Benefits sought
B
enefit
segmentation provides
an understanding of why people buy in a market and can aid the
identification
of opportunities. It is a fundamental
method of segmentation because the objective
of marketing is to provide customers with
benefits that they value. For example, a basic product
like toothpaste can confer a variety of
benefits,
ranging from decay prevention to great taste to white teeth. Brands
like Colgate have developed sub-brands that provide each of these
benefits such as Colgate maximum fluoride protection (decay
prevention), Colgate Junior toothpaste (taste) and Colgate Sensation
whitening toothpaste (white teeth). In most product categories, there
exists a segment of the market that is willing to accept high prices
as long as quality levels meet their needs (see Exhibit 5.1).
Exhibit 5.1 Longines, the watchmaker, targets the high end of the market with its slogan 'Elegance is an attitude'
Purchase behaviour
The degree of brand loyalty in a market is a useful basis for segmenting customers. Solus buyers are totally brand loyal, buying only one brand in the product group. For example, a person might invariably buy Ariel Automatic washing powder. Most customers, however, practice brand-switching behaviour. Some may have a tendency to buy Ariel Automatic but also buy two or three other brands; others might show no loyalty to any individual brand but switch brands on the basis of special offers (e.g. money off) or because they are variety seekers who look to buy a different brand each time. A recent trend in retailing is 'bio-graphics'. This is the linking of actual purchase behaviour to individuals. The growth in loyalty schemes in supermarkets, such as the Tesco Clubcard scheme, has provided the mechanism for gathering this information. Customers are given cards that are swiped through an electronic machine at the checkout so that points can be accumulated towards discounts and vouchers. The more loyal the shopper, the higher the number of points gained. The supermarket also benefits by knowing what a named individual purchases and where. Such biographic data can be used to segment and target customers very precisely. For example, it would be easy to identify a group of customers who were 'ground coffee' purchasers and target them through direct mail. Analysis of the data allows the supermarkets to stock products in each of their stores more relevant to their customers' age, lifestyle and expenditure. Japanese convenience stores are extensive users of this kind of customer information and, because of space restrictions there, shelves are restocked up to three times per day.
Usage
Another way of segmenting customers is on the basis of whether they are heavy users, light users or non-users of a selected product category. The profiling of heavy users allows this group to receive the most marketing attention (particularly promotion efforts) on the assumption that creating brand loyalty among these people will pay heavy dividends. Sometimes the 80:20 rule applies, where about 80 per cent of a product's sales come from 20 per cent of its customers. Beer is a market where this rule often applies. However, attacking the heavy user segment can have drawbacks if all of the competitions are also following this strategy. Analysing the light and non-user categories may provide insights which permit the development of appeals that are not being mimicked by the competition. The identity of heavy, light and non-user categories, and their accompanying profiles for many consumer goods, can be accomplished by using survey information provided by the Target Group Index (TGI) (www.tgisurveys.com). This is a large-scale annual survey of buying and media habits in the UK. Marketing in Action 5.2 demonstrates how one Irish beer brand turned its fortunes around by focusing on its existing users rather than trying to convert non-users.