Segmentation Strategies Segmentation versus aggregation strategies Consumer preference heterogeneity The Majority Fallacy The sales-costs tradeoff cannibalization Bases of segmentation The consumer x product x usage situation matrix

The Majority Fallacy Preferences Low Medium High Spiciness/Sweetness/Sourness

The sales-costs trade-off of segmentation 1 1000 1 1000 Number of different brands Number of different brands

Bases of segmentation Bases Examples Geographic Postal ZIP code districts, metropolitan statistical areas, countries, states, provinces, regions, nations, continents Demographic Gender, age, education, occupation, income marital status, household size, ethnic background Psychographic Personality characteristics, attitudes, beliefs, lifestyles Behavioral Usage situations, usage frequency

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The VALS 2 technique Actualizers Fullfilleds Achievers Experiencers Abundant resources Minimal resources Principle oriented Status oriented Action oriented Fullfilleds Achievers Experiencers Believers Strivers Makers Strugglers

An appeal to action-oriented consumers who may be achievers

The consumer x product x usage situation matrix Customer Preference heterogeneity exists. Find a customer segment that currently is not served adequately. Product Brand heterogeneity exists. Develop a new type of product. Usage situation Usage heterogeneity exists. Develop a new usage situation Customer x product Interaction Different groups of customers are loyal to different brands. Customer x product Situation Interaction Different groups of customers use the product in different usage situations. Product x Usage Situation Interaction Different brands are used in different usage situations. Customer x Product x Usage Situation Interaction Different groups of customers use different brands in different usage situations.