Presentation on theme: "Attitudinal Segmentation – Survey Method 1.Whom to Interview. In a survey of finding segments of customers who are travelers / tourists to Europe, it."— Presentation transcript:
Shells Customer Segmentation study Methodology Surveyed 5000 respondents in 6 markets. Questions included * Behavior patterns * Desired Features * Frustrations * Brand Ratings * Psychographics * Demographics * Statistically identified 10 distinct Clusters of customers with different needs/ attitudes Studied Survey results from each cluster Developed name and personality for each cluster Source:Wharton School
Segments selected Premium speedsters Simplicity Seekers Personality: Overburdened, Frustrated, Loyal to others, caring, sensitive. Hard to motivate. Gas Purchasing: Reactive. Want things that make buying gas easy. Major brand= product reassurance. In a Word…Overwhelmed Safety Firsters Personality: Confident, Self- assured, Responsible Control oriented, well prepared. Gas purchasing: want cleanliness, comfort, Efficiency, safety In a word….Safety Minded Source:Wharton School Personality : Internally driven, Competitive Mentality Gas Purchasing :Fast pumps, quick access In a word:Power minded
Brand Identities Considered One stop convenience (Value minded planners, struggling survivors) Friendliest Service (Relationship Shoppers, Comfort Zoners) Community support (Comfort Zoners) Lowest Price (Low octane commuters, Sentimentalists) Best Gasoline performance (Hands on individuals, premium speedsters) Quick & Easy ( Premium speedsters, simplicity seekers, safety firsters) Source:Wharton School
Single Segment Concentration Zodiac concentrating on executive and professionals Selective Specialization – may be or may not be Synergy among the segments selected HLL in Soaps Product specialization - Specialized product to several segments – TVS makes scooters of all ranges to several socio-economic classes Market specialization – Serving many needs of a single customer group. Financial services to NRIs Full Market Coverage - General Motors,
What is Positioning
To some it means the segmentation decision (economy and premium segments). To others it is an image question (Casual, sporty wear – Benetton) To still others it means selecting which product features to emphasize – (flavor or foaminess of toothpastes) Positioning a brand is obtaining mind-space of the consumer for the brand with Respect to competition Positioning is the act of designing the companys offering and image to occupy a distinctive place in the mind of the target market so as to maximize the Potential benefit to the firm. The result of positioning is the successful creation Of a customer focused value proposition e.g. – Colgate Total – Multi-benefit toothpaste as a one product solution for people with tooth problems As against Colgate Dental Cream – Core Identity for strong, white teeth meaning a toothpaste to maintain healthy teeth.
Jack Trout issues on Positioning
1.Embrace the obvious position possible in the market or granted by the market. Positioning should be in line with the perception of consumers mind not against it Coke:The Real Thing is fine; it is the original cola Coke:Always Coca-Cola may not be fine as half the market is Pepsi 2.Many positioning ideas are founded on how company estimates the future Samsung – Challenging Limits – Looks alright Avis:We are No.2. We try harder 3.Be Simple:Volvo – Drive Safely 4. Positioning is long term. Do not be driven by the stock market
Kotler et.al on Positioning
Steps to a Positioning Strategy
1.Determine Target Market Laptop for the business professional 2.Determine category membership of the brand under consideration Hewlett Packard dv1000 is a sophisticated business laptop 3.Identify the competition Sony, Toshiba
4.Establish the Category Points of Parity to fulfill the necessary conditions of category membership there are three main ways to convey a brands category membership - announcing category benefits centrino mobile technology - comparing to exemplars on par with HPs excellence in instrumentation - relying on the product descriptor HP Pavillion dv1000 is an entry level business laptop
5.Establish the Competitive Points of Parity to establish the equivalence of Product benefits, attributes, values with respect to competition HPs manufacturing quality is no way behind Sony or Toshiba. It is backed by decades of manufacturing electronic systems
6. Establish the Points of Difference if any to take a differentiated position If no POD exists then the brand takes a head on position or a me-too position HP has an excellent service network in India as compared to Toshiba. HP is not as expensive as Sony 7. Write out the Positioning Statement To the young urban professional (target market) our product – HP Pavilion dv 1000 is a rugged system with all the necessary features of a state- Of-art business computer and is offered as a value for money laptop with Excellent service backup.
Important considerations in choosing Points of Difference (PODs) (1) PODs are desirable by the customer - Relevant and important to the customer – e.g. price of HP Laptop - Distinctiveness – Service backup is not a common feature of all foreign made laptops in India - Believable – HP has been in the electronic business for decades
(2) PODs are deliverable to the customer - Feasibility – HP has the required organization to make the service deliverable and the required technology to offer a value for money product - Communicability - HPs products are not known as very expensive - Sustainable - HP has the required R&D to continue making state-of –art upgrades In this case PODs are anchored at the benefit level, sometimes they could be Anchored at the attribute or value level
Handling Conflicting POPs and PODs Sometimes attributes and benefits are negatively correlated or move in the opposite Direction. Ideally consumers want to maximize their benefit package. Examples of such cases are (1) Low Price vs High Quality (2) Taste vs Low Calories (3) Nutritious vs Good Tasting.
Methods to overcome such situations - Go for straddle positioning – do both simultaneously. BMW designed its car for both luxury and performance - Present the communication messages for each attribute / benefit Separately - Leverage equity of another entity e.g. Intel Inside - Redefine the relationship – Teach customers that the relation between attributes is redefined and now stands positive e.g. Apple is user friendly and not regarded as powerful. Apple came up with an ad campaign that had the tag – Power to be your best, teaching customers that they used it because it was user friendly and having used it successfully it was powerful.
Differentiation It is the process of adding a set of meaningful and valued differences to Distinguish a companys offering from competitor offerings A difference will be stronger if it satisfies one or more of the following criteria 1.Important - Infrastructure investment of business school 2.Distinctive, but not necessarily superior - Bajaj scooter 3.Superior - Product superiority of Gillette 4.Preemptive - cannot be easily copied - Zilog Processor 5.Affordable - Personal Computer of Acer 6.Profitable - MTRs food products
Dimensions on which differentiation can be achieved by firms 1.Product / Services 2.Personnel 3.Channel 4.Image
Product / Services -Product / Service Quality performance based – BMW conformance quality – CMM in software physical signs and cues – Tata Indica - Form- Satchets -Features – Cameras -Durability – Volvo - Reliability – Maytag -Repairability – Maruti -Style – Benetton -Design – Designer wear Services -Ordering ease – home delivery pizzas -Installation – Mobile -Customer Training – GE Medical Systems - Customer Consulting -Saree selling - Maintenance and repair – Premium apartments in the city.
Personnel - Trained personnel should exhibit the following -Competence – Repair engineers of process plants - Courtesy - Front line staff in premium hotels -Credibility – Premium hospital doctors - Reliability – Parallel computers -Responsiveness and Communication – Beauty Consultants
Products, New Product Development Process, Branding
a.Corporate product portfolio including mergers and acquisition decisions and changing portfolio b.SBU product portfolio including design of new product development process and product deletion decision c.Product line positioning, width and depth of product line, product modification d.Brand positioning Factors affecting product decisions - the consumer - the competitors - the environmental factors - firms own objectives and resources Illustrative Product decisions
Product A product is anything (bundle of benefits) that can be offered to a market to satisfy a want or need. An offering consists of the product features / Quality, service mix/quality, value based price. Products include - physical goods (automobiles), services (musical concert), persons (electoral candidate), Experiences (air journey), events (cricket match), tourist places (Kashmir), Properties (Leela Penta Hotel), organizations(hospitals), information(trade Shows) and ideas(family planning)
Core benefit - Transport Analysing the Five Product Levels – Indica Automobile Basic Product - 4 wheel closed car Expected product - good performance - all specs in the ad in small letters Augmented product - wants beyond expectations - best after sales service even though not required Potential product - possible evolution for the car of tomorrow CUSTOMER VALUE HIERARCHY
Classification of products Fdurability, tangibility basis èdurables, nondurables/consumables, services Fuse basis èconsumer, industrial, military, government
Industrial goods è raw materials and parts natural and manufactured raw material, components, subassemblies/modules, semi-knocked down kits è capital items Installations - buildings and plant Equipment - portable factory equipment and office equipment turnkey projects è supplies / consumables and business services operating supplies (paper, lubricants); maintenance/repair items (paint) and maintenance / repair service(Copier repair), business advisory services (legal, management consulting, advertising)
Consumer Goods Classification Convenience goods - staples (soaps), impulse (gum) emergency (umbrellas) Shopping goods - homogenous (fans, food mixers - price significant), heterogenous (textiles, furniture - non price issues also signficant) Specialty goods - goods with unique characteristics or brand identification - cars, cameras Unsought goods - Special selling effort reqd - encyclopedias, life insurance.
Product Hierarchy Need Family:Personal Transport Product Family:Automobiles Product Class:4 wheelers Product Line:Passenger cars Product Type:Mid size car Brand:Maruti Item:Esteem AX
Product mix width - partial Deodorants Bar Soap Coffee Detergents Tooth paste Ivory Camay Lava Kirks Zest Safeguard Coast Oil of Olay Product Line length for Bar soaps Gleem Crest Product Line length for Toothpaste P&G Product-Mix vs Product line Crest comes in two formulations and three sizes and so has a depth of six P& Gs product lines are consistent (closely related to each other) in distribution PRODUCT SYSTEM – PC +PRINTER+ OPERATING SYSTEM + APPLICATION S/W + MOUSE
Major elements of managing products Product Life Cycle Product Portfolio Analysis Objectives of Product Portfolio Analysis Product Line Management
Product Life Cycle
Making the PLC Operational / Issues to Look at PLC 1.Unit of Analysis – Product Class, Product Form, Product Line….. 2. What is the relevant market to which the PLC applies Relevant Product Market + Relevant Geographic Market 3.What is likely lifecycle pattern to emerge - fad, fashion, style, cycle-recycle, staple 4.Identifying the products stage in the PLC Model 5. Unit of measurement of PLC – unit sales, rupee value 6. Develop PLC on weekly, monthly, quarterly or annual data
Empirical Generalization: Always (Almost) Looks Like a Bass Curve
Color TV Forecast 1966 Peak in 1968 Industry Built Capacity For 14 million units
Objectives of Product Portfolio Analysis 1)Resource allocation among products and markets 2) portfolio analysis of competitors leads to a refined understanding of competitive strategy by action – reaction steps 3)Assess the marketing effort for each product to direct it in the product portfolio from one place to another
Boston Consulting Group- Growth share matrix. STARSPROBLEM CHILD CASH COW DOG MARKETGROWTHMARKETGROWTH RELATIVE MARKET SHARE High Low HighLow
Shell International directional policy matrix Prospects for sectors profitability UnattractiveAverageAttractive Companys Competitive Capabilities WeakDisinvestPhased withdrawal custodial Double or quit Companys Competitive Capabilities AveragePhased withdrawal Custodial Growth Try harder Companys Competitive Capabilities StrongCash generation Growth leader leader Competitive capabilities- Market position - Production Capability - Product R &D
Mc Kinsey/GE Business Array Industry attractiveness – Size, Market Growth, Pricing, Mkt. Diversity Competitive Structure, Industry Profitability Business strength - Size - Growth - Share - Position - Profitability - Margins - Tech. Position - Image - People HighMediumLow HighInvestment and growth (G) Investment and growth (G) Selectivity/ Earnings MediumInvestment and growth (G) Selectivity/ Earnings Harvest LowSelectivity/ Earnings Harvest
Product performance matrix Company salesDeclineStableGrowth Industry sales Profitability MKT share Below target TargetAbove Target Below target TargetAbove target Below target TargetAbove target GrowthDominant average Marginal StableDominant average marginal DeclineDominant average Marginal
Product Line Management Product Line analysis Product line length management
Product Line Analysis Study sales and profits of each item in line, to see Which to build, maintain, harvest, divest. Do ABC Analysis on sales / profits Core products – Basic Computers – low margins Staples – CPUs, Memory chips – higher margins Specialties – digital movie equipment – still higher margin Convenience items – monitors, printers –high volume high margin Manage each of the above four types of products differently Market Profile: Examine how the line is positioned against Competing lines. Understanding corresponding competing Products between your line and competitors line. Understand Gaps in product line and understand market segements
Product Line Length Management Product line objectives would be to induce both up selling and cross selling High Market share seeking firms will have longer product lines. High profitability seeking firms will have shorter lines of important / more profit product items.
Product line length Management Line stretching Upward – Maruti – 800, Omni, Esteem, Baleno, Toyota - Lexus Downward – Surf – Wheel Two way - Rural Transport Vehicle – Ambassador – Mitsubishi Lancer (Hindustan Motors) Texas Instruments in Hand Calculator Line Filling (each item should produce a just noticeable difference) TVS TVS Scooty --- TVS SUZUKI Mobike Line Featuring: (oft promoted brand in line) Lux in Soaps for HLL Line modernization – Intel in Microprocessors Line Pruning – First Ruf & Tuf ready to stitch kits. Later Ruf & Tuf Jeans
Developing New Products Firm end òNew Product Development Process Consumer end òConsumer Adoption Process
New Product Development Process Make or Buy Decision Issues to New Product Development Steps to New Product development Process Factors for success of new product launches New Product Strategies - Reactive and Proactive Some reasons for new product failures
Make or Buy Decision Considerations 1. Timing Considerations 2. Superiority of Buy technology 3. Cost considerations 4. Management, Legal and Market feasibility