Introduction

Module: Strategic Marketing

Instructor: Bilal Ahmad

LECTURE: Strategic market

segmentation

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Learning Outcomes

Identification of Market segments

Buyers needs, preferences and purchase

behavior
Formation of market segments

Customer group identification

Forming group base on Response

differences
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Finer segmentation strategies
 Selecting the segmentation strategy

Strategic analysis of market segments

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 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 behaviour

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Identification of Market segments

Segmentation variables
Segmentation and targeting of customers allows the
marketer to deliver a product within the target audience
needs and wants (Pickton and Broderick, 2005: 373)

Purchase
Use
Buyers Needs/Preferences
Characteristics of People/
Behavior
Situation
Organizations

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 Illustrative Segmentation Variables
Consumer Organizational Markets
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

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Product use situation
segmentation
Definition
Market segmentation based on use of product
Needs and Preferences vary according to
different use situations

Mass customization

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 Product use situation
segmentation
Example:

Astra/Merck segmentation based on.

Health care as business
Care administrator
Traditional
Physicians with standard patient needs
Cost sensitive
Physicians for whom cost is paramount
Medical though leaders
People on leading edge

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Buyer's needs and Prefrences

Needs and preferences

Specific to product
Specific to brand
Used as segmentation bases
Used as segmentation descriptors
Customer needs
Attitude
Perceptions

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Buyer's needs and Prefrences

Customer needs
Basic physiological needs
Nature and intensity of needs
Better solution (Filling the gap)

Attitudes
Attitude influence behavior
Marketing strategy development

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Buyer's needs and Prefrences

Perception
Process by which an individual selects,
organize, and interprets information inputs to
create a meaningful picture of the world.
(Bernard and Gary, Human behavior. 1964)
Evaluation of Positioning strategy
Strategic management of Positioning strategy

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Buyer's needs and Prefrences

Purchase behavior
Consumption variables
Volume of purchase
CRM system
Loyalty Program

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 Buyer's needs and Prefrences

Purchase behavior

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 Forming Market segments

Levels of involvement

Moderate
Low involvement High Involvement
involvement

Habitual Decisions Simple decisions Lengthy decisions

E.g. Face wash,

E.g.. tea, toothbrush E.g. Car, University
snacks

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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

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Forming market segments
Example

Miller genuine draft

mainstream sophisticates

Milwaukees Best Light

hardworking men

Pilsner Urquell
beer afficionados

Miller Icehouse
for drinking buddies
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Beer market demographics

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Requirements for segmentations

Response differences

Identifiable segments

Actionable segments
Cost/benefits of segmentation

Stability over time

Product Differentiation and market

segmentation
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Approaches to segment identification

Segment
identification

A-Start with B-Start with

identifiers of customer
customer group response profile
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Customer group identifiaction

Management insight and available

information

Cross classification analysis

Data Mining for segmentation

Segmentation illustrations

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Forming group based on response
differences
Customer relationship management (CRM)
Cluster analysis
Perceptual maps
Product market area
Competitor analysis
Buyers perception analysis
Map preparation

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Finer segmentation strategies
Logic
Customized offerings
Diverse customer base
Close customer relationships
Finer segmentation strategies
Micro-segmentation
Mass customization
Variety-seeking strategy

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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

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Strategic vision about future

Anticipating the future

Boundaries and composition of Product market
End-user customer base
Market and industry transformation
Potential threats
Value chain composition and structure
Product life cycle phase?

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