Description
It shows the basics of market segmentation and related topics.
Market Research And Segmentation
Segmentation –Definition
• Division of a market into homogeneous groups. • Respond differently to promotions, communications, advertising and other marketing mix variables. • Each group, or ?segment,? can be targeted by a different marketing mix .because the segments are created to minimize inherent differences between respondents within each segment and maximize differences between each segment.
Why Use Market Segmentation?
• Easier marketing. It is easier to address the needs of smaller groups of customers, particularly if they have many characteristics in common (e.g. seek the same benefits, same age, gender, etc.). • Find niches. Identify under-served or un-served markets. Using ?niche marketing,? segmentation can allow a new company or new product to target less contested buyers and help a mature product seek new buyers. • Efficient. More efficient use of marketing resources by focusing on the best segments for your offering— product, price, promotion, and place (distribution). Segmentation can help you avoid sending the wrong message or sending your message to the wrong people.
When Do You Use Market Segmentation?
• Big enough. Market must be large enough to warrant segmenting. Don’t try to split a market that is already very small. • Different. Differences must exist between members of the market and these differences must be measurable through traditional data collection approaches (i.e., surveys). • Responsive. Once the market is segmented, you must be able to design marketing communications that address the needs of the desired segments. If you can’t develop promotions and advertising that speak to each segment, there is little value in knowing that those segments exist.
How to Segment a Market
• A priori. A priori segmentation involves dividing a market into segments without the benefit of primary market research. • Some examples
– Heavy versus moderate and light users – Men versus women – Younger versus older users – North versus south regions – Buyers versus non-buyers
Contd….
• Post hoc. Primary market research is used to collect classification and descriptor variables for members of the target market
What Information Used to Segment a Market
• Classification variables Classification variables are used to classify survey respondents into market segments. Almost any demographic, geographic variable can be used to classify people into segments. • Descriptor variables. Descriptors are used to describe each segment and distinguish one group from the others
Real Life Example
The Arizona Lottery
The Arizona Lottery consists of many games of chance - Power ball (a high-jackpot, multi-state draw game), Lotto (a high-jackpot, in-state draw game), Fantasy Five (a lower level jackpot, instate draw game) and Instant Scratcher games. The odds of winning are best with the Instant Scratcher games which have lower payoffs (highest prizes range between $1,000 and $10,000). The odds of winning are greatest for the high jackpot games which have jackpots that routinely reach more than $20 million (for Powerball).
• In 1994, the Lottery saw a slip in sales from $259 million to $249 million with the influx of casinos on the Indian reservations. • In 1995, Powerball was introduced to the State of Arizona and sales increased to record levels ($286 million). • In 1996, however, sales declined to $258 million. • As a result, the Arizona Lottery decided that they should conduct a statewide survey to gain insights into what was happening with Lottery play. The goal of the survey was to define the nature of their target market of customers and identify their motivations for playing Lottery games.
Data Collection
• More than 3,000 Arizona residents age 18 and older were interviewed for this project. • Respondents were contacted through the use of a random digit dial sample of phone numbers across the state. • Residents who were either morally opposed to the lottery, or who felt the state of Arizona would be better off without a lottery, were asked demographic questions only, and screened out of the remainder of the survey.
Contd…….
• Interviewers asked respondents an extensive battery of questions including both attitudinal and behavioral aspects (e.g., frequency of play, types of games played) for both general gaming and the Arizona lottery. • Questions were also asked concerning general attitudes about life, advertising media, and leisure activities. • The survey took approximately 25 minutes to complete and respondents were not paid for their participation.
Steps in a Market Segmentation Analysis
• The data analysis in a market segmentation study employs both factor analysis and cluster analysis. • Factor analysis is used to define factor scores for each individual that describe characteristics that can be used for grouping consumers into homogeneous groups. • Cluster analysis is used to perform the grouping. Once the groups are identified, the groups most likely to have interest in a product are identified and targeted in the marketing plan. We now discuss this general process in more detail.
Contd…..
• In Arizona Lottery example, they conducted a factor analysis of the responses of all 3,084 respondents to a list of 45 statements about their attitudes toward the lottery and general gaming. Respondents were asked to indicate their level of agreement or disagreement (on a 1 to 7 scale) with each of the 45 statements.
The five latent factors identified are listed below.
• Winning the Lottery • Futility of Gambling • The Odds of Winning
• The Effect of Winning on My Life
• The Effect of Winning on Me
Market Segments in the Lottery Study
Thank You
doc_535101202.ppt
It shows the basics of market segmentation and related topics.
Market Research And Segmentation
Segmentation –Definition
• Division of a market into homogeneous groups. • Respond differently to promotions, communications, advertising and other marketing mix variables. • Each group, or ?segment,? can be targeted by a different marketing mix .because the segments are created to minimize inherent differences between respondents within each segment and maximize differences between each segment.
Why Use Market Segmentation?
• Easier marketing. It is easier to address the needs of smaller groups of customers, particularly if they have many characteristics in common (e.g. seek the same benefits, same age, gender, etc.). • Find niches. Identify under-served or un-served markets. Using ?niche marketing,? segmentation can allow a new company or new product to target less contested buyers and help a mature product seek new buyers. • Efficient. More efficient use of marketing resources by focusing on the best segments for your offering— product, price, promotion, and place (distribution). Segmentation can help you avoid sending the wrong message or sending your message to the wrong people.
When Do You Use Market Segmentation?
• Big enough. Market must be large enough to warrant segmenting. Don’t try to split a market that is already very small. • Different. Differences must exist between members of the market and these differences must be measurable through traditional data collection approaches (i.e., surveys). • Responsive. Once the market is segmented, you must be able to design marketing communications that address the needs of the desired segments. If you can’t develop promotions and advertising that speak to each segment, there is little value in knowing that those segments exist.
How to Segment a Market
• A priori. A priori segmentation involves dividing a market into segments without the benefit of primary market research. • Some examples
– Heavy versus moderate and light users – Men versus women – Younger versus older users – North versus south regions – Buyers versus non-buyers
Contd….
• Post hoc. Primary market research is used to collect classification and descriptor variables for members of the target market
What Information Used to Segment a Market
• Classification variables Classification variables are used to classify survey respondents into market segments. Almost any demographic, geographic variable can be used to classify people into segments. • Descriptor variables. Descriptors are used to describe each segment and distinguish one group from the others
Real Life Example
The Arizona Lottery
The Arizona Lottery consists of many games of chance - Power ball (a high-jackpot, multi-state draw game), Lotto (a high-jackpot, in-state draw game), Fantasy Five (a lower level jackpot, instate draw game) and Instant Scratcher games. The odds of winning are best with the Instant Scratcher games which have lower payoffs (highest prizes range between $1,000 and $10,000). The odds of winning are greatest for the high jackpot games which have jackpots that routinely reach more than $20 million (for Powerball).
• In 1994, the Lottery saw a slip in sales from $259 million to $249 million with the influx of casinos on the Indian reservations. • In 1995, Powerball was introduced to the State of Arizona and sales increased to record levels ($286 million). • In 1996, however, sales declined to $258 million. • As a result, the Arizona Lottery decided that they should conduct a statewide survey to gain insights into what was happening with Lottery play. The goal of the survey was to define the nature of their target market of customers and identify their motivations for playing Lottery games.
Data Collection
• More than 3,000 Arizona residents age 18 and older were interviewed for this project. • Respondents were contacted through the use of a random digit dial sample of phone numbers across the state. • Residents who were either morally opposed to the lottery, or who felt the state of Arizona would be better off without a lottery, were asked demographic questions only, and screened out of the remainder of the survey.
Contd…….
• Interviewers asked respondents an extensive battery of questions including both attitudinal and behavioral aspects (e.g., frequency of play, types of games played) for both general gaming and the Arizona lottery. • Questions were also asked concerning general attitudes about life, advertising media, and leisure activities. • The survey took approximately 25 minutes to complete and respondents were not paid for their participation.
Steps in a Market Segmentation Analysis
• The data analysis in a market segmentation study employs both factor analysis and cluster analysis. • Factor analysis is used to define factor scores for each individual that describe characteristics that can be used for grouping consumers into homogeneous groups. • Cluster analysis is used to perform the grouping. Once the groups are identified, the groups most likely to have interest in a product are identified and targeted in the marketing plan. We now discuss this general process in more detail.
Contd…..
• In Arizona Lottery example, they conducted a factor analysis of the responses of all 3,084 respondents to a list of 45 statements about their attitudes toward the lottery and general gaming. Respondents were asked to indicate their level of agreement or disagreement (on a 1 to 7 scale) with each of the 45 statements.
The five latent factors identified are listed below.
• Winning the Lottery • Futility of Gambling • The Odds of Winning
• The Effect of Winning on My Life
• The Effect of Winning on Me
Market Segments in the Lottery Study
Thank You
doc_535101202.ppt