation Economy-minded, couch potatoes, outdoors enthusiasts, status seekers Sociocultural Segmentation Cultures American, Italian, Chinese, Mexican, French, Pakistani Religion Catholic, Protestant, Jewish, Moslem, other Subcultures (Race/ethnic) African-American, Caucasian, Asian, Hispanic Social class Lower, middle, upper Family life cycle Bachelors, young married, full nesters, empty nesters 3-9

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SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES Use-Related Segmentation Usage rate Heavy users, medium users, light users, non users Awareness status Unaware, aware, interested, enthusiastic Brand loyalty None, some, strong Use-Situation Segmentation Time Leisure, work, rush, morning, night Objective Personal, gift, snack, fun, achievement Location Home, work, friend’s home, in-store Person Self, family members, friends, boss, peers Benefit Segmentation Convenience, social acceptance, long lasting, economy, value-for-the-money Hybrid Segmentation Demographic/ Combination of demographic and psychographic profiles Psychographics of consumer segments profiles Geodemographics “Money and Brains,” “Black Enterprise,” “Old Yankee Rows,” “Downtown Dixie-Style” SRI VALSTM Actualizer, fulfilled, believer, achiever, striver, experiencer, maker, struggler 3-10

Geographic Segmentation

The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city).

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Demographic Segmentation • • • •

Age Sex Marital Status Income, Education, and Occupation

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Age: Segmentation by Age Effects and Cohort Effects • Seven Life Development Stages (Table 3.3) – Provisional Adulthood • Pulling up roots

– First Adulthood • Reaching out, Questions/questions, Mid-life explosion

– Second Adulthood • Settling Down, Mellowing, Retirement

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Marital Status • Households as a consuming unit – – – –

Singles Divorced Single parents Dual-income married

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Psychological Segmentation • • • • •

Motivations Personality Perceptions Learning Attitudes

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AIOs

Psychographic (lifestyle) variables that focus on activities, interests, and opinions.

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Table 3.7 A Hypothetical Psychographic Profile of the Techno-Road-Warrior •Sends and/or receives 15 or more e-mail messages a week •Regularly visits Web sites to gather information and/or to comparison shop •Often buys personal items via 800 numbers and/or over the Internet •May trade stocks and/or make travel reservations over the Internet •Earns $100,000 or more a year 3-17

Sociocultural Segmentation • Family Life Cycle • Social Class • Culture, Subculture, and Cross-Culture

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Family Life Cycle • Phases a family goes through in their formation, growth, and final dissolution – – – – –

Bachelorhood Honeymooners Parenthood Post-parenthood Dissolution

• Explicit basis: marital status, family status • Implicit basis: age, income, employment 3-19

Use-Related Segmentation • Rate of Usage – Heavy vs. Light

• Awareness Status – Aware vs. Unaware

• Brand Loyalty – Brand Loyal vs. Brand Switchers

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Usage-Situation Segmentation • Segmenting on the basis of special occasions or situations • Example Statements: – Whenever our daughter, Jamie, gets a raise, we always take her out to dinner. – When I’m away on business, I try to stay at a suites hotel. – I always buy my wife flowers on Valentine’s Day. 3-21

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Benefit Segmentation • Segmenting on the basis of the most important and meaningful benefit – Prudential - financial security – Iomega - data protection – Wheaties - good health – Eclipse - fresh breath

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Hybrid Segmentation Approaches • Psychographic-Demographic Profiles • Geodemographic Segmentation • SRI Consulting’s Values and Lifestyle System (VALSTM)

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Table 3.8 Demographic-Psychographic Profile of Newsweek • • • • • • • •

Total adult readers 19,593,000 Men Professionals/ Managers Age 35-49 Household income >$100,000 Married Own laptop PC Spent $3000+ on vacation last year

%

Index

100.0 55.9 35.3 36.5 25.1 62.4 12.0 12.3

100 117 174 114 172 109 150 164

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Table 3.9 Demographic-Psychographic Internet Shopping Styles • • • • • •

E-bivalent Newbies Time-Sensitive Materialists Clicks & Mortar Hooked, Online, & Single Hunter-Gatherers Brand Loyalists

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Table 3.10 Sample Claritas Geodemographic Clusters Blue Blood Estates Young Influentials • .8% of U.S. households • 1.1% of U.S. households • Professional • Professional • Elite super-rich • College graduate • College graduate • Under 24, 25-34 • 35-44, 45-54, 55-64 • Country club members, • Yuppies, drink imported beer, read own mutual phones, fashion magazines play golf 3-26

Figure 3.8 VALS

ACTUALIZERS

High Resources

Principle Oriented Status Oriented Action Oriented

FULFILLEDS

BELIEVERS

ACHIEVERS EXPERIENCERS

STRIVERS

STRUGGLERS

MAKERS

Low Resources

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Figure 3.9 VALS 2 Segments and Participation in Selected Sports Percent of adults in each VALS 2 type who participated in selected sports in 1995.

Actualizers Experiencers Achievers Makers Fulfilleds Strivers Believers Strugglers 0

2

Mountain/rock climbing

4

6

8

10

Jet skiing/wave running/water biking

12

14

Inline skating

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Table 3.11 Size of VALS Segment as Percent of U.S. Population VALSTM SEGMENT Actualizer Fulfilled Believer Achiever Striver Experiencer Maker Struggler

PERCENT OF POPULATION 11.7% 10.5 17.0 14.7 11.8 12.9 12.0 9.5

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Mindbase Segmentation • Monitor Mindbase based on Yankelovich’s Monitor Survey of American Values and Attitudes • Table 3.12

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Table 3.12 Eight Major Mindbase Segments • • • •

Up and Comers Young Materialists Stressed by Life New Traditionalists

• • • •

Family Limited Detached Introverts Renaissance Elders Retired from Life

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Criteria For Effective Targeting of Market Segments • • • •

Identification Sufficiency Stability Accessibility

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