TARGET MARKETING & RESEARCH DESIGNPRINCIPLES OF MARKETING WEEK 08

LEARNING OBJECTIVES

• Market Segmentation• Target Marketing• Research Design• Survey Design• Homework

MARKET SEGMENTATIONConcept of Market Segmentation• Partitioning a market that is characterized by

heterogeneity in consumers’ response to the marketing mix into more homogeneous submarkets.

• Process of dividing a large market into smaller target markets, or customer groups with similar needs and/or desires.

MARGET SEGMENTATIONGENERAL PRODUCT-SPECIFIC

OBSERVABLE

LATENT

Observable features of physical and social environment (esp. demographics)

Behavioral characteristics (user status, loyalty, status, usage rate

Usage Situations

Values, lifestyles, and psychographics, personality variables

AwarenessAttitude (belief evaluations)Intentions

MARKET SEGMENTATIONMarket Segmentation

Segmentable market variables are:• Demographic• Benefits Sought• Geographic• Situation• Psychographic• Behavior / Usage

MARKET SEGMENTATIONMarket Segmentation • Demographic

• Age• Income Level• Family• Education• Ethnicity

• Examples?

MARKET SEGMENTATIONMarket Segmentation • Geographic

• When an organization localizes its marketing efforts to accommodate the unique needs of specific geographic regions

• Examples?

MARKET SEGMENTATIONMarket Segmentation • Psychographic

• Grouping customers together based on social class, lifestyles, and psychological characteristics (attitudes, interests, opinions)

• Examples?

MARKET SEGMENTATIONMarket Segmentation • Benefits Sought

• Segments based on the benefits that consumers desire from using a specific product.

• Examples?

MARKET SEGMENTATIONMarket Segmentation • Situation

• Purchase situation or occasion• Impacted by Physical and Social surroundings, Time to

make a purchase, task definition, pre-purchase attitude.

• Examples?

MARKET SEGMENTATIONMarket Segmentation • Behavior / Usage

• Markets can be segmented by how often or how heavily consumers use a specific product.

• Examples?

MARKET SEGMENTATIONIn Class Exercise

• Go to the websites for Crest and Colgate and study what types of toothpastes they offer to appeal to different market segments.

• Use this information or any other information that you can find to come up with a list of variables that companies use to segment the toothpaste market.

MARKET SEGMENTATIONSegmentation Bases• Behavioral Characteristics / Usage Situations

• Toothpaste Category Users• Other brand loyals• Other brand switchers• Heavy users• Light users• Potential users

• Awareness / Attitude / Intentions• Attitudinal Segmentation

• Consider plus and minuses of each brand

MARKET SEGMENTATIONVALS 2• A method of classifying consumers on the basis of two

dimensions:• Self orientation (primary motivation)

• Ideals (principle oriented consumers)• Those who are guided in their choices by abstract,

idealized criteria (quality, integrity, tradition)

• Achievement (status oriented consumers)• Those who are guided in their choices by the expected

reactions, concerns, and desires of groups to which they belong or aspire to belong.

• Self-Expression (action oriented people)• Those who are guided in their choices by a desire for

social or physical activity, variety, and risk taking.

MARKET SEGMENTATIONVALS 2• A method of classifying consumers on the basis of two

dimensions:• Resources

• Refers to the full range of psychological, physical, demographic, and material means and capacities people have to draw upon • (age, education, income, self-confidence, energy,

intellectualism, novelty seeking, innovativeness, impulsiveness, etc.)

MARKET SEGMENTATIONSegmentation Scheme for Toothpastes

Sensories

Sociables

Worriers

Independents

principal benefit

flavor, product appearance

brightness of teeth

decay prevention

low price

behavioral characteristics

users of spear-mint flavor

smokers heavy users heavy users

demographics children teens, young adults

large families men

psycho-graphics

high self-involvement, hedonistic

high sociability, active

hypochondriac, conservative

high autonomy, value-oriented

MARKET SEGMENTATIONData Sources for Segmentation• Simmons Market Research Bureau

• Product usage by category, demographics, media behavior, psychographics

• Mediamark Research

MARKET SEGMENTATIONSegmentation Criteria• Differentiable: Market response is homogeneous within segments and

heterogeneous between segments

• Indentifiable: Individuals can be assigned to a segment based on a meaningful profile of segment characteristics

• Stable: Segments and segment membership do not change in the short run

• Measurable: The size and purchasing power of relevant segments can be determined.

• Actionable: The company is able to develop a marketing mix that will appeal to the members of a given segment.

• Accessible: Members of a segment can be reached with the appropriate marketing mix.

TARGET MARKETING• Evaluation of the attractiveness of each market segment

and selection of target segments

• Evaluation of market segments based on:• Market segment characteristics• Industry competition• Company objectives and resources

• Selection of target segments can result in:• Undifferentiated (mass) marketing• Differentiated marketing• Concentrated marketing

TARGET MARKETING• Undifferentiated Marketing

• An organization develops one strategy appropriate for all members of the total market.

• Differentiated Marketing• An organization targets multiple market segments

and develops segment specific mixes.

• Concentrated Marketing• When an organization concentrates its

marketing efforts on a smaller segment of a larger market.

RESEARCH DESIGNConceptualization• Developing a model that shows variables

that will be studied and hypothesized relationships between the variables.

• Identify variables/construct to study• Specify hypotheses and relationships• Prepare a diagram that represents the relationship visually

RESEARCH DESIGNVariables vs. Constructs• Variables

• An observable item that is directly measured in a research study (gender, age, company name, number of employees, number of customers, amount spent, etc.)

• Construct• An unobservable concept measure indirectly by several

related variables by several related variables (service quality, satisfaction, materialism, best customer, etc.)

SURVEYSMethodologies• Person to Person Administered

• In Home interview• Purchase Intercept• Mail Intercept

• Telephone Administered• Telephone interview• Computer assisted telephone interview• Automated telephone surveys

SURVEYSMethodologies• Self Administered

• Mail Panel • Drop Off• Mail Survey

• Computer Assisted (Online)• Fax• Email• internet

SURVEYSSelecting a Survey Method• Consider the following:

• Situational Characteristics• Budget, completion time frame, quality, completeness

of data, data precision

• Task Characteristics• Difficult, stimuli needed, large amount of information,

sensitive topics

• Respondent Characteristics• Diversity, incidence, participation

SURVEYSQuestionnaire Design• A good questionnaire appears as easy to compose as a

poem, but usually the result of long painstaking work.

• No real, hard and fast rules, only guidelines.

SURVEYSDecisions• What should be asked?• How should each question be phrased?• In what sequence should the questions be arranged?• What questionnaire layout will best serve the research

objectives?• How should it be pretested and revised?

SURVEYSScreener and Filter Questions

SURVEYSScreener and Filter Questions

SURVEYSScreener and Filter Questions

SURVEYSSkip PatternsUse multiple visual Elements to improve skippattern compliance

SURVEYSQuestionnaire Organization• Logical flow• Usually go from general to specific• Ask sensitive questions later

SURVEYSQuestionnaire Organization

SURVEYSQuestionnaire OrganizationSelecting the first questionfor a questionnaire.

SURVEYSQuestionnaire Organization

SURVEYSQuestionnaire Organization• Use of booklets• Color coding• Question numbering• Fitting questions on a page• Instructions (skip and otherwise)• Use of typeface and blank space• Precoding

SURVEYSQuestionnaire Design• Place instruction exactly where needed and not a separate

section at the beginning questionnaire.

SURVEYSQuestionnaire Design• Maintain simplicity, regularity, and a consistent

figure/ground format to make respondent’s task easier.

• Increase size and brightness of visual elements to emphasize order for reading questionnaire information.

• Emphasize words and phrases in questions consistently, but sparingly

• Change spacing and similarity to identify appropriate groupings of visual elements.

SURVEYSQuestionnaire Design• Write special instructions as part of question, not as free

standing entities.

SURVEYSQuestionnaire Design• Answer Formats

• Categories may be placed to the left or right of category tables.

SURVEYSQuestionnaire Design• Answer Formats

• Place items with the same response categories in an item-in-a series format.

SURVEYSQuestionnaire Design• Answer Formats

• Eliminate check-all-that-apply question format.

SURVEYQuestionnaire Design

HOMEWORKIn this week’s homework you will be expected to complete the following:

Target Market / Market ResearchDescribe your customer profile in detail including

demographics, psychographics and geographic information about the target market in great detail.

HOMEWORKIn this week’s homework you will be expected to complete the following:

Questionnaire DesignDesign a questionnaire based on class discussion

and give it to 25 people before next week’s class. Review answers and develop conclusions based on the data collected.

FINAL PROJECT SPECSThe final project is the culminating academic endeavor of the class’s research over the quarter.

It will provide you with the opportunity to explore a problem or issue of particular personal or professional interest and to address it in a thorough focused study and applied research.

This project should demonstrate your ability to synthesize and apply the knowledge and skills acquired through the class, and it should not only exemplify your ability to think critically, but should utilize the variety of research methods introduced to come to a cohesive and logical conclusion.

FINAL PROJECT SPECS» Sections

Executive Summary Industry AnalysisMarketing ResearchSWOTT AnalysisHypothesis/Problem Statement/PurposeResearch ObjectivesLimitationsMethodologySample QuestionnaireData AnalysisConclusions