APPENDIX U
PRODUCT & MARKET SEGMENTATION
U-1
Product & Market Segmentation Grid
The Product & Market Segmentation Grid shown below refers to the
Product & Market Segmentation datafiles which are found as both Excel
spreadsheets and Access database tables.
SGP
Whereas the data provided in the datafiles enable the reader to produce factor specific conclusions,
as well as both graphic representations and programmatically generated forecasting models, the
reader can further use this data to produce checklists and programming matrices based on one’s
own evaluation of the factors. To this end the document matrix below, and/or the Product &
Market Segmentation Grid Excel spreadsheet (‘SEGMENTATION.xls’ in the ‘../xls’ folder),
can be used by the reader. Alternatively, this grid (‘SEGMENTATION.htm’ in the ‘../HTM’ folder)
can be opened in Word, completed, and then copied and pasted into an Excel spreadsheet
(preserving all the relevant cells) after completion. For further information on the fields within the
Grid and on the manipulation of the data please refer to the Segmentation Definitions.
SECTORS
01
02
03
04
05
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
U-2
06
07
08
09
10
11
12
13
14
15
SEGMENT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15

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
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
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

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

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TOTAL
for
SEGMENT
LOWER PRICE[1]
HIGHER PRICE[2]
HIGHER QUALITY[3]
LOWER QUALITY[4]
GREATER
AVAILABILITY[5]
REDUCED
AVAILABILITY [6]
PERFORMANCE
VARIANCES[7]
TECHNOLOGICAL +
TECHNICAL FACTORS[8]
WARRANTY
VARIANCES[9]
SERVICE FACTOR
VARIANCES[10]
PRODUCT
FRAGMENTATION[11]
CONVENIENCE
FACTORS[12]
DISTRIBUTION
FACTORS[13]
CUSTOMER FACTORS[14]
PSYCHOGRAPHICS[15]
BRANDING[16]
MULTI-BRANDING[17]
MARKET
STRETCHING[18]
TOTALS for SEGMENTS:
SECTOR TOTALS:
[1]
In countries where there is demand for a product at a price lower than the average retail price it may be possible for companies to
offer End Users a lower (or discount) priced product, probably under a separate brand name, in order to cover the market sector. The
attractiveness of such segmentation would obviously depend on company marginal costs in relation to the probable marginal revenue
which may be generated.
[2]
In some countries a higher than average price may be associated with better delivery, services, et cetera, and it may be possible for
companies to capitalize on this by offering End Users higher priced products, probably under a separate brand name, in order to cover
such market sectors. Obviously it is usually necessary to provide customers with some tangible benefit in return for a higher price. This
benefit may be priority delivery and service, better back-up services, et cetera.
[3]
Product segmentation through the provision of better quality products is common in most markets. The degree of quality segmentation
and its acceptance depends on individual national markets, the prevailing circumstances within that market and the general situation in
regard to products and services.
[4]
Product segmentation through the downward variation of product quality is also possible. Certain markets and market sectors will be
attracted to a down-market product if a reduced price is the benefit.
[5]
Often national markets or market sectors will be willing to pay a higher End User price for greater availability. End users in certain
markets (with a limited supplier base) will inevitably have difficulty in obtaining supplies and in these markets it will be possible for
companies to offer greater availability of products and in return charge a price premium.
U-3
[6]
Frequently national markets or market sectors will be attracted by discounted End User price for reduced availability. Some buyers will
be able to hold high stock and inventory levels and in these circumstances will be attracted to obtaining a price discount for reduced
product availability through less frequent delivery and ordering.
[7]
Specialist market sectors and end user application sectors will often have differing needs in terms of product performance and it will
be possible for companies to exploit this and thereby segment the market. The need for Performance segmentation of this sort will
depend on the complexity of the national market in question, the broadness of the end user sectors and the variability of the applications
in which products are being used. Better product performance will command a price premium and vice versa.
[8]
Particular end user application sectors will have differing needs in terms of product technology and it will be possible for companies to
exploit this and thereby segment the market. The need for Technological and Technical segmentation of this sort will depend on the
needs of the national market in question, the end user application sectors and the various national technical standards for products.
Better product technology or technically superior products will command a price premium and vice versa.
[9]
Many market sectors and end user application sectors will have differing needs in terms of product warranty and it will be possible for
companies to use this to segment the market. The need for warranty segmentation of this sort will depend on the circumstances of the
national market in question, the warranty needs and expectations of the end user sectors and the sort of applications in which products
are being used. Better product warranty, periods of warranty or warranty terms will command a price premium and vice versa.
[10]
Certain market sectors and end user application sectors will have differing needs in terms of product services (in terms of technical,
advisory, after-sales and other related services) and it will be possible for companies to thereby segment the market. Service factor
segmentation of this sort will depend on the perceptions of the national market in question, the service needs and expectations of the
end user sectors and the sort of applications in which products are being used. Better services or terms of service will command a price
premium and vice versa.
[11]
Specialist market sectors and end user application sectors will sometimes be attracted by the Fragmentation of products offered in
terms of physical variations of the product, the provision of products which allow for the possibility of end users adding value or
undertaking some of the production process and it may be possible for companies to thereby segment the market. Product
Fragmentation of this sort will depend on the capabilities and capacities of the end users in question, the product needs and
expectations of the end user sectors and the sort of applications in which products are being used.
[12]
Certain national markets or market sectors will be willing to pay a higher End User price for the so called 'Convenience Factors'. End
users in certain markets will inevitably find difficulty and inconvenience with suppliers and supplies and in these markets it will be
possible for companies to offer better convenience in terms of ordering procedures, order processing, credit period offered, delivery
services and frequency, et cetera of products and in return charge a price premium.
[13]
Sometimes geographically particular national markets or market sectors will be willing to pay a higher End User price for better
product distribution factors. End users in certain markets will inevitably have difficulty in distribution factors and in these markets it will
be possible for companies to offer better distribution (both geographic and in terms of distribution frequency, et cetera) of products and
in return charge a price premium.
[14]
Frequently certain national markets or market sectors will be willing to pay a higher End User price for better or improved customer
factors. End users in certain markets will be willing to pay for better customer servicing through the provision of up-market or otherwise
unique customer services and thus it may be possible for companies to offer these customer services and in return charge a price
premium.
[15]
Some national markets or market sectors will be effected and thereby segmented through certain Psychographic factors. End users
in certain markets will have certain perceptions and attitudes unique to that market. For instance, an example of Psychographics is the
phenomenon of product chauvinism whereby end users in certain national markets will usually give preference to products produced in
their own country. This factor usually represents a problem, but can also be an area of potential opportunity for astute suppliers to
exploit.
[16]
National markets or market sectors can be further segmented by the introduction of product branding in order to achieve pricing
differentials or other tactical marketing objectives. Different end users will inevitably have differing perceptions, attitudes and needs and
in these circumstances it will be possible for companies to offer product branding and thereby ensure a more effective market and
product segmentation without unduly affecting existing products and services.
[17]
Multi-branding is a vehicle whereby a supplier can introduce even more market segmentation and also increase or improve the
distribution set-up through allowing the multiple branding of products. In certain markets this will be a very effective way to cater for a
broad range of end users, market or application sectors.
[18]
Market Stretching can often extend coverage to new markets or market sectors by the introduction of product changes in order to
achieve product variations or differentials. Different end users will inevitably have differing perceptions, attitudes and needs and in these
circumstances it will be possible for companies to offer product variations and thereby attract purchasers from new markets. This will not
unduly affecting existing products and services.
U-4
U-5