Segmentation Flashcards
Segmentation as it relates to marketing
the blessing and curse of heterogeneity, segmentation is the essence of marketing
Define segmentation
partitioning of the market into groups with different responses to marketing variables.
Goal of segmentation
predict behavior
enhance competitive advantage
inform decisions about: design, positioning, communication
explainers vs describers
segmentation variables either describe groups behavior or provide an explanation for their behavior
list explainers
personality, activities, interests, needs, wants, expertise, habits, usage, loyalty…
list describers
physical location, age, gender, income, cultural differences
correlation vs causation
there may be correlation between a segment and consumer behavior but not causation
do we need causation??
if the predictors are accurate enough does it matter if they aren’t causation variables
Benefit segmentation
the strongest causal connection to behavior and typically best predictor of purchase - except when emotional or affiliative
dell example of benefit segmentation
technoteamers
technocriticals
technowizards
techno-go- to
psychographic segmentation
a subcategory of benefit segmentation that is characteristic of high connection due to underlying motivations or preferences
stomach remedy example psycho segmentation
the severe sufferers
the active medication
hypochondriacs
practicality
how do you put info to use in segmentation??
marketing appeals to groups
assign benefits to needs
gather knowledge about customers through communication
combined variables
combine correlational and causal variables for deeper assessment, for example people go to taco bell for:
speed- causal variable
penny pinchers- non causal
what needs to be certain for successful segmentation
consumers are heterogenous
market size justifies sub divisions
firm is pursuing marketing philosophy
name four factors considered when segmenting
size, growth rate and profitability
competitive intensity
barrier to entry
company fit
Majority fallacy
- profitability is not to be equated with segment size-
- largest segments are most competitive-
Consumers vs decision makers
decision maker power and influence can change landscape for consumer desires
segment overlap
overemphasize homogeneity within labeled segments
segment size caveat
important to know the true size of each segment- often times different than expectations and can reduce wasteful marketing
one man segment
current information age, customers are differentiated and tailored to at an individual level
Customer centric
database marketing and relationship marketing has shifted landscape from product centric to consumer centric
4 metrics of CCV
customer profitability - profit from customer
customer lifetime value - total profits accumulated over time
customer equity - sum of CLVs for a firm
customer equity share - customer equity as a proportion to competitors
Tactical advantages
- identify consumers at individual level
- track consumers over time
