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Attitudinal Segmentation – Survey Method

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1 Attitudinal Segmentation – Survey Method

2 Whom to Interview. In a survey of finding segments of customers who are travelers / tourists to Europe, it is not appropriate to count only those who have been to Europe, because that accounts for a small percentage. You have to talk to potential travelers Frame of reference for questioning When you are questioning customers on vacations do you take (a) overall experience of vacations (b) last vacation Find different ways of segmentation For example : Vacation to Europe, segment on (a) Favourability towards Europe (b) Segmenting on Income brackets © segmenting customers based on desires sought on their last vacation In a study on 1750 interviews for vacationing the following segments were Uncovered – (1) visit friends and relatives segments (2) good for family sight- Seeing (3) outdoor vacationeer (4) resort vacationeer (5) foreign vacationeer

3 Shell’s Customer Segmentation study Methodology
* Statistically identified 10 distinct “Clusters” of customers with different needs/ attitudes Surveyed 5000 respondents in 6 markets. Questions included * Behavior patterns * Desired Features * Frustrations * Brand Ratings * Psychographics * Demographics Studied Survey results from each cluster Developed name and personality for each cluster Source: Wharton School

4 Shell Customers Target Segments and Characteristics
Relationship shoppers 13% Comfort Zoners 15% Low octane communicators 7% Sentimentalist 13% Safety firsters 6% Hands-on individualists 12% Value minded Planners 6% Simplicity seekers 11% Struggling survivors 9% Premium speedsters 13% Source: Wharton School

5 Segments selected Premium speedsters
Personality : Internally driven, Competitive Mentality Gas Purchasing : Fast pumps, quick access In a word: Power minded 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

6 Brand Identities Considered
Quick & Easy (Premium speedsters, simplicity seekers, safety firsters) Friendliest Service (Relationship Shoppers, Comfort Zoners) One stop convenience (Value minded planners, struggling survivors) Best Gasoline performance (Hand’s on individuals, premium speedsters) Community support (Comfort Zoners) Lowest Price (Low octane commuters, Sentimentalists) Source: Wharton School

7 Market Targeting

8 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 Targeting Market specialization – Serving many needs of a single customer group. Financial services to NRIs Full Market Coverage - General Motors,

9 What is Positioning

10 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 company’s 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.

11 Jack Trout issues on Positioning

12 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 Many positioning ideas are founded on how company estimates the future Samsung – Challenging Limits – Looks alright Avis: We are No.2. We try harder Be Simple: Volvo – Drive Safely Positioning is long term. Do not be driven by the stock market

13 Kotler on Positioning

14 Steps to a Positioning Strategy

15 Determine Target Market
Laptop for the business professional Determine category membership of the brand under consideration Hewlett Packard dv1000 is a sophisticated business laptop Identify the competition Sony, Toshiba

16 4. Establish the Category Points of Parity to fulfill the necessary conditions
of category membership there are three main ways to convey a brand’s category membership - announcing category benefits centrino mobile technology - comparing to exemplars on par with HP’s excellence in instrumentation - relying on the product descriptor HP Pavillion dv1000 is an entry level business laptop

17 5. Establish the Competitive Points of Parity to establish the equivalence of
Product benefits, attributes, values with respect to competition HP’s manufacturing quality is no way behind Sony or Toshiba. It is backed by decades of manufacturing electronic systems

18 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.

19 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

20 (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

21 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.

22 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.

23 Differentiation It is the process of adding a set of meaningful and valued differences to Distinguish a company’s 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 - MTR’s food products

24 Dimensions on which differentiation can be achieved by firms
1. Product / Services 2. Personnel 3. Channel 4. Image

25 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.

26 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

27 Channel - Coverage – HLL - Expertise – Avon - Performance - Caterpillar Image - Differentiate Identity – Mysore Sandal Gold vs Dove - Differentiate Logo, colors, slogans, events and sponsorships – Coca-Cola

28 Products, New Product Development Process, Branding

29 Illustrative Product decisions
Corporate product portfolio including mergers and acquisition decisions and changing portfolio SBU product portfolio including design of new product development process and product deletion decision 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 - firm’s own objectives and resources

30 Understanding Products

31 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)

32 Analysing the Five Product Levels – Indica Automobile
CUSTOMER VALUE HIERARCHY Analysing the Five Product Levels – Indica Automobile Core benefit - Transport 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

33 Classification of products
durability, tangibility basis durables, nondurables/consumables, services use basis consumer, industrial, military, government

34 Industrial goods raw materials and parts
natural and manufactured raw material, components, subassemblies/modules, semi-knocked down kits capital items Installations - buildings and plant Equipment - portable factory equipment and office equipment turnkey projects 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)

35 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 .

36 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

37 P&G Product-Mix vs Product line
PRODUCT SYSTEM – PC +PRINTER+ OPERATING SYSTEM + APPLICATION S/W + MOUSE P&G Product-Mix vs Product line Crest comes in two formulations and three sizes and so has a depth of six Product Line length for Bar soaps Deodorants Detergents Product mix width - partial Bar Soap Ivory Camay Lava Kirk’s Zest Safeguard Coast Oil of Olay Product Line length for Toothpaste Tooth paste Coffee Gleem Crest P& G’s product lines are consistent(closely related to each other) in distribution

38 Major elements of managing products
Product Life Cycle Product Portfolio Analysis Objectives of Product Portfolio Analysis Product Line Management

39 Product Life Cycle

40 Making the PLC Operational / Issues to Look at PLC
Unit of Analysis – Product Class, Product Form, Product Line….. 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 Identifying the product’s stage in the PLC Model Unit of measurement of PLC – unit sales, rupee value Develop PLC on weekly, monthly, quarterly or annual data

41 Empirical Generalization: Always (Almost) Looks Like a Bass Curve

42 Color TV Forecast 1966 Industry Built Capacity For Peak in
14 million units Peak in 1968

43 An Empirical Generalization

44 Another Example 35 mm Projectors

45 Another Example: Overhead Projectors

46 Capture Law- DRAMS Norton and Bass: Management Science (1987) Sloan Management Review (1992)

47 Capture Law-Mainframes-Beautiful!

48 Generations of PC’s

49 Effects of Different Prices

50 Product Portfolio Analysis

51 Objectives of Product Portfolio Analysis
Resource allocation among products and markets portfolio analysis of competitors leads to a refined understanding of competitive strategy by action – reaction steps Assess the marketing effort for each product to direct it in the product portfolio from one place to another

52 Boston Consulting Group- Growth share matrix.

53 Shell International directional policy matrix
Prospects for sectors profitability Unattractive Average Attractive Company’s Competitive Capabilities Weak Disinvest Phased withdrawal custodial Double or quit Phased withdrawal Custodial Growth Try harder Strong Cash generation Growth leader leader Competitive capabilities- Market position - Production Capability - Product R &D

54 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 High Medium Low Investment and growth (G) Selectivity/ Earnings Harvest

55 Product performance matrix
Company sales Decline Stable Growth Industry sales Profitability MKT share Below target Target Above Target Above target Dominant average Marginal marginal

56 Product Line analysis Product Line Management Product line length management

57 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 Product Line Analysis Market Profile: Examine how the line is positioned against Competing lines. Understanding corresponding competing Products between your line and competitor’s line. Understand Gaps in product line and understand market segements

58 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.

59 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

60 Developing New Products
Firm end New Product Development Process Consumer end Consumer Adoption Process

61 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

62 Make or Buy Decision Considerations 1. Timing Considerations 2. Superiority of ‘Buy’ technology 3. Cost considerations 4. Management, Legal and Market feasibility

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