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Services Segmentation

Priceline.com

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Segmentation

• Identify and profile distinct groups of buyers who might require separate product and/or marketing mixes

• A rational adjustment of product and marketing effort to consumer/user requirements

• Key concept: CONSUMER DIFFERENCES (Consumer Heterogeneity).

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Segmentation – American Cable TV

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Bases for Segmentation

• Primary: Determinants of consumption or transaction utility– e.g., benefits sought, usage

behavior, (who, what, where, when, how, why?).

• Secondary: Addressable characteristics related to primary segmentation basis (mostly for profiling)– e.g., geographic, demographic

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Benefit Segmentation

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Segmentation in Services

• Product Segmentation– Heterogeneity due to

variations in the valuation of consumption utility

• Services Segmentation– Heterogeneity due to

variations in the valuation of•Consumption utility•Transaction utility

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Segmentation: The Services Perspective (contd.)

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Segmentation – Retail Financial Services in Asia

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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Segmentation: An Illustration

British Airways• 35% of customers generate 60% of sales• segment specific services

– Concorde, First Class, Club Europe, Club World, Euro Traveller, World Traveller and domestic Shuttle

• value to segment = overall benefit– core product + supplementary service– payoffs = Virgin Limo Service!

P4 Sept/Oct -2003 Services Marketing – Professor V. Padmanabhan

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