1. Marketing Hoorcollege blok 2 week 2
Any colour you like as long as it’s black - segmentation: the basis of marketing
Marketing Hoorcollege blok 2 week 2

2. Or: Why I am not in the same target group as Brad Pitt & Johnny Depp (at least) when it comes to cars

3. Learning goals By the end of the colleges and reading you should:
Know the three elements of marketing core strategy: segmentation, targeting & positioning (STP)
Understand how STP helps organizations deal with one of the main trends in western and some developing markets today
Be in a position to develop a marketing segmentation, choose a target group and create a positioning for an offer
* You should have also read chapters 9 & 10 in the last blok

4. Agenda A quick recap The aims of blok 2
If you’re not segmenting, then you’re not marketing
Segmentation
Summary

5. Previously on…
Marketing:
In Search Of Exchange

6. We argued that marketing is about creating mutually beneficial exchange
Exchange is the process where you willingly give something of value to another, in return for getting something of value to you

7. And that marketing is a process that creates offers to customers

8. Our aim in blok 2 is to
Take you through the process of creating a marketing offer
With the exception of promotion - which will be covered in blok 3 or 4
Give you some tools (in addition to the UCD tools) you can use to do this
Help you understand why this process is even more important in today’s marketing environment

9. If you’re not segmenting, then you’re not marketing

10. Any colour you like, as long as it’s black
The Model T Ford is regarded as the first car to be built on using a production line
Henry Ford wanted to produce quickly
Black paint dried more quickly so the only colour you could have was black
Soon Ford lost share to companies that offered other colours

11. No cup holders please we’re German
In the 1990’s cup holders became popular in the USA
German companies such as BMW and Mercedes didn’t see them as necessary (cars were about engineering not cup holders!)
Their market share fell in the USA

12. The mobile phone is just a device
Early mobile phones were seen as just devices to make calls
The idea of a mobile phone as a fashion accessory was at first not accepted by many companies
Nokia did understand this and were the first company to offer different designs and colours
Nokia gained huge market shares

13. The lessons of these stories
The customer really is king
One offer never appeals to everyone
Offers to everyone will be beaten by offers to targeted groups
Marketing is becoming more complex (and more exciting - no honestly it is…)

14. Markets are becoming more fragmented
In the developed economies at least the idea of mass marketing is essentially dead
One product for a large market does not work anymore
Consumers are becoming more sophisticated (verfijnd) and choosy
They have better access to information
They have more choice
They are overloaded with marketing messages
They are more cynical
This is especially true in our “always on” world

15. Result: the old model is broken

16. What’s wrong?
The problem is that there are too many “me too” offers on the market today
These are products (and price, place, promotion) that try to reach the same broad market segment with basically the same offer

17. What’s the solution? Make remarkable products
One solution suggested by Seth Godin in his book Purple Cow is to:
Make remarkable products
that appeal to a smaller better defined segment

18. So how do we do this?

19. The start of the answer is…
Better market segmentation
Since this allows you to
Target the right segment to approach
Which means you can position your offer more effectively
Which leads to better marketing mixes
Which leads to your customers choosing your offer
And telling their friends

20. Not everyone will love you, but some might if you know who they are
Segmentation
Not everyone will love you, but some might if you know who they are

21. Segmentation
A market segment is just a group of potential customers with the same needs and wants
Marketers use different factors that might reveal needs and wants to make segments
For example age and gender are very popular

22. But this isn’t good enough… Remember this?
Based on age & gender we are in the same target group!
Yeah right!
But how can we tell us apart?

23. Well marketers tend use segmentation variables…

24. Task: What would allow you to separate Brad, Johnny & Charlie?
As I go through each of the segmentation variables use the sheet I have given you to work out which might separate Brad, Johnny and me if you were company wanting to develop a car

25. Geographic variables Region Country size City size Population density
Continent, groups of countries such as Benelux, country, areas with a country such as the Randstad, area within a city such as Amsterdam Noord
Country size
City size
Population density
Climate

26. Demographic variables
Age
Gender
Family size
Family life-cycle
Life stage
Income
Occupation
Educational level
Religion
Race
Nationality

27. Psychographic variables
Social class
Lower, working, middle, upper
Lifestyle
Interests, hobbies, beliefs, attitudes
Personality
Ambitious, introvert, extrovert, social

28. Behavioural variables
Purchase occasion
Benefits desired
User status
Usage rate
Loyalty
Readiness stage
Attitude to the product, brand or company

29. Multivariable segmentation
For most products one variable is not enough, it will tell you little about the target group
So organizations tend use multivariable segmentation
This is simply combining segmentation bases:
Simple multivariable segmentation uses two or more bases from one category
E.g. Age and gender from demographic variables
Advanced multivariable segmentation uses two or more bases from two or more categories
E.g. Lifestyle, age, family life cycle and attitude to the product
Multistage segmentation uses different variables at different times
E.g. Region, then lifestyle and age
In general multivariable segmentation leads to better customer insights

30. What makes a good market segmentation?
A good market segmentation is one that is:
Measurable - you know how many members it has and you can track their purchases
Accessible - you can contact them and make your offer
Sustainable - you can make a profit by serving them
Actionable - you are able develop offers that are attractive to the segment
In addition a good segmentation allows you to understand the customer from their point of view so that you can make offers that will meet their needs better than your competitors

31. Summary
The aim of marketing is to create mutually beneficial exchange by creating offers that are more attractive to customers that alternatives
But the consumer is becoming more choosy about what they consider beneficial
In the Internet age this is even easier
As a result offers aimed at “everyone” will be beaten by more targeted offers
To survive in this environment we must become better at segmenting the potential market into meaningful groups that can be approached profitably
If you’re not segmenting, then you’re not marketing

32. Brad, Johnny & Charlie: My answer