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Consumer Trends and Marketing Part I: Market Segmentation,

Targeting and Positioning

TRUEFOOD WP8Girona, 26 – 27 March 2007

Based on the books: “ Marketing Management and Consumer Behavior” - P. Kotler; “Consumer Behaviour” - Engel, Blackwell & Miniard; “Consumer Behaviour and Marketing Strategy” - Peter, Olson &

Grunert; “Food, People and Society” – Frewer, Risvik & Schifferstein

Dr. Renata JanuszewskaIr. Bianka Kuehne

Prof. Xavier GellynckProf. Jacques Viaene

Gent University, Belgium

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�A primary reason for studying consumer behaviour is to identify bases for effective segmentation

�Selection of the appropriate target market is paramount to developing successful marketing programmes

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Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate produsts or marketing mixes

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1. Identifying Market Segments

2. Cross-European market segmentation

3. Example: chocolate segments in Belgium and Poland

4. Target marketing and product positioning

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�Generic

�Targeted

�Segmented

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� Is a global (overall) differentiation on a nontargeted basis which means the differentiation is not for any specific segment of customers

�The firm presents rather an improved offering to the entire market

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� A company identifies a specific market segment and then designs a marketing program to target and appeal to this particular segment

� This approach uses specific elements of the marketing mix to differentiate a company’s offerings

� Example: whitening creams for the Filipino market

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� Involves breaking up the total market into segments that are homogeneous by some characteristics of its customers (such as demographics, psychographics, or usage patterns)

� and then targeting each segment as a distinct market for which all elements of the marketing mix are differential

� Example: B2B segmentation: residential, institutional, industrial and commercial (different product and service needs)

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���������� � Needs and wants vary on the basis of personal and environmental

characteristics; the resources (time, money, expertise)

Targeted Differentiation(Price and distribution)

Generic Differentiation(Product, Price, Service, Distribution, Promotion)

Needs/wantsHomogeneous

Segmented Differentiation(Product, Service, Promotion, Price, Distribution)

TargetedDifferentiation(Product & Promotion)

Needs/wantsDiverse

ResourcesDiverse

ResourcesHomogeneous

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Occasions, Benefits, Uses, or Attitudes

Behavioral

GeographicRegion, City or MetroSize, Density, Climate Demographic

Age, Gender, Family size and Fife cycle, Race, Occupation, or Income ...

Lifestyle or PersonalityPsychographic

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�World region or country�State/province�Neighborhood�City or metro size�Density�Climate

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�Age�Gender�Family size�Family life

cycle� Income�Occupation

�Education�Religion�Race�Generation

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� Hypotheses: � natural & economics resources enable or

constrain human activities� geographic location helps shape people’s

lifestyles and activities (cold vs. warm areas; farmland vs. industrial zones)

Example: 9 nations of USA: PRIZM (Potential Rating Index by Zip Codes) linked with behavioural purchase data, credit card information, magazine subscription, radio & TV listening/viewing data

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�Occasion�Benefits�User status�User rates�Loyalty status�Readiness stage�Attitude toward the product

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�Lifestyle�Social class�Personality-based segmentation�VALS

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�What: usage segmentation (high, medium, low)

�Why: customers’ underlying motives:1/ Differences in benefits sought2/ Product involvement attitude3/ Differences in lifestyles and psychographics

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# �� �# �$����)� �$��HEAVY HEAVY LIGHTLIGHTPRODUCT (% USERS)PRODUCT (% USERS)

75%

71%

Soups andSoups anddetergents (94%)detergents (94%) 25%

29%

79% 21%

Toilet tissue (95%)Toilet tissue (95%)

Shampoo (94%)Shampoo (94%)

75% 25%

17%

17%

Paper towels (90%)Paper towels (90%)

Cake mix (74%)Cake mix (74%)

Cola (67%)Cola (67%)

83%

83%

13%

5%

87%

19%

Beer (41%)Beer (41%)

Dog food (30%)Dog food (30%)

Bourbon (20%)Bourbon (20%)

81%

95%

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� Refers to grouping individual customers according to the benefits they seek from a product or service

Toothpaste market benefit segments (Haley, 1968)

Value orient.ConservativeActiveHedonisticLifestyle

Cheapest brand

CrestUltra BriteColgateBrands favoured

Heavy usersHeavy usersSmokers Spearmint-flavoured tp.

Special behaviour

MenLarge families

Teens, youngsters

Children Demographic strengths

PriceDecay preventing

Brightness of teeth

FlavourAppearance

Principal benefit

Independent segment

Worrier segment

Sociable segment

Sensory segment

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�� (�����, �-�� (�.����� /���� Gearhead – true car enthusiasts who enjoy driving their

cars, love to maintain and care their cars, most likely to believe that the car you drive shows who you are;

� Epicures – drive elegant, comfortable, well-equipped, luxury cars; someone else takes care about their car;

� Functionalists – like functional, fuel efficient cars without concern for style or sportiness, tend to buy small & mid-size cars;

� Road Haters – least involved in their car or in driving; concerned most with safety, don’t enjoy driving, least knowledgeable about cars

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� Most well-known psychographic segmentation scheme

� Motivations, activities, interests and opinions

� 1995, US Centres for Disease Control & Prevention: social marketing effort “Nutrition & Physical Activity Initiative”, national sample of 3000 adult US consumers � identification of 7 health lifestyle segments

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1. Physical fanatics (24%) – low-fat nutritious diets, regular exercise, frequent conversations on health topics, compliance with doctor’s advice

2. Decent doolittles (24%) – living unhealthy lifestyles (smoking, drinking, poor eating); but aware of the health risks they face, see themselves as “religious and conservative”

3. Passively healthy (15%) – are in excellent health currently, engage in exercising but their eating habits are unhealthy and they are indifferent to their health

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4. Active attractives (13%) – exercise regularly, control fat intake, socially active, describe themselves as “romantic, youthful, vain”

5. Tense but trying (10%) – they are diet and exercise conscious, but tend to be smokers and also more anxiety prone than other groups

6. Non-interested nihilists (7%) – least health-oriented, reject any personal responsibility for their health, smoke and dislike exercise, less satisfied with life than others, “homebodies”

7. Hard living hedonist (6%) – heavy smokers, drinkers, drug users, least satisfied with life: “moody, independent”

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1. Develop a list of benefits, motivations, attitudes & behaviours of a product category (focus groups, conversations with product engineers/managers)

2. Run survey and obtain consumer evaluation of these benefits… in terms of their importance to consumers:� 5-point Likert scale for each attribute/question� or a weighing scale: 100 points distributed over the attributes

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3. Make factor-cluster analysis: choose correct number of clusters (based on a statistical criterion and on cluster interpretability)

4. Crosstab clusters with other (e.g. socio-economic or geodemographic) data

5. Profile clusters and give a label/name

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Geographicfactors

Geographicfactors

Demographic factors

Demographic factors

Behavioral factors

Behavioral factors

PersonalFactors

PersonalFactors

Economic factors

Economic factors

Situational factors

Situational factors

Cultural FactorsCultural Factors

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Segments

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Measurable/IdentifiableMeasurable/Identifiable

Accessible/ReachableAccessible/Reachable

SubstantialSubstantial

DifferentialDifferential

• Segments must be large or profitable enough to serve

• Segments can be effectively reached and served

ActionableActionable

• Size, purchasing power, profiles of segments can be measured

• Segments must respond differently to different

marketing mix elements & actions

• Must be able to attract and serve the segments

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� AIO lifestyle study (Activities, Interests, Opinions) => attitude/value maps

� Lifestyle is a cognitive construct consisting of 3 aspects:

1. Human behavior can be explained by cognitive paradigm:

by interpretation of comprehension processes, integration processes, and cognitive structure

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2. Cognitive structures consist of declarative (a) and procedural (b) knowledge,

(a) a system of cognitive categories and their associations: cognitive categories vary in levelof abstraction, associations vary in strength

=> result of life-long learning

(b) a system of scripts that are cognitive representation of a sequence of acts, or motions, or behavior, which is typical for a given task

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3. Behavior is motivated by linking cognitive categories referring to concrete acts or objects to abstract cognitive categories referring to values:

objects in the environment become relevant to a person only to the degree to which they are related to that person’s self-concept, system of goals and values

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Based on theory, a cross-nationalinstrument to measure food-related lifestyle (FRL) was developed by Grunert et al. 1997

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� is an intermediate level construct with a

higher level of abstraction than product-

specific beliefs and attitudes

� not usually suitable to predict individual and

concrete food choices

� but it gives vectors of choice probabilities

between consumer segments

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1. WAYS OF SHOPPING�Importance of

product information

�Attitude to advertising

�Enjoyment from shopping

�Speciality shops�Price criteria�Shopping list

2. QUALITY ASPECTS�Health�Price/quality

relation�Novelty�Organic products�Taste�Freshness

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3. COOKING METHODS

�Interest in cooking�Looking for new

ways�Convenience�Whole family�Planning�Woman’s task

4. CONSUMPTION SITUATION�Snacks versus

meals�Social event

5. PURCHASING MOTIVES• Self-fulfillment in

food•Security•Social relationship

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SEGMENTS in 4 COUNTRIES

� Uninvolved food consumer

� Careless food consumer

� Conservative food consumer

� Rational food consumer

� Adventurous food consumer

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Example:

Study in Denmark for description of consumers with regard to organic

foods

Organic food market: value of 2,5 billion DKK

= 335 million euro (1999)

40* - Means for six organic food products: (potato, egg, milk, rye bread, ice-cream, coffee)

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Uninvolved Power+Tradition 9

Impulsive Hedonism+Achievement 14

Conservative Conformity+Security 20

Traditional Benevolence/Goodwill 20

Eco-healthy Stimulation+Self-direction 43

Adventurous Self-direction+Universalism 42

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When segments are identified a clear communication strategies must be developed

Advertising has to link information about the product to benefit and life values of the target groups

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Eco-healthy -do not like to buy/make food-self-direction

Adventurous -like to buy/make food-novelties-universalism

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� Food, eating and nutrition are shaped by culture

� Cultural comparisons may be complex and problematic, with many conceptual and methodological differences

� A single education program will be inappropriate and unlikely to be effective for all groups of European population

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Attribute importanceAttribute importanceexamples

I PAY ATTENTION TO THE CHOCOLATE’...

• APPEARANCE (A1)• SMELL (A2)• TASTE (A3)• FILLING (A5)• PRICE (A6)• APPEARANCE OF PACKAGE (A7)• COUNTRY OF ORIGIN (A9)• TRADE NAME (A10)• QUALITY MARK (A11)• OPINION OF OTHERS (A13)

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Benefit beliefsBenefit beliefs examples

CONSUMPTION OF CHOCOLATE...• …decreases STRESS (B1)• …quickly provides us in ENERGY (B5)• …enriches body in MAGNESIUM (B8)• …brings feeling of SICKNESS (B12)• …causes GUILTY FEELINGS (B13)• …causes ADDICTION (B14)• …BITTER - brings more PLEASURE (B18)• …BITTER - is rather for GOURMET (B19)• …BITTER - is more EXPENSIVE (B21)

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(WHO AM I?)• I often SNACK with chocolate (P3)• I like to ANALYSE MYSELF (P6)• I often my COMPARE APPEARANCE (P11)• I eat chocolate while BEING WITH FRIENDS (P14)• I would eat ANY chocolate to stop hunger (P18)• I buy only the BEST QUALITY chocolate (P19)• I eat chocolate and I FEEL HEALTHIER (P24)• Concerned VS Unconcerned (P31)• Conservative VS Experimenting (P33)• Weight Careless VS Weight Careful (P35)

Psychological criteriaPsychological criteria

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Sensory-Preference Patterns

(a) Homogeneous(a) Homogeneouspreferencespreferences

SweetnessSweetness

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amin

ess

Cre

amin

ess

(c) Clustered(c) Clusteredpreferencespreferences

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amin

ess

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amin

ess

SweetnessSweetness

(b) Diffused(b) Diffusedpreferencespreferences

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amin

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SweetnessSweetness

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FACTOR LOADING MAIN VARIABLE• X1-TRUST .799 TRADE MARK• X2-PACKAGE .710 PACK. APPEAR.• X3-SENSORY CUES .649 SMELL

• Y1-ANTICIPATION .771 ADDICTION• Y2-FUNCTIONALITY .730 LOWER STRESS

Y3-NUTRITION .715 MAGNESIUM• Y7-SELF-CONSC. .639 FEEL SICKNESS

Step 1: Principal component Step 1: Principal component analysisanalysis

Value referring to maximum correlation between a group of variables

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FACTOR LOADING MAIN VARIABLE• Z1 - PERSONAL CONSC. .874 AUTO-ANALYSIS• Z2 - PUBLIC CONSC. .781 OTHERS IMPORT.• Z3 - CRAVING .703 OFTEN SNACKING• Z4 - HEALTH-REWARD .792 FEEL HEALTHIER• Z5 - SOCIABILITY .745 FRIENDS IMPORT.• Z6 - OPEN-EXPERIMENT. .711 ACTIVE• Z10 - PRICE .477 ECONOMICAL• Z11 - SELF-CONTROL .804 CONTROLLED

Step 1: Principal component Step 1: Principal component analysis_cdanalysis_cd

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� Select Analyze – Data Reduction – Factor –Variables (input variables) – Descriptives –Under Correlation Matrix, check KMO & Bartlet Test – Extraction – Method (principal components) and Analyze (correlation matrix) and Extract (eigenvalues over 1.0) –Continue – Rotation – under method, choose Varimax – Continue – Scores – Save as variables – Continue - OK

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Representation of countries

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50%

100%

Poland 13% 49% 91% 52% 65%

Belgium 87% 51% 9% 48% 35%

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INDEP HEAL INNOV RESTR HEDON

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FACTORS LOADINGS� NOT IMPORTANT PUBLIC OPINION -.463� NOT IMPORTANT PACKAGE -.701� NOT REWARD THEMSELVES -.357� DISBELIEF IN NUTRITION -.470� PREFER BITTER CHOCOLATE .431

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FACTORS LOADINGS

� OPEN & EXPERIMENTING .512� SOCIAL & RISK TAKING .609� DISBELIEF IN ADDICTION -.993� BELIEF IN NUTRITION .571� IMPORTANT PRICE .602� IMPORTANT PACKAGE .561� DO NOT LIKE BITTER CHOCOLATE -.300

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GROUP Independent Innovative

Characteristics -Most self-confident-Fondant most preferred

-Active, open for experience-Value-for-money-Non-conformist

Advertisement focus SAFETY

GUARANTEE

TECHNICALPARAMETERSNOVELTYORIGINALITYPROMO PRICE

STRATEGIC GROUPS

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�Undifferentiated (mass) marketing�Differentiated (segmented)

marketing�Concentrated (niche) marketing�Micromarketing (local or individual)

marketing

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SingleSingle--segmentsegmentconcentrationconcentration

ProductProductspecializationspecialization

M1 M2 M3 P1

P2

P3

SelectiveSelectivespecializationspecialization

M1 M2 M3 P1

P2

P3

M1 M2 M3

Full marketFull marketcoveragecoverage

P1

P2

P3

MarketMarketspecializationspecialization

M1 M2 M3 P1

P2

P3

P1

P2

P3

M1 M2 M3

P = ProductP = ProductM = MarketM = Market

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�Some segments are at special risk:�Children�Inner-city minority consumers�Internet shoppers

�Controversy occurs when the methods used are questionable

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�The place the product occupies in consumers’ minds relative to competing products

�Key objective: to form a particular brand image in consumers’ minds –by developing strategy of marketing mix elements

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� Positioning by attribute� Organic shampoo; soft-mild nature of roll-on NIVEA

deodorant; price/quality attribute(s)

� Positioning by consequence or value� Safety, family values, fun, enjoyment…

� Positioning by product user� Subcultures or reference persons (Bacardi & George Cluney)

� Positioning by product class�Frozen yoghurt repositioned as light ice cream

� Positioning by competitors�Naming the competitor is illegal in many European

countries unless it contains actual facts

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� Visual depiction of consumers’ perceptions of competitive products, brands or models; constructed on the basis of consumer survey

Lesshealthy

Healthier

Snack

Part of a meal

Chocolate bar

Plain yoghurt

Ready-made chocolatemousse

Vanila icecream

Home-made sticky rice

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� Selecting an overall positioning strategy�More for more value proposition�More for the same value proposition�The same for less value proposition...

� Developing a positioning statement�Sumarizes the company/brand positioning�Example: to (target segment & need) our (brand)

is (concept) that (point-of-difference)

� Communicating the chosen position

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1. Identifysegmentationvariables andsegment themarket

2. Develop profiles ofresultingsegments

MarketMarketSegmentationSegmentation

3. Evaluateattractivenessof eachsegment

4. Select thetargetsegment(s)

MarketMarketTargetingTargeting

5. Identifypossible

positioningconcepts foreach target

segment

6. Select,develop, andcommunicate

the chosenpositioning

concept

MarketMarketPositioningPositioning