Report G: Customer Groups

BUS 5001 Contemporary Business

We shall be looking at:

1 Segmentation strategy2 New developments in segmentation3 Brand Value

Report Outcome One: Segments addressed and

segmentation strategy

What is segmentation?

Market segmentation involves dividing large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs.

Kotler

Segmentation techniques

Segmentation techniques

i. Demographicii. Geographiciii. Geodemographiciv. Psychographicv. Behaviouralvi. Usagevii. Customer Benefitviii. Loyaltyix. Buyer Readinessx. Adoption Model

Targeting Options:Undifferentiated

Supplier

Segment 1

Segment 2

Segment 3

Segment 4

Segment 5

One product / brand for all customer segments

Targeting Options:Differentiated

Supplier

Segment 1

Segment 2

Segment 3

Segment 4

Segment 5

Differentiated products for targeted segments

Targeting Options:Focused

Supplier

Segment 1

Segment 2

Segment 3

Segment 4

Segment 5

Single product / brand for a single segment

Targeting Options:One-to-one

Supplier

Modified marketing mix for each individual customer (Customisation / Individualisation / ‘Mass Customisation’)

Report Outcomes One and Three: New ideas in customer

segmentation

Socio-Economic Groups

A: ‘Upper Middle Class’Higher managerial, administrative and professional

B: ‘Middle Class’Intermediate managerial, administrative and professional

C1: ‘Lower Middle Class’Supervisory or clerical, junior managerial, administrative and professional

C2: ‘Skilled Working Class’Skilled manual workers

D: ‘ Working Class’Semi-skilled or unskilled manual workers

E: SubsistencePensioner, widowed, casual and lowest grade workers

The Family Life Cycle

Young singles Few financial burdens. Focus on recreation

Young married Financially strong. Focus on home.

Full Nest: Young couple, child < 6yrs Financially burdened. Credit users, child focused.

Full Nest: Young couple, child > 6yrs Financially stronger. Child focus.

Full Nest: Older couple, dependent child Better financial position. School focus.

Empty Nest: Children left home, working Financially strong. Focus on travel & leisure

Empty Nest: Children left home, retired Financially weaker. Focus on health.

Solitary survivor Reduced spending. Focus on health, hobbies, care.

A classification of Residential Neighbourhoods (http://www.caci.co.uk)

‘Wealthy Achievers’ Affluent suburbs, achievers, prosperous retirement areas

25% of UK households

‘Urban Prosperity’ Affluent professionals 11% of UK households

‘Comfortably Off’ ‘Starters’, secure and settled families, prudent pensioners

26% of UK households

‘Moderate Means’ Older families, ethnic communities, ‘blue collar roots’

15% of UK households

‘Hard Pressed’ Council housing, inner city, high unemployment

23% of UK households

A new look at segmentation

Generations X, Y and Z

VeteransBorn prior to 1946. Tend to be disciplined, respect law and order and they like consistency. This generation is not comfortable with change. They have fixed views on the role of each gender, and in the workplace are comfortable with a directive, command and control management style.

Baby Boomers Born between 1946 and 1964. The largest population of any generation. Open-minded and rebellious youth, but more conservative in their 30’s and 40’s. Job status and social standing conscious.Tend to be optimistic, ambitious, and loyal, and believe that employment is for life.

Generation XBorn between 1965 and 1979. Exposed to daycare and divorce.Well-educated , many having tertiary qualifications.Resourceful, individualistic, self reliant and sceptical of authority.Focused on relationships, their rights and skills. Tend to change jobs and careers.

Generation YBorn between 1980 and 1995 (Millennium or Net Generation.)Very technology wise and are comfortable with ethnically diverse groups. Optimistic, confident, sociable, and have strong morals and a sense of civic duty.Not brand loyal , flexible, style consciousness, likely to change employers.

Generation ZBorn after 1995. (Digital Natives)Used to instant action and satisfaction.Children of Generation X and are born into smaller families with older mums.Communication is mainly through online communities and social media – join large scale online groups.May not perform well in public speaking.

Tribal marketing:

THE TIME OF THE TRIBES

(POSTMODERN) TRIBES

A tribe, in the postmodern sense of the term, is a group of individuals • who are not necessarily homogenous (in terms of objective social characteristics),

• but are inter-linked by the same subjectivity, the same passion,

• and capable of taking collective action, short-lived but intense.

“Brand Tribe: A group of people who share their interest in a specific brand and create a parallel social universe ripe with its own values, rituals, vocabulary and hierarchy”

Wipperfürth, 2005

BRAND TRIBES/COMMUNITIES

DIFFICULT TO IDENTIFY“Tribes are not easy to identify.

They are fuzzy: more societal sparkles than socioeconomic certainty.

They are shifting aggregations of emotionally bonded people, open systems to which a person belongs and yet doesn't

quite belong.

Their underlying logic is made up of shared experience, interpretations and

representations”

Le Quéau, 1998

From segments of consumers

With feedback effect

• Consumer• Client• User• Buyer

• Members• Fanatics• Adepts• Connoisseurs• ....• ....

To tribes of enthusiasts

THE LOGIC OF TRIBAL MARKETING

• Focus on customer-company relationship

• The company as a pole of the relationship

• Loyalty cards, bulletin boards…

• Mainly cognitive loyalty

Individualistic approach to consumer loyalty

Tribal approach to consumer loyalty

• Focus on customer-customer relationship

• The company as a support of the relationship

• Rituals, brandfests, sacred places…

• Mainly affective loyalty

TRIBAL LOYALTY

It can go wrong…

This who Burberry would like their customers to be…

It can go wrong…

But this is who the brand has become associated with…

Report Outcome Three: Identifying new market segments

Ethnic Minority Segments

http://www.hispanic-advertising-agency.com/

Only 5% of ads on UK TV in 2010 featured actors from ethnic

minority backgrounds

LGBT Segments

Identifying International Market Segments

http://www.gapminder.org/labshttp://www.oecd.org/statistics/

http://www.imf.org/external

http://www.guardian.co.uk/global-development/datablog/2012/nov/09/developing-economies-overtake-west-2050-oecd-forecasts?intcmp=239#data

Report Outcome Two: Brand Value

Definitions of ‘brand value’ or ‘brand equity’

“A brand has positive customer-based brand equity when consumers react more favourably to a product and the way it is marketed when the brand is identified than when it is not”. Keller (2008)

“The set of assets and liabilities linked to a brand’s name and symbol that adds to or subtracts from the value provided by a product or service to a firm and/or that firm’s customers” Aaker (1996)

How is brand value measured?

In the mind of the customer

In market performance

In shareholder value

In the mind of the customer:• Awareness

– Brand recall and recognition

• Associations– Brand benefits and uniqueness

• Attitudes– Perceptions of quality and satisfaction

• Attachment– Brand loyalty

• Activity– Purchase, information search, word-of-mouth

In market performance:

• Price premiums• Price elasticities

– Inelastic to increase, elastic to decreases• Market share• Expansion success

– Success in line and brand extensions• Cost structure

– Ability to save in marketing costs• Profitability

In shareholder value:

• Stock price• Price to Earnings multiple

– Market price of share divided by the annual Earnings per Share

• Market capitalisation– Total value of all shares outstanding

Brand evaluation consultants:

http://bavconsulting.com/

http://www.wpp.com/wpp/marketing/brand

Sources:

Aaker, D., 1996. Building Strong Brands, Free Press

Keller, K.L., 2008. Strategic Brand Management. Pearson Press