2.2.1. market segmentation and targeting

2.2.1. Market Segmentation and Targeting

Week 2: Competitive Advantage

Yanis Hamdali, M.Sc., Prof. Dr. Albrecht Söllner

The Global Canvas2

2.2.1. Competitive Advantage - Yanis Hamdali, M.Sc., Prof. Dr. Albrecht Söllner

Key

Partners /

Global Value

Chain

Key

Activities /

Structure &

Process

Value

Proposition

Customer

Relationships

Customer

Segments /

Target Markets

Humans &

Resources

Channels /

Modes of Entry

Cost Structure Revenue Streams

Business Environment / Institutional Environment (at home/

abroad)

Agenda

1. Market segmentation - A three stage process

2. Macro vs. Micro segmentation

3. Common ways of segmenting buyers

4. Hybrid segmentations

5. Key figures market analysis

6. Market development

Different Customer Segments might have different Problems!

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A three stage process4


Segmentation

Identifying meaningfully

different groups of

customers

Targeting

Selecting which

segment(s) to serve

• Product

• Price

• Place

• Promotion

• People

• Process

• Physical facilities

Positioning

Implementing chosen

image and appeal to

chosen segment

Market segmentation5


„Only who knows the target can hit!“(Greek proverb)

Image source: https://mumbrella.com.au/wp-content/uploads/2018/04/ThinkstockPhotos-826228744.jpg

Global Market Segmentation Options 6


Economich

Technologicalh

Geographich

Culturalh

Demographich

Politicalh

Industrial Structure

Lifestyleh

Response to

Marketingh

Attitudes, Tastes and

Predispositionsh

Cultural Traits

Mikro Level BasesMakro Level Bases

Inter-Market Segmentation

Based on Hybrid Variables

Strategic Brand Positioning

Macro-segmentation or Country-based Segmentation 7


Bases for

segmentation

Segment(s) name Author(s) date Segment descirption

GNP, GNP distribution, size Country segments Kotler, 1986 Individual countries represent separate segments

GNP, GNP distribution, size,

LDC technology level

Country grouping or clusters

Import demand

segments

Sethi, 1971; Porter, 1986; Wind, 1986;

Huszagh et al.,1986

Nachum, 1994

Clusters with similar demographics, cultural patterns

Two stage analysis of import data that includes factor

scores and cluster analysis

Geographic proximity,

economic integration,

development levels

Regional segments

Sourcing and purchasing of

materials, components, technology

Daniels, 1987

Frear et al., 1995

World regions (country groupings) with similar

characteristics for economies of scale

Survey of 135 firms based in 42 countries. Clustering

based on sourcing strategies

Cross-cultural patterns Cultural segments Whitlock, 1987 Similar cultural values and attributes across countries

Levels of economic

development and trade

Pro-trade segments Crawford et al., 1988 Attitudes toward imported products in developed and

developing countries

Product adaptation, country

variables

Specialty products and market

segments

Sheth, 1986 Product adaptation from one country segment to

another

Quelle: Hassan, Craft and Kortam (2003)

Micro-segmentation or Consumer-based Segmentation 8


Bases for segment. Segment(s) name Author(s) date Segment descirption

Lifestyle factors and

product benefits

Across countries segmentation

Core value segment

Domzal and Unger, 1987

Lascu et al., 1996

Psychographic segmentation and benefits analysis

A cross-cultural study of terminal values held by different

demographic within country segments

Responses to marketing Strategically equivalent segments

Convenience orientation

segments

Affinity segments

Consumer-product segments

Kale and Sudharshan, 1987

Luqmani et al., 1994

Smit and Neijens, 2000

Hofstede et al., 1999

Segmentation tag response to a specific marketing mix

A cross-cultural measure of convenience orientation to cluster

segments based on time-saving orientation and comfort-orientation

Segmentation-based on affinity for advertising

Segmentation-based on consumer-product relations

Cultural traits Sensory segments Moskowitz and Rabino, 1994 Divide consumers by the patterns of sensory characteristics that they

like the most about a number of products

Attitudes Attitude clusters Verhage et al., 1989 Similar consumer attitudes for specific products across countries

Hybrid factors (values,

benefits, demographics,

etc.)

Global segments Hassan and Katsanis, 1991

Kreutzer, 1988

Profiling of global elites and teenagers

Two-stage segmentation using environmental and behavioral

indicators

Macro-level and micro-

level diffusion parameters

Diffusion-based segments Helsen et al., 1993 Latent-structure method to accommodate the bass diffusion model

Quelle: Hassan, Craft and Kortam (2003)

Common Ways of Segmenting Buyers 9


By Behavior By Demographics By Geography By Psychographics

• Benefits sought form

the product

• How often the product

is used (usage rate)?

• Usage situation (daily

use, holiday use, etc.)

• Buyer‘s status and

loyalty to product

(nonuser, potential

user, first-time user,

regular user)

• Brand loyalty

• Age

• Generation (X, Y, or Z)

• Income

• Gender

• Family life cycle

• Ethnicity

• Family size

• Occupation

• Education

• Nationality

• Religion

• Social class

• Region (continent,

country, state,

neighborhood)

• Size of city or town

• Population density

• Climate

• Activities

• Interests

• Opinions

• Values

• Attitudes

• Lifesyles

Segmentation by GenerationBaby Boomers, Gen X, Y & Z (Brazil) 10

2.2.1. Competitive Advantage - Yanis Hamdali, M.Sc., Prof. Dr. Albrecht Söllner Image Source: Francis & Hoefel (2020) McKinsey & Company

The Sinus‐Milieus® in Germany 201811


The multi‐optional, efficiency‐oriented top performers:

A global economic mindset;

self‐image as avantgarde when it

comes to consumption and style;

very technically and IT minded;

establishment tendencies, erosion

of visionary verve

The security‐ and order‐loving

older generation:

Rooted in the world of the petty

bourgeoisie or the traditional blue‐collar culture; exercising thrift and

adapting where necessary; growing

resignation and an ever‐greater

sense of being left behind.

Market(segment) sizes 12


A

B

C

D

E

F

Sales volumes of

companies A to F

Market volume of all

companiesGrowth reserves

Market potential

Handbuch zur Business-Erstellung, 8. überarbeitete Auflage, Netzwerk Nordbayern, S. 51

Necessary key figures for the market analysis

Market potential (maximum capacity)= number of users x average demandThe potential often exists initially only as a "vision" or "idea" as the examples of Apple, Microsoft, Amazon, Facebook, Google, IKEA, or Ryanair show

Market volume (current market)= actual sales or sales volume in the segment

Market exploitation/saturation= Market volume : Market potential

Market share (absolute)= Sales or turnover : Market volume

Market share (relative)= Sales or turnover : Sales or turnover market leader

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Determination of market volume and market potential 14


Official statistics (import, production, export, consumption)

Calculations Associations (member information, see e.g. German screw or

cork association, German Chemical Industry Association - VCI)

Conclusions (e.g. grams of liquid crystals per screen x screens (new and

replacement), cell phones per inhabitant x inhabitants aged from ... to)

Projections (from samples - prospective buyers)

Panel surveys (recurring survey of the same target group to identify trends)

Tenders, building permits

New products (innovation) → trial and errorButtom Up

Top Down

Market(segment) development15


Growing Market Stagnating Market Shrinking Market

Source: Pfeffermann (2016) - BPW Marktanalyse

Key Takeaways

• Global market segmentation can be viewed as the process of identifying segments whether they be country groups or individual buyer groups, of potential customers with homogeneous attributes who are likely to exhibit similar buying behavior patterns.

• Different key figures are used to describe segments and markets. E.g. the market potential reflects the maximum capacity of the market.

• To determine the market volume and the market potential there are two different approaches. The top-down approach uses official statistics or calculations from industry associations, while the bottom-up approach uses your own research.

• Markets may be growing, stagnating or even shrinking.

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2.2.1. market segmentation and targeting

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