Segmentation and Targeting See Harvard Note on “Segmentation and Targeting” ( 8219-HTM-ENG)
Overview • Segmentation: A Definition • Why Segmentation is important • Segmentation Criteria • Types of Segmentation • How to Segment, Process of Segmentation • Who, What and Why? • Segment Attractiveness Criteria • Cluster Analysis Methodology • Summary
What is Segmentation? 4
Segmentation is the separation of customers with differing needs into smaller groups with similar needs. B 1 B 2 B 3 B 4 B 5 B 6 B 7 B 8 B 9 B 10 B 1 B 2 B 3 B 4 B 5 B 6 B 7 B 8 B 9 B 10
Examples: How Pasta Sauces and Coffee Markets were Transformed by Segmentation 6
Example: Characteristics of Hypertension Patients Based on Medication Adherence Least Adheren t Skeptica l (17%) Resigne d (15%) Moderat ely Adheren t Confuse d (10%) Concern ed (22%) Most Adheren t Confide nt (12%) Proactiv e (24%) Source: Adapted from exhibit from “Getting Patients to Take Their Medicine,” June 2006, McKinsey & Company. Reprinted in Marketing Reading: Segmentation and Targeting ; Sunil Gupta, Harvard Business School Press, Jun 27, 2014
Why Segment? 8
Benefits of Segmentation Company • Need identification • Product design • Better focus and use of ad dollars • Customer satisfaction Customer • Convenience and time savings • Tailored products and services • Relevant offers • Personalized experiences Source: Marketing Reading: Segmentation and Targeting ; Sunil Gupta, Harvard Business School Press, Jun 27, 2014
Segmentation helps companies identify consumers’ varying needs 10 Distracted Providers 32.00% Healthy Spenders 20.00% Pennywise Minimalists 12.00% Devoted Indulgers 20.00% Healthy Thrifters 16.00% Totally committed to their cat. This segment expresses their devotion thru healthy choices, but with a thrifter’s budget. Distracted by juggling all of life’s demands, these owners provide all the health and wellness necessities, but are less emotionally invested in the cat. Totally committed to their cat. This segment expresses their devotion thru healthy choices, e.g., cat food with clean, high quality ingredients. And, they often spend for super premium foods. Nothing but the best for this cat! Pennywise and value focused, these cat owners make a minimal effort when it comes to their cat. They find the least expensive food the cat will eat and that is what they serve – no concern for nutrition or ingredients. Their cat is their trusted companion. Emotionally devoted , they love to indulge their cat with food and treats they love to eat.
Customer Needs & Customer Identity MBM6 Chapter 5 Segmentation helps in product design Häagen-Dazs in France Tide in India
Segmentation can lead to better focus for marketing and advertising dollars ?
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- Marketing, Sunil Gupta, Harvard Business School Press, Nielsen Segmentation