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TM 11-TM 11- 22Copyright 1999 Addison Wesley Longman, I nc.Copyright 1999 Addison Wesley Longman, Inc.

Segmen. & Aggreg. Strategies

Segmentation strategies: Divide and Conquer Aggregation strategies: One size fits all

When Should Use What???

1- Consumer preference heterogeneity (variability). Toyota2- Majority fallacy Spicy food

3- Sales-costs tradeoff

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TM 11-TM 11- 33Copyright 1999 Addison Wesley Longman, Inc.Copyright 1999 Addison Wesley Longman, Inc.

The Majority Fallacy

Preferences

Ladies Bikes

Low Medium

High S iciness/Sweetness/Sourness

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THE MAJORITY FALLACY

CASE STUDY

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The sales-costs trade-off of segmentation

Sales Costs

1 1000 1 1000Number of different brands Number of different brands

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TM 11-TM 11- 66Copyright 1999 Addison Wesley Longman, I nc.Copyright 1999 Addison Wesley Longman, Inc.

THE SALES-COST TRADE OFF

Increasing segments means increasing sales butincreasing cost!

Cost Factors:

1- Manufacturing cost2- Economy of Scale

3- Marketing cost

Solution is Cannibalization (Tissue papers. Corp TVC)

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7/14TM 11-TM 11- 77Copyright 1999 Addison Wesley Longman, Inc.Copyright 1999 Addison Wesley Longman, Inc.

Bases of segmentation

Bases Examples

GeographicGeographic

DemographicDemographic

PsychographicPsychographic

BehavioralBehavioral

Postal ZIP code districts, metropolitan

statistical areas, countries, states, provinces,regions, nations, continents

Postal ZIP code districts, metropolitanstatistical areas, countries, states, provinces,regions, nations, continents

Gender, age, education, occupation, incomemarital status, household size, ethnicbackground

Gender, age, education, occupation, incomemarital status, household size, ethnicbackground

Personality characteristics, attitudes,beliefs, lifestyles

Personality characteristics, attitudes,beliefs, lifestyles

Usage situations, usage frequencyUsage situations, usage frequency

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8/14TM 11-TM 11- 88Copyright 1999 Addison Wesley Longman, I nc.Copyright 1999 Addison Wesley Longman, Inc.

GEOGRAPHIC SEG.

ENGLISH LANGUAGE

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An ad targetedat women

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10/14TM 11-TM 11- 1010Copyright 1999 Addison Wesley Longman, Inc.Copyright 1999 Addison Wesley Longman, Inc.

The VALS 2 technique (Page 313)

Actualizers

Fullfilleds Achievers Experiencers

Believers Strivers Makers

Strugglers

Principle oriented Status oriented Action oriented

Abundant resources

Minimal resources

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11/14TM 11-TM 11- 1111Copyright 1999 Addison Wesley Longman, Inc.Copyright 1999 Addison Wesley Longman, Inc.

An appeal to action-oriented consumers whomay be achievers

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12/14TM 11-TM 11- 1212Copyright 1999 Addison Wesley Longman, I nc.Copyright 1999 Addison Wesley Longman, Inc.

BEHAVIOURIAL SEG. Usage situation and frequency

Non-users, light users and heavy users

Frequency Marketing Techniques ???

Who uses FMT?

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13/14TM 11-TM 11- 1313Copyright 1999 Addison Wesley Longman, Inc.Copyright 1999 Addison Wesley Longman, Inc.

The consumer x product x usagesituation matrix

Customer x productInteraction

Customer x productInteraction

Customer x productSituation Interaction

Customer x productSituation Interaction

Product x UsageSituation InteractionProduct x Usage

Situation Interaction

Customer x Product xUsage Situation Interaction

Customer x Product x

Usage Situation Interaction

Customer Customer

ProductProduct

Usage situationUsage situationDifferent groups of customers are loyal todifferent brands.

Different groups of customers are loyal todifferent brands.

Different groups of customers use the product indifferent usage situations.

Different groups of customers use the product indifferent usage situations.

Different brands are used in different usagesituations.

Different brands are used in different usagesituations.

Different groups of customers use different brandsin different usage situations.

Different groups of customers use different brandsin different usage situations.

Preference heterogeneity exists. Find a customer segment that currently is not served adequately.

Preference heterogeneity exists. Find a customer segment that currently is not served adequately.

Brand heterogeneity exists. Develop a new type of product.

Brand heterogeneity exists. Develop a new type of product.

Usage heterogeneity exists. Develop a newusage situation

Usage heterogeneity exists. Develop a newusage situation

h d

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14/14TM 11-TM 11- 1414Copyright 1999 Addison Wesley Longman, Inc.Copyright 1999 Addison Wesley Longman, Inc.

The consumer x product x usagesituation matrix

Dawlance MWO Case StudyDawlance MWO Case Study

Customers of various ages, visiting fast food restaurants in various timings.Customers of various ages, visiting fast food restaurants in various timings.