Marketing Management Reconsideration - KEDGE Bordeaux - Session #3 PDF

MARKETING MANAGEMENT RECONSIDERED SESSION 3 SEGMENTATION & TARGETING HOW TO IMPLEMENT AN INCLUSIVE AND SUSTAINABLE SEGMENTATION AND TARGETING STRATEGY? YANNICK LE GENISSEL SESSIONS AND GROUP PROJECTS PROGRESS ACCORDING TO THE LOGIC OF THE MARKETING STRATEGY Session Date...

MARKETING MANAGEMENT RECONSIDERED SESSION 3 SEGMENTATION & TARGETING HOW TO IMPLEMENT AN INCLUSIVE AND SUSTAINABLE SEGMENTATION AND TARGETING STRATEGY? YANNICK LE GENISSEL SESSIONS AND GROUP PROJECTS PROGRESS ACCORDING TO THE LOGIC OF THE MARKETING STRATEGY Session Date Course theme Workshop theme S1 Thursday, October 3 Introduction to marketing management in a constrained world Project definition & context analysis S2 Tuesday, October 15 Brand management: How to manage a brand sustainably? Brand image/identity analysis & context analysis Segmentation & Targeting: How to implement an inclusive and S3 Thursday, October 17 sustainable segmentation and targeting strategy? Building segmentation & assessing the segments Positioning: How to design an inclusive and sustainable S4 Friday, October 18 positioning? Setting up targeting and positioning Intermediary report submission (Oct 20) - WIP meetings (Oct 22) S5 Tuesday, October 22 Mix Product: designing a sustainable offer Implementing the positioning in the product mix S6 Wednesday, October 23 Mix Price: implementing a responsible pricing strategy Implementing the positioning in the pricing mix Mix Distribution: designing an inclusive and sustainable S7 November 4 or 7 distribution strategy Implementing the positioning in the distribution mix Mix Communication: implementing a responsible communication S8 November 7 or 8 strategy Implementing the positioning in the communication mix S9 End of Nov / Beg; of Dec Final individual exam (quiz) Finalizing the group project and preparing for presentations S10 Thursday, December 12 Final presentations of group projects MARKETING MANAGEMENT RECONSIDERED | S1: Introduction to marketing management in a constrained world 2 S 3.1. SEGMENTATION PRINCIPLES S 3.2. DESIGNING SEGMENTATION IN AN INCLUSIVE WAY S 3.3. TARGETING STRATEGIES S 3.4. CONSUMER PROFILES FOR SUSTAINABLE OFFERINGS MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 3 WHAT IS SEGMENTATION? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 4 SEGMENTATION DEFINITION Segmenting a market means dividing it into distinct groups… …but groups of what? Product segmentation Groups of products ≠ Customer segmentation Groups of people Powered by Midjourney MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 5  SEGMENTATION DEFINITION Segmentation Dividing intro groups ≠ Targeting Choosing the group(s) Powered by Midjourney MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 6 WHAT IS CUSTOMER SEGMENTATION? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 7 SEGMENTATION IS AN ANSWER TO A MARKETING DILEMMA Each consumer is a unique individual who should be treated in a unique way But… …the more production costs rise, the more demand falls The more each consumer is treated uniquely... MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 8  CUSTOMER SEGMENTATION DEFINITION Customer segmentation consists in dividing a market into distinct groups of customers, based on one or more criteria, with similar ways of thinking or acting, and who could potentially be the target of a specific marketing policy. Principle of homogeneity The individuals within any given segment must be the most similar to each other Principle of heterogeneity These segments must be the most different from each other Source: De Baynast, A., Lendrevie, J., & Lévy, J. (2021). Mercator 13th ed. MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 9  TWO APPROACHES FOR CUSTOMER SEGMENTATION Bottom-up approach: typology or clustering Top-down approach: predefined criteria a statistics-based approach using multiple data on the population under study, 1. Marketing managers select the criteria they we carry out a statistical analysis to try to find consider relevant to their market, based on their homogeneous groups and then identify the knowledge and vision of the market corresponding differentiating criteria 2. Questionnaire surveys are used to quantify the population of each group thus defined Source: https://pypr.sourceforge.net/kmeans.html MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 10 S 3.1. SEGMENTATION PRINCIPLES S 3.2. DESIGNING SEGMENTATION IN AN INCLUSIVE WAY S 3.3. TARGETING STRATEGIES S 3.4. CONSUMER PROFILES FOR SUSTAINABLE OFFERINGS MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 11 TYPE 1 CRITERIA DEMOGRAPHIC, GEOGRAPHIC, SOCIAL AND ECONOMIC MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 12  AGE Age or generation? Boomers 1946-1965 X generation 1965-1980 “Baby bust” Y generation 1980- 2000 “Millenials” – “Digital natives” Z generation 2000-2010 Alpha generation 2010-… MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 13  GENDER Man / woman… Gender stereotype? Man and women… only? How to define gender? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 14  PHYSICAL CHARACTERISTICS Size Hair type & color Skin type & color … But… Be careful of discrimination! Be inclusive! MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 15  FAMILY COMPOSITION Single Divorced In couple With kids With teens …  Also consistent with “life moment” (e.g., newly weds, waiting for a child, fresh parents) MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 16  GEOGRAPHIC Worldwide: Europe, North America, Asia National: Paris area, North, south-west, south-east, City size Area type: urban, country-side… Climate: hot, cold, tempered Again… Think inclusive! MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 17  INCOMES Income ranges Socio-professional category Executive / non-executive / employee Private or public sector employee … But what about the “bottom of the pyramid”? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 18  RELIGIOUS FAITHS AND ETHNIC GROUPS? Criteria not yet widespread in France because of the universalist culture, but more prevalent in North America, for example. Here too, beware of discrimination, use with caution, but may be relevant in certain markets (e.g., Halal). MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 19 TYPE 2 CRITERIA PERSONALITY AND LIFESTYLE MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 20  PERSONALITY There are several approaches to personality traits, but they are often a variation on the "big five".  The literature struggles to demonstrate the real relevance of personality traits as segmentation criteria... MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 21  LIFESTYLE Groups of individuals who share the same opinions, behaviors and values, which go some way to explaining their purchasing behavior. e.g., boardsports enthusiasts MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 22  LIFESTYLE MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 23 LIFESTYLE 24 TYPE 3 CRITERIA BEHAVIORAL MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 25  USER STATUS user loyalty status purchased quantities « RFM » model « Récense » = last purchase date « Fréquence » = Frequency « Montant » = amount Innovation adoption profile: early adopter, early majority, late majority, laggard. MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 26  CONSUMPTION PATTERN Business or personal purchase? Level of involvement with the product … MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 27  SITUATION OF USE Consumption on the move, at home or in the office … MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 28  SITUATION OF USE Cadbury’s Market Segments: spot the criteria Immediate eat (34%) ‘Have a break, have a Kit Kat…’ Home stock (25%) Dairy Milk, large bags of Maltesers… Kids (17%) Cadbury’s Buttons… Seasonal (9%) – Easter eggs, Xmas… Gift (15%) – Roses, Quality Street… MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 29  SITUATION OF USE Cadbury’s Market Segments: spot the criteria MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 30  SITUATION OF USE Cadbury’s Market Segments: spot the criteria MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 31 TYPE 4 CRITERIA NEEDS / WANTS / EXPECTED BENEFITS MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 32 NEEDS / WANTS / EXPECTED BENEFITS -> THE BASES The customer segmentation criterion based on the expected benefit by the consumer e.g.: the toothpaste market MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 33 MULTI-CRITERIA SEGMENTATION MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 34  AN EXAMPLE OF SHAMPOO CONSUMERS Gender x 3 (Man, Woman, other) Hair length x 6 (Bald, very short, short, medium, long, very long) Hair type x 3 (oily, balanced, dry) Hair appearance x 3 (straight, wavy, curly) Dandruff problems x 2 (yes or no) Hair fragility x 2 (yes or no) Hair color x 10 (white, grey, red, auburn, blond, light chestnut, chesnut, dark chestnut, brown, black) Hair volume x 3 (thin, medium, thick)  3 x 6 x 3 x 3 x 2 x 2 x 10 x 3 = 19 440 possible segments  Reduce and deepen the segments studied MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 35  AN EXAMPLE OF SHAMPOO CONSUMERS Gender x 3 (Man, Woman, other) Hair length x 6 (Bald, very short, short, medium, long, very long) Hair type x 3 (oily, balanced, dry) Hair appearance x 3 (straight, wavy, curly) Dandruff problems x 2 (yes or no) Hair fragility x 2 (yes or no) Hair color x 10 (white, grey, red, auburn, blond, light chestnut, chesnut, dark chestnut, brown, black) Hair volume x 3 (thin, medium, thick)  Focus on curly hair  Deepen the expected benefits of people with curly hair MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 36 SEGMENTATION, TOLERANCE AND INCLUSIVITY MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 37 HOW TO BUILD QUALITY SEGMENTATION? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 38  QUALITIES OF A GOOD SEGMENTATION Relevant e.g.: how relevant is it to segment by person size for a shampoo? Discriminatory Should lead to the identification of different behaviors/motivation. Measurable Its size and potential must be assessable. Substantial Its size must be significant. (The segment must be profitable.(?)  see social innovation Powered by Midjourney part below) MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 39  1. The descriptive segmentation process Steps of the descriptive segmentation process are as follows: ✓ Identifying the most important descriptors that will describe the individual segments ✓ Describing segments using additional secondary descriptors ✓ Creating detailed customer profile of each segment based on their specific needs MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 40  A concrete example: ski resort (observable characteristics first) 1. Main descriptor 2. Secondary descriptors 3. Needs/ Wants / Benefits MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 41  2. The bases segmentation process Steps of the bases segmentation process are as follows: ✓ Identifying the needs/wants/benefits sought/demand and assessment of the importance of primary benefit(s) to the individual segments ✓ Building segments based on the primary needs/wants/benefits sought/demand ✓ Creating a detailed customer profile of each segment based on observable variables MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 42  A concrete example: tooth paste market (expected benefits first) 1. Needs/ Wants / Benefits 2. Descriptors 43 CUSTOMER SEGMENTATION VS. PERSONÆ MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 44  CUSTOMER SEGMENTATION VS. PERSONÆ Customers’ market Segmentation Personæ MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 45  PERSONÆ DEFINITION A persona is an imaginary person illustrating and representing a typical user segment, whose profile, role, behavior and psychological variables (involvement, motivation, obstacles, etc.) are described in concrete terms. A persona embodies a marketing segment obtained through the segmentation process. MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 46 S 3.1. SEGMENTATION PRINCIPLES S 3.2. DESIGNING SEGMENTATION IN AN INCLUSIVE WAY S 3.3. TARGETING STRATEGIES S 3.4. CONSUMER PROFILES FOR SUSTAINABLE OFFERINGS MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 47 WHAT IS TARGETING? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 48  TARGETING MEANS CHOOSING AND ABANDONING Market customers Segmentation Targeting        MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 49 HOW TO CHOOSE THE RIGHT SEGMENT(S)? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 50  SEGMENT ASSESSMENT – STEP #1 SWOT analysis of each segments MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 51  SEGMENT ASSESSMENT – STEP #2 Attractiveness of the segment Company resources = strengths  Use strength / attractiveness matrix MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 52  STRENGTH / ATTRACTIVENESS MATRIX 1. Assessment of attractiveness of each segment 3 kinds of criteria to be used: 1. Segment Size and Growth Right size and growth 2. Segment Structural Attractiveness Current strong and aggressive competitors The existence of many actual or potential substitute products 3. Affinity with your product Affinity with technology, access to technology, etc. 53 Price sensitivity 53  STRENGTH / ATTRACTIVENESS MATRIX 1. Assessment of attractiveness of each segment  Assessment of each segment on specific criteria, scale from 1 to 5  Define the importance of each criteria by choosing a weight for each of them (1 to 5) Criteria Segment 1 Segment 2 … Segment X Criteria #1 Criteria #2 Criteria #3 … Criteria #X 54 TOTAL SCORE 54  STRENGTH / ATTRACTIVENESS MATRIX 1. Assessment of attractiveness of each segment  Example: Criteria Coefficient Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment size 3 3 2 4 1 3 Growth dynamics of the 2 2 2 4 1 5 segment Profitability of the 5 1 2 3 2 4 segment Competition 3 4 1 5 1 5 Price sensitivity 1 3 1 4 1 5 55 WEIGHTED SCORE 33 24 54 19 59 55  STRENGTH / ATTRACTIVENESS MATRIX 2. Assessment of company strengths of each segment 3 kinds of criteria to be used: 1. Brand recognition Brand awareness, consumer-based brand equity 2. Brand implementation in the market Market share Access to the channels of distribution where the segmented customers buy 3. Product adequation with the segment needs Available technology, features, etc. 56 56  STRENGTH / ATTRACTIVENESS MATRIX 2. Assessment of company strengths on each segment  Assessment of each segment on specific criteria, scale from 1 to 5  Define the importance of each criteria by choosing a weight for each of them (1 to 5) Criteria Segment 1 Segment 2 … Segment X Criteria #1 Criteria #2 Criteria #3 … Criteria #X 57 TOTAL SCORE 57  STRENGTH / ATTRACTIVENESS MATRIX 2. Assessment of company strengths on each segment  Example Criteria Coefficient Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Brand reputation 4 3 2 4 1 3 Market share 5 2 2 4 1 5 Channel access 2 1 2 3 2 4 Technology fitting with 1 4 1 5 1 5 segment needs Product features fitting 3 3 1 4 1 5 with segment needs 58 WEIGHTED SCORE 37 26 59 17 65 58  STRENGTH / ATTRACTIVENESS MATRIX 3. Synthesis  Summary of scores in a graphical matrix High Segment Targeted 5 segments Segment 3 Attractiveness Segment Segment 1 2 Segment 4 59 Low Strengths High (Competitive advantages) 59 WHAT TARGETING STRATEGY TO ADOPT? MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 60  CHOOSE YOUR TARGETING STRATEGY The whole Several One segment Individuals market segments only Mass market Customization 61 61  CHOOSE YOUR TARGETING STRATEGY Most Most effective efficient Segment 1 Segment 2 Segment 3 Many groups One mass market 62  TARGETING STRATEGY Undifferentiated marketing  One only mix for the whole market (all segments) “Any color the customer wants, as long as it's black.” Henry Ford, 1919 ADVANTAGES DRAWBACKS Economies of scale thanks to Competitors attack by better the quantities produced meeting certain specific (research and development, needs advertising, distribution, etc.) 63 Attractive price / quality ratio 63  TARGETING STRATEGY Differentiated marketing  Several segments targeted, with an adaptation of the offer to each segment ADVANTAGES DRAWBACKS Satisfies the targeted Maximizes marketing, segments well. production and R & D costs Allows a price policy Makes positioning choices according to the segments and brand policy more Maximize market share complex. 64 Reduces risks 64  TARGETING STRATEGY Concentrated marketing  Selection of one particular segment ADVANTAGES DRAWBACKS Economies of scale thanks to Risk of sudden drop in the specialization. demand Excellent knowledge of the Arrival of a much more targeted segment powerful competitor on the Facilitates positioning as segment. 65 specialist Facilitates leadership on the segment 65  TARGETING STRATEGY Personalized marketing (one-to-one)  Each customer is unique 66 66 S 3.1. SEGMENTATION PRINCIPLES S 3.2. DESIGNING SEGMENTATION IN AN INCLUSIVE WAY S 3.3. TARGETING STRATEGIES S 3.4. CONSUMER PROFILES FOR SUSTAINABLE OFFERINGS MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 67  A SOCIAL APPROACH OF BUSINESS Social Mission FOR beneficiaries WITH beneficiaries (Beneficiaries are solely recipient) (Beneficiaries are part of value creation process) A B Two-sided value model Market-oriented work model Differentiated A sufficiently large base of regular-paying customers cross-subsidizes the A sufficiently large base of regular-paying customers cross- social mission, aimed at other beneficiaries, who are sole recipients of a subsidizes the social mission, aimed at other beneficiaries, who (commercial revenue product or service. “buy one, give one” model. are integrated into the value chain and thus participate in the cross-subsidies social creation of the offer. mission) E.g., for every pair of shoes sold, TOMS gives a pair of shoes to a child in need E.g., Meet My Mama is a corporate catering service whose in more than 85 countries. In 2020, 100 million shoes were donated in this mission is to integrate migrant women into the world of work by Economic way promoting their culinary talents. mission C D One-sided value model Social-oriented work model Integrated The economic activity produces social value, as the beneficiaries are the In addition to quadrant C, where beneficiaries are not only the paying customers. This model is often found in emerging market economies, paying customers but also gain employment in the social (beneficiaries are where companies find innovative ways to minimize the cost of production venture. paying customers) and delivery to sell affordable goods or services to those in need. E.g., VisionSpring not only sells eyeglasses to the poor but also E.g., VisionSpring markets low-priced eyewear to the 2.7 billion people in the offers paid employment to them to distribute and sell the glasses world who cannot afford them. in their rural villages Source: Adapted from Saebi, T., Foss, N. J., & Linder, S. (2019). Social Entrepreneurship Research: Past Achievements and Future Promises. Journal of Management, 45(1), 70–95 MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 68  #3 – SEGMENTATION MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 69  WORKSHOP #3 1. Build the multi-criteria segmentation chart of your market, integrating inclusivity & sustainability approaches. Use the hierarchical approach detailed below. 2. Assess the segments you identified thanks to the SWOT analysis & strength / attractiveness matrix 3. Make personae of targeted segments REMINDER: first draft report due by October 20th Word document in PDF format with: - Full diagnosis (market + company) - New product-service system idea -> show economic / social / environmental benefits of your new offer - Segmentation & targeting strategy - Positioning strategy (see tomorrow) Powered by Midjourney Email address: [email protected] MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 70 THANK YOU!  BIBLIOGRAPHY De Baynast, A., Lendrevie, J., & Lévy, J. (2021). Mercator: Tout le marketing à l’ère de la data et du digital. Dunod. Dekhili, S., Merle, A., & Ochs, A. (2021). Marketing durable. Pearson. GreenFlex – Ademe (2023). Baromètre de la consommation responsable. Kantar (2022). Experience Graduate. L’ObSoCo/Citeo (2023). Observatoire de la consommation responsable. Kotler, P., Keller, K. L., Manceau, D., & Hemonnet, A. (2019). Marketing management (16e éd). Pearson. Saebi, T., Foss, N. J., & Linder, S. (2019). Social Entrepreneurship Research: Past Achievements and Future Promises. Journal of Management, 45(1), 70–95. Volle, P., & Schouten, J. W. (2022). Marketing plus durable. De Boeck supérieur. Wiki AFM - https://marketingpourunesocieteresponsable.org/ MARKETING MANAGEMENT RECONSIDERED | S3: Segmentation & Targeting 72