What?

How

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When

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Why?

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DefinitionMarket segmentation is the act of

dividing a market into well-defined

slices for market targeting and

positioning. A market segment

consists of a group of consumers

who share a similar set of needs and

wants.

5 requirements of effective segmentation• Measurable: Size, purchasing power, and characteristics of the

segments can be measured

• Substantial: The segments are large and profitable enough to

serve.

• Accessible: The segments can be effectively reached and

served

• Differentiable: The segments are conceptually distinguishable

and respond differently to different marketing-mix elements

and programs

• Actionable: Effective programs can be formulated for

attracting and serving the segments

MARKET SEGMENTATION

Full market coverage:

The firm attempts to

serve same product

(commodity or sole ones)

to the great number of

buyers via mass

distribution and

communications, when

the market shows no

natural segments.

4 LEVELS OF SEGMENTATION

Multiple segments:

The firm offer better

design, price, disclose,

and deliver the

product/service, with

fine-tune the

marketing program

and activities, to some

specific groups sharing

the same preferences.

Single segment:

The firm markets to

only one particular

segment. A niche is

a more narrowly

defined consumer

group seeking a

distinctive mix of

benefits within a

segment.

More companies

now practice

individual and mass

customization. The

future is likely to see

more individual

consumers take the

initiative in

designing products

and brands.

2 BASES OF SEGMENTATION

CONSUMER RESPONSES

Psy

ch

og

rap

hic

Life style Culture-oriented, sports-oriented, outdoor-oriented, tradition-oriented…

Personality Compulsive, gregarious, authoritarian, ambitious…

Behavi

ora

l

Occasions Regular, occasion, special occasion…

Benefits Quality, service, economy, speed…

User status Nonuser, ex-user, potential user, 1st time user, regular user…

Usage rate Light user, medium user, heavy user

Loyalty status None, medium, strong, absolute

Readiness stage Unaware, aware, informed interested, desirous, intending to buy

Attitude toward

productEnthusiastic, positive, indifferent, negative, hostile…

Marketers use them singly or in combination

CONSUMER CHARACTERESTICSG

eo

gra

phic

Region Asia, America, Europe, Africa

City or

metro sizeUnder 5K, 5 – 20K, 20 – 50K, 50 – 100K, 100 – 250K, 250 – 500K, 500K – 1M, 1 – 4M, 4M+

Climate Northern, Southern, Eastern, Western

Nationality North America, Latin America, British, French, Chinese, Japanese

Dem

og

rap

hic

Age Under 6, 6 – 11, 12 – 17, 18 – 34, 35 – 49, 50 – 64, 65+

Family size 1 – 2, 3 – 4, 5+

Family life

cycle

Young, single; young, married, no children; young, married, youngest child under 6; young, married,

youngest child 6 or older; older, married, with children; older, married, no children under 18; older,

single, other…

Income A, B, C, D, E, F

OccupationProfessional and technical; managers, officials, and proprietors; clerical sales; craftspeople;

forepersons; operatives; farmers; retired; students; homemakers; unemployed…

Education Grade school or less; some high school; high school graduate; some college; college graduate

Religion Buddhism, Catholic, Protestant, Jewish, Hindu, Muslim…

Race White, Black, Asian, Hispanic…

Generation Silent generation, Baby boomers, gen X, gen Y

Social class Lower lowers, upper lowers, working class, middle class, upper middles, lowers upper, upper uppers

Shampoo brands | Unilever

DOVE SUNSILK CLEAR

Morden woman

25+ YO

A+

Traditional-oriented girls (with long

black hair)

18 - 24 YO

AB

Female

18 - 24 YO

AB

For damage hair due to enviromental

and personal impacts

For rough and dry hair For dandruff troubles

EQUITYBRANDBrand equity is the added value endowed on products and

services. It may be reflected in the way consumers think, feel,

and act with respect to the brand, as well as in the prices,

market share, and profitability the brand commands.

It’s important intangible asset that has psychological and

financial to value the firm(Meanwhile: Brand valuation – The job of estimating the total financial value of

the brand)

• Customer-based brand equity is the differential effect brand

knowledge has on consumer response to the marketing of

that brand

• 3 key ingredients of customer-based brand equity:• No differences in consumer responses: The brand name

product is essentially a commodity, and competition will

probably be based on price.

• Differences in response are a result of consumers 'brand

knowledge. Brands must create strong, favorable, and unique

brand associations with consumer

• Brand equity is reflected in perceptions, preferences, and

behavior related to all aspects of the marketing of a brand.

Key benefits of brand equityImproved perceptions of product performance, Greater

loyalty, Less vulnerability to competitive marketing actions

and marketing crises, Larger margins, More inelastic

consumer response to price increase, More elastic

consumer response to price decreases, Greater trade

cooperation, Increased marketing communications

effectiveness, Possible licensing opportunities, Additional

brand extended opportunities, Improve employee

recruiting and retention, Greater financial return

EQUITYBRAND BrandAsset® Valuator Model

• Energized differentiation measures the degree to which

a brand is seen as different from others, and its perceived

momentum and leadership

• Relevance measures the appropriateness and breadth of

a brand’s appeal

• Esteem measures perceptions of quality and loyalty, or

how well the brand is regarded and respected

• Knowledge measures how aware and familiar

consumers are with the brand.

• Energized differentiation + Relevance combine = Brand

strength (Leading indicator that predicts future growth

and value)

• Esteem + knowledge = Brand stature (a “report card "on

past performance and a current indicator of current

value.)

• Both form the power grid, depicting stages in the cycle of

brand development in successive quadrants

• Strong new brands show higher levels of differentiation

and energy than relevance, whereas both esteem and

knowledge are lower still. Leadership brands show high

levels on all pillars. Finally, declining brands show high

knowledge—evidence of past performance— a lower

level of esteem, and even lower relevance, energy, and

differentiation

EQUITYBRAND BrandAsset® Valuator Model

EQUITYBRAND BrandDynamics™ Pyramid

• Presence. Active familiarity based

on past trial, saliency, or

knowledge of brand promise

• Relevance. Relevance to

consumer’s needs, in the right

price range or in the

consideration set

• Performance. Belief that it

delivers acceptable product

performance and is on the

consumer’s short-list

• Advantage. Belief that the brand

has an emotional or rational

advantage over other brands in

the category

• Bonding. Rational and emotional

attachments to the brand to the

exclusion of most other brands

“Bonded” consumers at the top of the pyramid build stronger relationships with and

spend more on the brand than those at lower levels. There are more consumers at

the lower levels, so the challenge for marketers is to help them move up.

EQUITYBRAND Brand Resonance Pyramid

From bottom to top

(1) ensuring consumers identify the brand and associate it with a

specific product class or need

(2) firmly establishing the brand meaning in consumers’ minds by

strategically linking a host of tangible and intangible brand

associations

(3) eliciting the proper consumers’ responses in terms of brand-

related judgment and feelings

(4) converting customers 'brand response to an intense, active loyalty

***The model emphasizes the duality of brands - the rational route

to brand building (left side) and the emotional route (right side)

***Creating significant brand equity requires reaching the top of

the brand pyramid, which occurs only if the right building blocks

are put into place

***Resonance is the intensity of consumers’ psychological bond

with the brand and the level of activity it engenders

• Salience is how often and how easily consumers think of the brand

under various purchase or consumption situations.

• Performance is how well the product or service meets consumers

'functional needs.

• Imagery describes the extrinsic properties of the product or service,

including the ways in which the brand attempts to meet

consumers 'psychological or social needs.

• Judgments focus on consumers’ own personal opinions and

evaluations.

• Feelings are consumers’ emotional responses and reactions with

respect to the brand.

• Resonance describes the relationship consumers have with the

brand and the extent to which they feel they’re “in sync”with it.

EQUITYBRAND

Brand loyaltyReflect how likely a consumers will

be to switch to another brand,

especially when that brand makes a

change, either in price or in product

features

Brand awarenessA recognized brand will often be

selected over an unknown brand.

The awareness factor is particularly

important in contexts in which the

brand must first enter the

consideration set. It must be one of

the brands that are evaluated.

Perceived qualityDirectly influence purchase decisions and

brand loyalty (when a buyer is not motivated

or able to conduct a detailed analysis)

Support a premium price which, in turn, can

create gross margin that can be reinvested.

Basis for a brand extension

Brand associationCreate a positive attitude or feeling

that can become linked to a brand

Competitors will find it hard to

attack if a brand is well positioned

upon a key attribute in the product

class

Other proprietary brand assetsE.g: Patents, trademarks, and

channel relationships.

EQUITYBRAND

Brand audit – “Where the brand has been”

• A consumer-focused series of procedures to assess the health of the

brand, uncover its sources of brand equity, and suggest ways to

improve and leverage its equity.

• Conducting when setting up marketing plans and considering shifts

in strategic direction.

• Allowing marketers to keep their fingers on the pulse of their brands

so they can manage them more proactively and responsively.

Brand-tracking studies – “Where the brand is now” and whether

marketing programs are having the intended effects

• Collecting quantitative data from consumers over time to provide

consistent, baseline information about how brands and marketing

programs are performing.

• Helping marketers understand where, how much, and in what ways

brand value is being created, to facilitate day-to-day decision

making.

They are complementary, and marketers can employ both

2 APPROACHES TO MEASURE

EQUITYBRAND Brand Value Chain

***A structured approach to assessing the sources and

outcomes of brand equity and the way marketing activities

create brand value based on several premises

***The brand value chain links the two approaches: Brand

Audit and Brand-tracking studies

3 multipliers moderate the transfer between the

marketing program and the subsequent three value

stages.

• Program multiplier determines the marketing

program’s ability to affect the customer mind-set and

is a function of the quality of the program investment

• Customer multiplier determines the extent to which

value created in the minds of customers affects market

performance. This result depends on competitive

superiority (how effective the quantity and quality of

the marketing investment of other competing brands

are), channel and other intermediary support (how

much brand reinforcement and selling effort various

marketing partners are putting forth),and customer

size and profile (how many and what types of

customers, profitable or not, are attracted to the

brand)

• Market multiplier determines the extent to which the

value shown by the market performance of a brand is

manifested in shareholder value. It depends, in part,

on the actions of financial analysts and investors.

EQUITYBRAND Audi

SALIENCE

PERFORMANCE

IMAGERY

JUDGEMENTS

FEELINGS

RESONANCE

High Depth/ Breadth

High digital recognition

Strong heritage (Brand history)

Strong brand awareness* (T.O.M 24.32% -

2nd behind BMW; Recall: 74.32% - 2nd behind

BMW; 93% brand recognition/100% aided

brand recognition)

High performance cars:

- Leader in endurance races (24h du

Mans)

- Customers want the Quattro Tech

Innovative design

- Steadily improving quality perception

- Regained credibility after the 80s reputation slump. -

Sales data shows it is now considered a valid

alternative to BMW and Mercedes

- Design as perceived strong point (2013 best car

brand as for design/style according to U.S consumers

- Hot on quality for 91% of respondent*

Sports and Innovation

- For modern customers

- Looking to be different

- Successful

- Sporty

Fun, excitement, social approval and

self-respect

The customer feels smarter, able to

challenge old conventions and habits

Emotional association: Beauty,

prestige, power, speed, safety,

competition, happiness, young

Relationship with the

brand (According to

Lovemarker):

A commodity for

53.6%

A brand for 13%

A lovemark for

33.3%

Active engagement through

social networks

Brand loyalty still relatively low

(47.5% in USA – 2013) but

strongly improving over the last

years

Fan community with

engagement Blockbusters (Iron

Man, I Robot)

*Questionnaire tested the difference in the brand awareness and

image of Audi and Mercedes-Benz with young consumers, also

making use of the Lovemarker tool. We had 74 respondents of age

between 15 and 34 years old, residing in several countries, mainly

France (66,2%), Italy (18,9%) and other European countries (6,8%). The

sample was composed by females at 59,5% and by males at 40,5%.

EQUITYBRAND Mercides-Benz

SALIENCE

PERFORMANCE

IMAGERY

JUDGEMENTS

FEELINGS

RESONANCE

High Depth/ Breadth

High digital recognition

Strong heritage (Brand history)

Strong brand awareness* (T.O.M 21.62% -

3rd; Recall: 72.97% - 3rd behind BMW and

Audi; 93% brand recognition/100% aided

brand recognition)

Premium quality cars

- One of the leaders in Formula 1

- Efficient design

- High prices

- 3rd best car brand for quality, 2nd best for

tech/innovation (US consumer – 2013)

- Hold a guaranteed place in the consumers’ set of

choices thanks to its worldwide popularity and

success

- Still a leading car brand, though it appears to be

losing ground to BMW and Audi

- Hot on quality for 78% of respondent*

Premium and elegant

- For customer who want to be part of

the myth

- Selling a brand heritage

- Traditional, Loyalty

Warmth, security, social approval and self-respect

The customer feels he/she deserves the redefined

pleasures of life and knows how to enjoy them

Asserts a privileged lifestyle: “The best or Nothing”

Emotional associations: Elegance, comfort, classic,

safety, timeless, tradition, olf, noble

Relationship with the

brand (According to

Lovemarker):

A commodity for

46.9%

A brand for 18.8%

A lovemark for

34.4%

Users are loyal to the

brand (Brand loyalty:

55.9% - 2nd best car brand

in US 2013)

Engagement in F1 each

year with a branded team

as an engine supplier for

other teams

*Questionnaire tested the difference in the brand awareness and

image of Audi and Mercedes-Benz with young consumers, also

making use of the Lovemarker tool. We had 74 respondents of age

between 15 and 34 years old, residing in several countries, mainly

France (66,2%), Italy (18,9%) and other European countries (6,8%). The

sample was composed by females at 59,5% and by males at 40,5%.

TH

AN

K Y

OU

!