SEGMENTATION
INTERNET MARKETING 15.823
PROF. GLEN L. URBAN
SPRING 2001
OUTLINE
• REVIEW OF SEGMENTATION
– BASES
– METHODS
• LEVELS OF SEGMENTATION
– GLOBAL
– LOCAL
– ONE TO ONE --PERSONALIZATION
• CONSUMER RELATIONSHIP
MANAGEMENT
WHY SEGMENT MARKETS
WHY SEGMENT
• Preference Heterogeneity
• Balance Versus Costs
– Variety versus Production
• INTERNET -- Some Costs Down
– communicate individually
– Interface customization
• Some Costs not Changed
– Physical Production/Inventory
– Software -- Service Design
DECISION
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Segment or Not? Low Cost or Custom
Basis of Segmentation -- Many Choices
Level of Segmentation -- Big Enough
Common versus Segment Attributes -Product/Service or Communication
On Line Trading
• eTrade?
• MLPFS
• Bridge Trader
TRADITIONAL BASES OF
SEGMENTATION
• Demographics
• Attitudes -- Psychographics
• Preferences
– products - like similar things
– attribute importances -- benefit segmentation
• Uses -- Intensity (Heavy/Light)
TOP
LEFT
SIDE
FRONT
VIEW
RIGHT
SIDE
EXAMPLES
• PRIZM
• VALS
PRIZM
USA census
1000 measures -- 34 factors -- 5 domains
education and affluence
family life cycle
mobility
ethnicity
housing stock & urban
cluster ZIP areas
12 and 40 cluster
link to other zip data
consumption
PRIZM
THE 1980 ZIP CLUSTER MODEL
TWELVE ZIP-CLUSTER GROUPS, IN DESCENDING ZQ RANK
Group Codes
Group Titles
S1
Educated, Affluent Executives & Professionals in Elite Metro Suburbs
S2
Pre & Post-Child Families & Singles In Upscale, White-Collar Suburbs
S3
Upper-Middle, Child-Raising Families In Outlying, Owner-Occupied Suburbs
U1
Educated, White-Collar Singles & Ethnics in Upscale, Urban Areas
T1
Educated, Young, Mobile Families In Exurban Satellites & Boom Towns
S4
Middle-Class, Post-Child Families In Aging Suburbs & Retirement Areas
T2
Mid-Class, Child-Raising, Blue-Collar Families In Remote Suburbs & Towns
U2
Mid-Class Immigrants & Minorities In Dense, Urban Row & Hi-Rise Areas
R1
Rural Towns & Villages Amidst Farms & Ranches Across Agrarian Mid-America
T3
Mixed Gentry & Blue-Collar Labor In Lo-Mid Rustic, Mill & Factory Towns
R2
Mixed Whites, Blacks, Spanish & Indians In Poor Rural Towns & Farms
U3
Mixed Blacks, Spanish & Immigrants In Aging, Urban Row & Hi-Rise Areas
43 LIFE STYLE QUESTIONS
• My idea of fun at a national park would be
to stay at an expensive lodge and dress up
for dinner
• I could stand to skin a dead animal
• 1 to 7 agree --disagree scales
• cluster
• describe average person in cluster
Actualizers. These consumers have the highest incomes and such high self-esteem and abundant resources
that they can indulge in any or all self-orientations. They are located above the rectangle. Image is
important to them as an expression of their taste, independence, and character. Their consumer choices are
directed toward the finer things in life.
Fulfilleds. These consumers are the high resource group of those who are principle-oriented. They are
mature, responsible, well-educated professionals. Their leisure activities center on their homes, but they
are well-informed about what goes on in the world and they are open to new ideas and social change. They
have high incomes but are practical consumers.
Believers. These consumers are the low resource group of those who are principle-oriented. They are
conservative and predictable consumers who favor American products and established brands. Their lives
are centered on family, church, community, and the nation. They have modest incomes.
Achievers. These consumers are the high-resource group of those who are status-oriented. They are
successful, work-oriented people who get their satisfaction from their jobs and families. They are
politically conservative and respect authority and the status quo. They favor established products and
services that show off their success to their peers.
Strivers. These consumers are the low-resource group of those who are status-oriented. They have values
very similar to Achievers but have fewer economic, social, and psychological resources. Style is extremely
important to them as they strive to emulate people they admire and wish to be like.
Experiencers. These consumers are the high-resource group of those who are action-oriented. They are
the youngest of all the segments with a median age of 25. They have a lot of energy, which they pour into
physical exercise and social activities. They are avid consumers, spending heavily on clothing, fast foods,
music, and other youthful favorites—with particular emphasis on new products and services.
Makers. These consumers are the low resource group of those who are action-oriented. They are pratical
people who value self-sufficiency. They are focused on the familiar—family, work, and phyusical
recreation—and have little interest in the broader world. As consumers, they appreciate practical and
functional products.
Strugglers. These consumers have the lowest incomes. They have too few resources to be included in any
consumer self-orientation and are thus located below the rectangle. They are the oldest of all the segments
with a median age of 61. Within their limited means, they tend to be brand-loyal consumers.
Source: Martha Farnsworth Riche, “Psychographics for the 199,” American Demographics, July 1989, pp. 24-26ff.
VALS2 GROUPS
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Actualizers
Fulfilleds
Believers
Achievers
Strivers
Experiencers
Makers
Strugglers
Levels of segmentation
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Global
Country
Local
Individual
EXAMPLES
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Surgua -- SE Bank
Wine.com -- California Wines
Lycos/Terra Case
Yahoo.Boston -- Local Audience
Personalization
LOCAL AUDIENCE
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Like Minded Individuals
Affinity
Targeted commerce
Segments
– local residents
– college student
– new comers
– Tourists
– Business Travelers
– Displaced/relocated natives
Personalization
• Screen Layout
• Targeted Marketing
• Permissive Marketing
– ads
– brochures/info
• Recommendations
– Advisors
– Intelligent Agents
• Mass Customization
CUSTOMER RELATIONSHIP
MANAGEMENT
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Organize Data
Profiling -- algorithms
Rules Engine
Delivery -- Communication/promotion
Measurement
Learning
TAKEAWAY
• Segmentation Art
– Basis
– Level
• Segmentation Science
– Profiling
– Rules Engines
• CRM -- Case Prime Response