Principles of Marketing. 5. Market Segmentation, Targeting, and Positioning. Part 1-2.

 

Figure 5.1 Market segmentation allows companies to focus their resources on their target markets—the markets where their marketing messages will best resonate. (credit: “3D Bullseye” by ccPixs.com/flickr, CC BY 3.0)

In the Spotlight

To begin this chapter, we are going to look at an example of a well-known company that successfully used market segmentation to appeal to a very specific consumer market as a way to revive one of its products.

Mattel Inc. is the producer of popular children’s toys like Hot Wheels, Barbie, and Max Steel. Its action figure Max Steel was introduced in 1999 to only modest success in the United States, but it was enormously popular in South America, even outselling the company’s top lines—Hot Wheels and Barbie. Nearly a decade later, marketers decided to revive the brand in the United States, hoping for a second chance at success.1

Mattel used a number of important market segmentation variables and market strategies to appeal to its target market. First, in terms of demographic variables, marketers recognized that the Max Steel figure typically appealed to boys (gender segmentation) between the ages of 6 and 11 (age segmentation), so they decided to focus on this segment by developing a website that included games, character biographies, and other features popular with boys in this age bracket.

Market research also revealed that its target audience was interested in superheroes and enjoyed watching videos and playing video games centered around these superheroes, so the company used psychographic and lifestyle segmentation to appeal to this segment.2 For example, Mattel created a Disney Channel cartoon for Max Steel so that, months before the relaunch of the product in the United States, its target market was already familiar with the character and was more likely to buy (or pressure their parents to buy) the action figure. The result? Max Steel has become a minor superhero “staple” in toy aisles, cartoons, and movies.

5.1 Market Segmentation and Consumer Markets

Learning Outcomes

By the end of this section, you will be able to:

• 1 Define market segmentation.
• 2 Describe the benefits of market segmentation.
• 3 Discuss methods of segmenting consumer markets.

Market Segmentation Defined

You may have heard the saying “You can’t be all things to all people.” That sums up the essence and purpose of market segmentation—the process of dividing a target market into smaller, more precisely defined groups of consumers or organizations who have common needs and are expected to respond similarly to a marketing action.

The Advantages of Market Segmentation to the Organization

It’s estimated that the average person sees an astounding 4,000–10,000 advertising messages each day.3 That’s why it’s critical to target the right market. Most marketers have limited advertising budgets, so using one marketing message to reach a broad audience may garner a few new customers, but it’s likely to come at a high advertising cost.

Consider a company that makes woodworking tools for the professional or home hobbyist. The company would waste a lot of money placing ads in “general interest” magazines like Reader’s Digest because the average reader likely has little interest in woodworking tools. A better bet would be placing ads in specialty magazines like The Family Handyman (published by the same company as Reader’s Digest), Wood Magazine, or Popular Woodworking— publications aimed at professional woodworkers and hobbyists. Not only would it likely cost less to advertise in specialty magazines like these, but the ads would be more relevant to the company’s desired customer base.

There are other benefits to market segmentation. Let’s look at a few:

• Improved Focus on the “Important” Customers. Customers are not all alike. Some will love your product or service, while others will be indifferent. Instead of trying to appeal to everyone, market segmentation enables marketers to focus their efforts and resources on those customers who will likely result in revenue for the company.
• Improved Product Development. Market segmentation allows marketers to better understand what consumers want in a product or service, and that knowledge enables the marketer to make recommendations for refinements to existing products and services to meet those needs. This knowledge is equally important in terms of designing new products and services to meet the needs of the target market.
• Improved Brand Loyalty. When customers feel that your company’s products or services are a good fit for them, they are more likely to stick with your brand and recommend it to others.4

Methods of Segmenting Consumer Markets

There are several different types of marketing segments you can create. We’ll focus on four major types:

• Geographic segmentation: the “where”
• Demographic segmentation: the “who”
• Behavioral segmentation: the “how”
• Psychographic segmentation: the “why”

Geographic Segmentation: The “Where”

Let’s first take a look at geographic segmentation, or dividing the market based on where your customers or potential customers live. There are several geographic parameters a marketer can use to focus their marketing efforts, including location, cultural preferences, climate, language, and population type and density (see Figure 5.2).

Figure 5.2 Geographic Market Segmentation (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

Let’s explore each of these individually.

Segmenting the market on the basis of location can be as small as a county or zip code or as large as a country. Segmenting a market this way can also be used to identify a new geographic location into which the business may wish to expand.

Starbucks is a great example of a company that uses location segmentation. First, the company segments its markets according to global geographic segmentation—the Americas, China, and Asia Pacific and Europe, the Middle East, and Africa.5 Each of these segments is then subject to sub-segmentation in order to cater to markets that share cultural preferences. For example, in China, where tea tends to be the beverage of choice, Starbucks offers a lengthy menu of tea-based drinks like Red Bean Green Tea Frappuccino and Black Tea Latte. In South Korea, where consumers prefer creamy beverages, Starbucks offers Jeju Honey Peanut Latte and Happy Cheese White Mocha.6

Customers’ choices and market behavior can also be influenced by their location in terms of climate or season. Segmenting the market this way also allows the marketer to present the most relevant information to the audience. There’s not much of a need for snowmobiles during the summer, even in northern climates, and not much demand for convertibles in the middle of winter in those same northern climates. In the same manner, companies that sell beachwear are more likely to record increased sales during the summer and in warmer climates.

Language can be used to segment a market geographically. For instance, there are a number of different languages spoken in different regions and states in India. Therefore, it stands to reason that an advertisement in the Hindi language would miss the mark in states where Assamese or Telugu is spoken. These advertisements would need to be translated for people in different regions.7 To give you an idea of the complexity of this, however, there are more than 19,500 languages or dialects spoken in India and 121 languages spoken by 10,000 people or more!8

Finally, the marketer can segment the market on the basis of population type or density—in other words, whether the market is urban, suburban, or rural. Think about this in terms of a company that does home lawn treatments like fertilization, weed control, or grub control. That company would likely have more success targeting a suburban area where residents need extra yard care. It would be less successful in an urban area where residents have smaller yards or maybe no yards at all!

Demographic Segmentation: The “Who”

Now let’s look at dividing a market on the basis of demographic segmentation (see Figure 5.3).

Figure 5.3 Demographic Market Segmentation (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

With demographic segmentation, the marketer will divide the market into smaller groups, generally on the basis of common demographic factors such as gender, income, age, educational level, race, religion, ethnicity, occupation or job type, and even family structure. These smaller segments enable marketers to focus their efforts and resources on those customers who will likely result in revenue for the company.

With gender segmentation, the market is divided into men and women. Those who identify as men and those who identify as women have different interests in terms of shopping for various products like apparel, shoes, and food. For example, look at the ad campaigns crafted toward women in fashion magazines such as Vogue or Vanity Fair. You’ll likely see a different ad focus in magazines like GQ or Men’s Health.

Income segmentation involves segmenting the market on the basis of monthly or yearly income. With income data, a company can determine how its potential consumer base spends money on both the high and low ends of the spectrum. Mercedes-Benz is a classic example of this as it markets different car models at different price points: A-Class vehicles starting in the low $30,000 range, C-Class in the $40,000–$55,000 range, E-Class in the $55,000–$72,000 range, and, finally, its S-Class vehicles, which are priced at $95,000 and up.9

Age is another common factor used to segment consumers. It’s likely no surprise to you that our preferences change with age. The products that appeal to us as teens or young adults are likely not the same products that appeal to us when we’re older. The age segmentation is threefold:

• Age Range. This type of segmentation represents a specific age group, such as children, teens, adults, and older adults. However, you also need to consider “perceived age” (i.e., how old you feel) versus “actual age” (i.e., your chronological age). Purchases tend to reflect our perceived age rather than our chronological age.
• Life Cycle or Life Stage. In the same way that our preferences change with age, they change with our life stage, and most people typically pass through many life stages, from childhood to adolescence to young adult, middle age, and older adult. This type of segmentation can be a little tricky, however, particularly in view of stereotypes and changing family dynamics. For instance, some teens or young adults may be parents, while middle-aged adults may be starting families, having second families, becoming empty nesters, or are single (or single again).
• Generation Based. This method of breakdown defines age by generation, such as baby boomers, millennials, and Generation X. Consumers within generations will differ slightly in age (for example, baby boomers were born between 1946 and 1964, and Gen Xers were born between 1965 and 198010 ), but these generational cohorts still tend to share certain characteristics and ideas.

Education is another means through which marketers can segment a market, and it also affects the channels through which marketers reach the target market. For example, if you were going to open a bookstore in your hometown, you’d want to determine the average educational level in your community as part of your due diligence. Are most of your would-be customers elementary or middle school students? Their tastes in reading will be considerably different than if you live in a college town populated by a number of literary professors who prefer the classics.11

Race, ethnicity, and religion can be used to segment a market. It’s always dangerous to stereotype, but consumers of different races, ethnicities, and religions have different preferences and needs. Consider a company like Zondervan, a leading bible publisher. It would make sense for the company to segment its market based upon religion because it offers products that complement the religious beliefs of a particular group. Likewise, IMAN Cosmetics is designed for women with darker skin tones, so its target market would likely be women of color.

Marketers can also segment the market based on occupation or job type. Focusing on a smaller segment of the market enables a company to make better use of its limited resources. For example, AllHeart is a producer of medical scrubs, nursing uniforms, shoes, and medical accessories, so it has segmented the market to focus on medical professionals. Another example can be found with Saf-Gard, a producer of safety shoes and work boots that meet or exceed safety standards. This company targets workers in the construction and farming industries.

Finally, a company can segment its market on the basis of family structure, marital status, whether there are children in the home, and the life stages of those in each family.

Behavioral Segmentation: The “How”

Behavioral segmentation divides consumers into market segments depending on their behavior patterns when interacting with a product or service (see Figure 5.4).

Figure 5.4 Behavioral Market Segmentation (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

The behavioral pattern benefit segmentation focuses on which benefits or features of a product or service are most applicable to the customer. Consider toothpaste. People who buy toothpaste may do so for a variety of reasons—sensitive teeth, tartar control, whitening, fresh breath, cavity prevention, etc. This means that two consumers may look identical in terms of their demographics but could have very different values regarding the benefits and features that are most important to them.

For example, Procter & Gamble markets various formulations of its Crest brand toothpaste, including Crest Kids, Gum Detoxify Deep Clean, Gum and Breath Purify Deep Clean, and more. Marketing messages sharing the toothpaste’s benefits and differences are tailored for each formulation.12

Occasion segmentation divides consumers (or potential consumers) on the basis of the occasions when they make purchases or plan to buy. Occasion marketing is huge because marketers know that consumers will be purchasing certain items on certain occasions. Just look at the number of Internet or TV ads advertising chocolates, flowers, and jewelry in the weeks preceding Valentine’s Day or the sudden appearance of PEEPS and chocolate bunnies before Easter.

Usage-based segmentation identifies various segments of users based on how much they use a product. Consumers are typically divided into groups of non-, light, medium, and heavy product users. As a general rule, companies target heavy users because, although heavy users may be a relatively small percentage of the market, they generally account for a high percentage of total buying. This is actually called the Pareto principle in marketing, which asserts that 80 percent of a company’s revenue comes from the top 20 percent of repeat or loyal customers.13

Link to Learning

Pareto Principle

Regardless of which area of business you go into, the Pareto principle is a concept you will encounter often. It’s a concept people adopt in their life and in management. Check out these resources to learn more:

• Simply Psychology article: Pareto Principle (The 80-20 Rule)
• Better Than Yesterday video: The Pareto Principle—80/20 Rule—Do More by Doing Less
• Fresh Books Blog article: How to Increase Productivity Using the Pareto Principle
• HubSpot article: What Is the 80/20 Rule? How the Pareto Principles Will Supercharge Your Productivity

Psychographic Segmentation: The “Why”

Psychographic segmentation breaks down consumer groups into segments that influence buying behaviors, such as lifestyle, personality variables, and values (see Figure 5.5).

Figure 5.5 Psychographic Market Segmentation (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

A person’s lifestyle provides insight on what they value, or how they spend their time and money. Marketers analyze three lifestyle dimensions, commonly called AIO (activities, interests, and opinions) variables:

• Activities. Activities focus on a person’s daily routine and/or hobbies. For instance, if you’re an urban dweller who rides your bike to work and works out regularly, your buying patterns are probably going to be vastly different from someone who drives to work and doesn’t work out.
• Interests. Interests drive passions. What are your interests? Crypto investing? Gaming? Photography? That’s important information to marketers because by identifying your interests (assuming you’re a target consumer), they can more easily determine what marketing messages will appeal to you.
• Opinions. Opinions matter, and especially in the age of social media, opinions spread fast. Companies monitor social media sites to gain insight about consumers’ opinions of their products or services and respond accordingly—and quickly! Companies such as PepsiCo and Mastercard continuously monitor 24/7 all social media postings about their companies, products, and competitors worldwide.

Link to Learning

Social Media Segmentation

There are a number of ways to segment social media markets. Read more about it on HubSpot: “8 Simple Ways to Segment Your Social Media Audience.” Understanding how social media influences market segmentation is critical. Read this article from Marketing Tech to gain insight.

Marketers can also segment a market based on personality variables to create a group of people with similar personality traits because personality and purchasing habits are strongly related. To illustrate this, look at the fitness tool Mirror. This interactive home trainer has performed well in the market since its inception in 2018 because it targets those people who want to work out but can’t find the time to go to the gym.

Link to Learning

Personality Segmentation

Harley-Davidson is another great example of a company that segments its market based on personality. Check out this video from Harley-Davidson as an example of how it is sending a message that resonates with motorcycle riders.

Values are the principles and important things that influence the way you live and work. As one example, environmental concerns are becoming a value issue for consumers, and they are looking for products from companies that are better for the earth. Knowing this, IKEA has incorporated a furniture buyback and resale program in the United States. If you have a piece of IKEA furniture that’s an oldie but still a goody and you want to retire it, IKEA will buy it back and help you pave the way toward sustainable living.14 Another great example is Lululemon’s Like New program. You can bring in any used Lululemon gear, trade it in at the store, get an eGift card for use at a Lululemon store, and 100 percent of the Like New profits are reinvested in the company’s sustainability initiatives.15

In addition to the AIO model of psychographic segmentation, there is another model known as VALS (values, attitudes, and lifestyles) that segments consumers into eight different types (as shown in Figure 5.6).

Figure 5.6 The VALS Framework (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

The premise of VALS is relatively simple: if you know what consumers are thinking, you will know which promotions or marketing messages will attract them to your product or service. And you can use the framework to determine what consumers are thinking by determining their values, attitudes, and lifestyles.16

Let’s take a look at these eight consumer types:

• Innovators are characterized by high income and high resources. These innovators have definite individual tastes and preferences and are motivated to achieve the “finer things” in life.
• Thinkers are consumers who have resources and are motivated by their knowledge.
• Believers are subtly different from thinkers in that thinkers typically make their own decisions, whereas believers look to their peers for affirmation of their decisions. They have fewer resources than innovators or thinkers.
• Achievers tend to be high-resource consumers who want to excel, both at the workplace and within their families. They are likely to purchase brands that have stood the test of time in terms of their success in the marketplace.
• Strivers tend to be lower-resource consumers. They have similar values as achievers but lack the same level of resources.
• Experiencers have relatively high resources and want to experience “being different.” The majority of experiencers are young adults.
• Makers, like experiencers, want self-expression, but they lack the resources to make that happen, so they tend to be more focused on building a better family than spending money.
• Survivors have the least number of resources and are the least likely to adopt innovative products. Survivors tend to be brand-loyal customers.17

Using Multiple Segmentation Bases

Keep in mind that a company doesn’t have to use just one or two segmentation bases; it can use all of them or a mix of them, a process that’s also known as multi-segment marketing. It’s not uncommon for companies to develop products that compete against their own offerings as long as the new products offer different perceived benefits to consumers. For instance, Procter & Gamble sells several different types of laundry detergent, such as Tide, Gain, and Cheer. Each of these brands offers different benefits like all-temperature use, fresh scent, unscented, stain removal, or whitening. By having these different brands, P&G can appeal to multiple target markets.

Careers In Marketing

Market Research Analyst

What does a market research analyst do, you might ask? They study markets and data to determine potential new opportunities for a company. According to the Bureau of Labor Statistics, the typical entry-level education required is a bachelor’s degree, and there are about 741,000 jobs with an expected growth rate of 22 percent from 2020 to 2030. This article from Coursera, “What Is a Marketing Analyst? And How to Become One,” outlines job roles and responsibilities, compares this job to other types of analyst jobs, and describes steps for how to become a marketing analyst.

Watch these videos to learn about the typical marketing analyst job description and how to become one.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1.

In China, Starbucks offers tea-based drinks featuring regional ingredients. On what basis has Starbucks segmented its market?

1. Demographic
2. Behavioral
3. Geographic
4. Psychographic

2.

A travel agency offers adventure trips like hut-to-hut camping in the mountains as well as quieter vacations in all-inclusive resorts. On what basis has the travel agency segmented its market?

1. Psychographic
2. Demographic
3. Behavioral
4. Geographic

3.

Road Scholar is an American not-for-profit organization that provides educational travel programs geared primarily to older adults. On what basis has Road Scholar segmented the market?

1. Geographic
2. Psychographic
3. Demographic
4. Behavioral

4.

Garnier offers a wide range of shampoos, including hydrating shampoo, smoothing shampoo, color-safe shampoo, volumizing shampoo, and more. On what basis has Garnier segmented the market?

1. Geographic
2. Psychographic
3. Behavioral
4. Demographic

5.

Peloton’s main products are Internet-connected stationary bikes and treadmills that enable subscribers to remotely participate in live classes via streaming media. This enables subscribers to have a “spin class” experience without going to the gym. On what basis has Peloton segmented the market?

1. Demographic
2. Behavioral
3. Geographic
4. Psychographic

5.2 Segmentation of B2B Markets

Learning Outcomes

By the end of this section, you will be able to:

• 1 Describe the challenges of segmenting B2B markets.
• 2 Discuss the advantages of segmenting B2B markets.
• 3 Explain methods of segmenting B2B markets.

Challenges of Segmenting B2B Markets

Just like its consumer market counterpart, business-to-business (B2B) market segmentation focuses on identifying unique market segments based on common characteristics. However, segmenting a B2B market is in many ways far more challenging than segmenting a consumer market because the motivations, processes, and considerations of B2B buyers are quite different from those of business-to-consumer (B2C) buyers. Let’s take a closer look.

• Challenge #1: Dealing with Highly Complex B2B Markets. As discussed in Business Markets and Purchasing Behavior, decision-making in B2B markets is quite different from decision-making in B2C markets. In a B2C market, the consumer is often the only decision maker involved in making a purchase. That’s not the case in B2B markets, where you’re often dealing with a buying center—all the people in the organization who have varying influence on the B2B buy decision. You may also recall from this chapter that buying centers have a variety of members who play different roles, such as users, initiators, influencers, gatekeepers, decision-makers, etc. Accordingly, it can be difficult to identify precisely who the target buyer is.18
• Challenge #2: Dealing with More Rational Buyers. Although the view is somewhat controversial, it is said that B2B buyers are more “rational.” Consumers tend to buy what they want and are more affected by emotions in buying decisions. Alternatively, B2B buyers typically buy what they need, and buying decisions are more deliberate, particularly in terms of price. Accordingly, in B2B markets, the marketer must determine the drivers of those needs.
• Challenge #3: Complexity of B2B Products. Just as the decision-making unit in a B2B transaction is more complex, so too are the B2B products themselves. When you make a major purchase, like a high-definition TV, your choice is likely made on the basis of fairly simple criteria. You might evaluate things like screen size, resolution, and your budget. However, in the B2B market, even the simplest of products may have to be integrated into a larger system. For example, a new payroll system might have to be integrated into the company’s human resources information system (HRIS). Another consideration with respect to the complexity of B2B products is that many B2B purchases are frequently tweaked to meet the company’s detailed specifications, whereas consumer products are almost always standardized.19

Advantages of Segmenting B2B Markets

Market segmentation is a tried-and-true method that’s been around since the 1950s, but there is still some confusion about how to use it in a B2B setting because it’s not as clear-cut as other forms of market segmentation. How does a marketer target the characteristics of something impersonal like a business? Despite the challenges of segmenting B2B markets, it still plays a critical role. Let’s examine some of the advantages.20

• Improved Campaign Performance. Similar to the previous example of a company using specialty magazines to reach the right target audience with the right message, B2B marketers can do the same. For example, Mailchimp, a marketing automation platform and email marketing service, examined user data to compare segmented marketing campaigns with non-segmented campaigns. The statistics based upon a comparison of 18 million email recipients were eye-opening. Campaigns directed toward defined market segments saw increases in a number of areas, including a 14.3 percent higher email open rate.21
• Improved Customer Loyalty and Retention. In our discussion of consumer market segmentation, we pointed out that market segmentation allows marketers to better understand what consumers are looking for in a product or service, and the same holds true with B2B market segmentation. The more marketers know about their customers’ business objectives and challenges, the more they can attempt to meet their needs. That not only builds confidence in the brand but also ultimately leads to greater customer retention and loyalty.22
• Assistance in Product Development. By using market segmentation, a company can refine its products or services to better meet the needs of its B2B customers. For example, let’s say your company’s product is payroll software. Having better identified the needs of the target market, your company may be able to add new features and functionality to make it even more attractive for the target market and possibly add a new revenue stream by making the product useful for another market segment.
• Improved Profitability. Implementing a market segmentation strategy accomplishes three important goals. First, targeting the right B2B customers with the right message increases your company’s competitiveness. Second, it enables the marketer to properly price products with the best price for its different customer segments. Third, it helps identify the best prices with which to target new customers and ensure that your organization’s offerings are neither overpriced nor underpriced, thereby increasing profitability.23

Methods of Segmenting B2B Markets

How do you segment B2B markets? Just like with consumer markets, there is a variety of methods. Marketers can segment B2B markets based on firmographics, technographics, needs-based segmentation, value-based segmentation, and behavioral segmentation (see Figure 5.7). We will look at each of these in the following sections.

Figure 5.7 Methods of Segmenting B2B Markets (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

Firmographics

Where demographics are concerned with people, firmographics are concerned with companies. They are a grouping of B2B customers based on shared company attributes. There are five general categories of firmographics:

• Industry. What are the organization’s primary activities? Once you’ve determined that piece of information, you can use market segmentation to group firms that are in a similar line of business.
• Location. The mantra in the real estate industry is that there are three things that matter: location, location, location. Just like with geographic segmentation in the B2C market, a marketer can choose a city, state, country or even a continent, depending on the line of business. For instance, depending on the cybersecurity challenges or threats faced by customers in different countries or regions, a cybersecurity firm may offer different cybersafety features in its software.24
• Size. Will your company target small and midsize operations or Fortune 500 companies? The needs of these organizations are vastly different. Firmographic size typically involves two components: revenue and number of employees.
• Legal Structure. In firmographics, legal structure denotes the legal status of a firm. For example, is the organization a sole proprietorship, a limited liability company, a corporation, or a nonprofit firm? Is it an independent business, a parent company, or a subsidiary of another business?25 All of these factors are important to know in order to create targeted content.
• Performance. Customer segments can be broken down based on performance, such as market share, quarterly or annual sales figures, and growth and/or losses (both in employees and revenue).

Segmenting Customers Based on Technographics

Technographic segmentation is based on the various hardware and software technologies used by B2B customers. It allows the marketer to organize prospects by their technology ownership and usage and narrow the market to those prospects who want to invest in new technological solution in the future.26

Needs-Based Segmentation

Think about it: What’s the point of marketing a product or a service to an organization that doesn’t need it? Needs-based segmentation is the concept that a marketer should focus limited resources on those customers that need the product and have the ability to purchase it.

Needs-based segmentation clusters groups of customers on the basis of what they need or want when seeking a product. Does your company’s product offer the features or benefits that the B2B buyer is seeking? Will the product meet the buyer’s (or company’s) needs? Those are the questions marketers need to answer when segmenting the B2B market based on needs. The late Theodore Levitt, an economist and a professor at Harvard Business School once said, “People don’t want to buy a quarter-inch drill; they want a quarter-inch hole.”27 Accordingly, rather than segmenting a market based on firmographics, many marketers choose to segment it based on what is valued by decision influencers.

Value-Based Segmentation

Value-based segmentation (sometimes called tiering or profitability segmentation) groups customers according to the potential value they may bring to a business. It places potential customers with the same value level (or “transactional worth”) into individual segments for target marketing. In its simplest terms, this approach is like the usage-based segmentation strategy of B2C markets. A marketer examines previous purchase data to determine how much a company buys, how frequently it buys, and the value of the purchases.28

Behavioral Segmentation

Behavioral segmentation considers the behavior of customers toward a company’s products or services. We’re not talking about two-way mirrors or covert operations here. This can be as simple as determining how the customer interacted with your company’s website, what content they interacted with, and whether the customer opened your last marketing email. The marketer then segments customers on the basis of their interaction with the company and attempts to discern if customers within that segment have become more interested or less interested over time. Behavioral segmentation is often used together with value-based segmentation to identify which customers should be pursued to get greater value out of them.29

Link to Learning

The Importance of Segmentation

For more information on the importance of segmenting B2B customers, check out this video, The Importance of Segmenting Your Customers. This video is from B2B Business International Market Research, a market research company, and it speaks to the importance and value of knowing your customers.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1.

Hoffman Enterprises, a manufacturer of electronic controls for appliances, has segmented its customers based upon the size of the company in terms of revenue and its geographic location. What method of segmenting B2B markets is Hoffman Enterprises using?

1. Technographics
2. Behavioral
3. Firmographics
4. Needs Based

2.

Matias is a marketing manager for a company whose product integrates with customer relationship management (CRM) systems such as Salesforce. In order to segment the market, he researches which companies currently use Salesforce as well as any other complementary or competing tools. On what basis is Matias segmenting the market?

1. Technographics
2. Value-based
3. Behavioral
4. Firmographics

3.

Which form of B2B market segmentation differentiates customers according to their “transactional worth”?

1. Behavioral
2. Firmographics
3. Value based
4. Needs based

4.

Which form of B2B market segmentation groups customers based on sets of characteristics such as industry, location, size, legal structure, and performance?

1. Technographics
2. Psychographics
3. Firmographics
4. Demographics

5.

Which B2B market segmentation strategy clusters groups of customers on the basis of what features they normally look for in a product?

1. Firmographics
2. Behavioral
3. Technographics
4. Needs based

https://tinyurl.com/yu8sfthc

Perfect Competition

 

By Gennaro Cuofano 

Perfect competition is a theoretical construct that represents a market where certain conditions are met to ensure idealized competition. These conditions are outlined by several key characteristics that distinguish perfect competition from other market structures, such as monopoly or monopolistic competition. The concept of perfect competition was first developed by economists in the late 19th and early 20th centuries and has since become a fundamental building block in economic theory.

Key Characteristics of Perfect Competition

To understand perfect competition, let’s explore its key characteristics:

1. Many Buyers and Sellers

In a perfectly competitive market, there are a large number of buyers and sellers. No individual firm or buyer has the power to influence the market price. Each firm is a price taker, meaning it accepts the prevailing market price as given.

2. Homogeneous Products

Products offered by firms in a perfectly competitive market are identical or homogeneous. There is no differentiation in quality, packaging, or branding. Consumers perceive the products of all firms as perfect substitutes.

3. Perfect Information

All market participants, including buyers and sellers, have access to perfect information. This means they are fully aware of market conditions, prices, and product quality. There are no information asymmetries.

4. Ease of Entry and Exit

Firms can easily enter or exit the market. There are no significant barriers to entry, such as government regulations, high startup costs, or proprietary technology. Firms can freely compete without hindrance.

5. Price Determination

The price in a perfectly competitive market is determined by the intersection of market supply and demand. Firms have no control over the price; they can only choose the quantity of output to produce.

6. Profit Maximization

Firms in perfect competition aim to maximize profits. They do so by producing the quantity of goods where marginal cost (the cost of producing one more unit) equals marginal revenue (the additional revenue from selling one more unit).

7. Zero Economic Profit in the Long Run

In the long run, in perfect competition, firms earn zero economic profit. This means that while they cover all their costs, including normal profit (the minimum profit required to keep the business operating), there is no excess profit. Firms operate efficiently and do not earn supernormal profits.

Real-World Relevance and Examples

Perfect competition is an idealized model, and real-world markets rarely conform to all its conditions simultaneously. However, elements of perfect competition can be observed in various sectors:

1. Agricultural Markets

Agricultural markets often exhibit characteristics of perfect competition. Many small farmers sell homogeneous products, such as wheat or corn, in well-functioning markets. Price fluctuations are primarily driven by supply and demand.

2. Stock Markets

Stock markets, especially for widely traded stocks, can resemble perfect competition. There are many buyers and sellers, and information about stock prices and company performance is readily available.

3. Foreign Exchange Markets

The foreign exchange market, where currencies are traded, can be considered close to perfect competition. There are numerous participants (banks, financial institutions, and individuals), homogeneous products (currencies), and real-time information on exchange rates.

4. Online Retailing

In the online retail sector, especially for commodity-like products, elements of perfect competition can be observed. Many sellers offer homogeneous products, and consumers have access to price information and can easily compare prices.

5. Labor Markets

Certain segments of labor markets, such as low-skilled or unskilled labor, may resemble perfect competition. Many individuals are available to offer their labor, and wage rates are influenced by supply and demand.

Significance in Economic Analysis

Perfect competition serves as a crucial benchmark in economic analysis and has several implications:

1. Efficiency

Perfectly competitive markets are considered efficient because they allocate resources to their highest-valued uses. Firms produce at the lowest possible cost, and consumers obtain goods at the lowest possible prices.

2. Consumer Welfare

Consumers benefit in perfect competition as prices are competitive and products are homogeneous. Consumer surplus (the difference between what consumers are willing to pay and what they actually pay) is maximized.

3. Economic Welfare

Perfect competition also maximizes overall economic welfare, which includes both consumer and producer surplus. In the long run, resources are efficiently allocated, and there is no waste or inefficiency.

4. Dynamic Efficiency

Perfect competition encourages innovation and technological progress as firms seek to reduce costs and increase productivity to remain competitive.

5. Price as a Signal

In perfectly competitive markets, prices act as signals for resource allocation. If demand increases, prices rise, signaling firms to produce more. If demand falls, prices decrease, signaling firms to reduce production.

6. Long-Run Equilibrium

In the long run, firms in perfect competition earn zero economic profit. This means they only earn enough to cover their costs, including normal profit. Inefficiencies are eliminated over time.

Criticisms and Limitations

While perfect competition is a useful theoretical model, it has its criticisms and limitations:

1. Real-World Deviations

Few real-world markets perfectly match all the conditions of perfect competition. Most markets exhibit some degree of imperfection, such as product differentiation or barriers to entry.

2. Homogeneous Products

The assumption of homogeneous products may not apply to many modern markets where product differentiation is prevalent, such as in the automobile or electronics industries.

3. Perfect Information

Perfect information is rarely attainable in practice due to information asymmetries and the costs associated with obtaining information.

4. Zero Economic Profit

The assumption of zero economic profit in the long run may not hold in industries with innovation or natural monopolies.

5. Lack of Real-World Applications

Perfect competition is an idealized model and may not be directly applicable to industries with unique characteristics, such as pharmaceuticals or high-tech innovation.

Conclusion

Perfect competition represents an idealized model that serves as a benchmark for understanding how markets can operate with maximum competition and efficiency. While it is a simplified abstraction that may not perfectly reflect real-world markets, it provides valuable insights into the benefits of competition, efficient resource allocation, and the role of prices in signaling and equilibrium. The concept of perfect competition remains a fundamental building block in economic analysis, helping economists and policymakers assess market behavior and design policies that promote competition and enhance economic welfare.

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Вовлеченность 3.0: от обратной связи к действиям.

 

Джош Берсин — один из самых авторитетных HR-аналитиков, к чьим прогнозам прислушиваются HR-лидеры и руководители компаний во всем мире. По мнению эксперта, в ближайшие годы принципиально изменится отношение к вовлеченности персонала, и для этого понадобятся новые программные инструменты.

Рынок инструментов обратной связи и вовлеченности персонала заметно оживился. Привычный управленческий подход сильно изменился с тех пор как компании стали прислушиваться к мнению сотрудников. Теперь руководителей оценивают по уровню счастья сотрудников.

И это неслучайно. Еще десять лет назад исследование The Service Profit Chain доказало, что удовлетворенность клиентов напрямую зависит от настроений сотрудников. Довольные сотрудники создают более качественные продукты, творчески мыслят и уделяют больше внимания клиентам. Мы замечаем это в самолетах, магазинах, клиниках, всякий раз, совершая покупки.

Необходимость думать о том, как чувствуют себя сотрудники экономически обусловлена существенной трансформацией бизнес-моделей. Как бы компании ни старались перейти на цифровой формат продаж, качество сервиса приобретает все большее значение. По недавним оценкам, 85% фондового рынка США базируется на нематериальных активах, а это все, что связано с человеческой деятельностью (интеллектуальная собственность, уровень сервиса, узнаваемость бренда, лояльность клиентов).

Каждая компания — это люди. И если мы хотим, чтобы клиенты были счастливы, надо заботиться о счастье сотрудников.

Что означает «компания, умеющая слушать»?

Обратная связь работает лишь в том случае, когда в компании решены проблемы с культурой и техническими средствами. Все мы знаем, что необходимо выстраивать культуру, при которой люди могут смело говорить все, что думают. Вместе с тем, это нелегко: мы не хотим просто собирать претензии, нам нужна конструктивная критика, идеи по развитию, беспристрастные мнения, все, что помогло бы улучшить условия работы.

• В Netflix действует принцип: «не говори онлайн того, что не скажешь в глаза». Компанию отличает исключительная честность: каждый знает, что может высказать все, что должно быть сказано.
  
  
• В компании Patagonia практика обратной связи прижилась не сразу. Как говорит директор по персоналу Дин Картер, в первый год люди настороженно отреагировали на предложение озвучивать свою точку зрения. Программа заработала только два года спустя, когда все поняли, что это безопасно.
  
  
• Рей Далио описывает в книге «Принципы. Жизнь и работа», почему он стал сторонником «радикальной прозрачности», и как в хедж-фонде Bridgewater внедрили автоматизированную систему обратной связи, которая определяет лидеров мнений по таким показателям как «добросовестность» и «авторитет».
  
  
• Сотрудники IBM и других технологических компаний свободно обговаривают проблемы в мессенджере Slack и онлайн-сообществах. Дайан Герсон, HR-директор IBM, отмечает, что открытые обсуждения позволяют мгновенно реагировать на жалобы и управленческие ошибки. В Amazon уже несколько лет работает постоянно активная система обратной связи, способная выявлять любые осложнения.

Возможно, некоторые побаиваются показывать внутреннюю «кухню» в социальных сетях, но поверьте, это действительно здорово. Все компании, что создали открытую культуру, подтверждают позитивный результат, и сейчас для этого есть все возможности.

Мы шли к этому долго. Десять лет назад, когда я только начинал изучать эту сферу, свыше 60% компаний вообще не опрашивали сотрудников, остальные проводили опрос не чаще раза в год. Сейчас компании повсеместно используют пульс-опросы, прислушиваются к мнению сотрудников, а информация поступает напрямую линейным менеджерам. Нет надобности привлекать HR-консультантов к первичной обработке и фильтрации данных.

Например, в компании Workday каждую неделю задают сотрудникам единственный вопрос. Линейные менеджеры сразу получают ответы и видят, где возникли затруднения задолго до того, как ситуация выйдет из-под контроля.

Как выстроить архитектуру обратной связи

Сейчас доступны сотни программ, позволяющих решить эту задачу. По сути, функции обратной связи предусмотрены в любой современной HR-системе. Пару месяцев назад SAP приобрела за 8 миллиардов долларов компанию Qualtrics, незадолго до выхода облачного сервиса для клиентских опросов. Аналогичные программы предлагают Software, Workday, Cornerstone, Oracle, ADP, Glint, CultureAmp, Peakon, Perceptyx, SurveyMonkey, и другие разработчики. Выбор огромный: буквально у каждого крупного поставщика ПО для управления эффективностью найдется решение для обратной связи.

Но прежде чем подбирать инструменты, важно понять, что представляет собой «архитектура обратной связи» вашей компании, и сгруппировать все источники. Чтобы получить содержательные выводы, понадобится функционал, который в Glint называют перекрестным программным интеллектом (cross program intelligence).

Точно знаю, эти инструменты работают: по данным сайта Glassdoor средний показатель вовлеченности персонала за последние три года вырос на 8,7%. Уверен, это говорит о том, что компании стали уделять больше внимания потребностям сотрудников.

Опять-таки, сбор данных — это далеко не все. Допускаю, что ваш HR-департамент любит устраивать опросы, но основные проблемы начинаются при обработке результатов: как использовать эту информацию?

От обратной связи к действию: роль руководителя

Изначально вовлеченностью персонала занимались статистики и социальные психологи. У нас была небольшая специальная группа при HR-отделе, которая разрабатывала опросы, анализировала ответы и пыталась установить наиболее значимые взаимосвязи. Сейчас обратная связь стала непрерывной (результаты опросов, отзывы, комментарии) и важно использовать ее на благо компании.

Как понять, о чем спрашивать? И что делать с этой массой ответов? Просто сбрасывать «по назначению» или поступать умнее?

За годы изучения вовлеченности я пришел к выводу, что это комплексная задача. У всех сотрудников разные потребности, поэтому необходимо расширять кругозор. Итак, я разработал модель в помощь руководителям.

Бывают руководители, которые контролируют каждый шаг: у подчиненных: буквально связаны руки. В иных организациях люди толком не знают, за что отвечают, поэтому у них размыты приоритеты. Иногда рабочая обстановка настолько шумная и нервозная, что о продуктивности не может быть и речи. В некоторых компаниях безнадежно рассчитывать на продвижение, поэтому у сотрудников создается ощущение, будто они застряли в болоте. Случается, люди не доверяют руководству. Список можно продолжать до бесконечности.

Предлагаю рассмотреть проблему со всех сторон и признать, что мелочей не бывает. Вместо того, чтобы искать статистически значимые величины, дайте людям высказать все, что у них наболело. И тогда вы поймете, что действительно важно.

Что поможет руководителям перейти к действиям

Возвращаемся к исходной точке. Что делать с полученной информацией? Чем она может быть полезна руководителям и рядовым сотрудникам?

Инструменты нового поколения умеют анализировать и интерпретировать данные, а затем подсказывать, что надо предпринять. В некотором смысле мы переходим от рынка систем обратной связи к совершенствованию методов управления, иначе говоря, к системам управления улучшениями. Среди всех компаний, работающих в этом направлении, особого внимания заслуживает Glint (принадлежит LinkedIn). Хотя у меня нет цели расхваливать их продукт, но все же я считаю его ориентиром для рынка.

Диспетчер для менеджера

В Glint поняли главное: вовлеченность и обратная связь важны, но все зависит от конкретных действий. Многие разработчики программ для управления вовлеченностью предусмотрели некий шаблон «плана действий», но это всего лишь второстепенное дополнение к результатам опроса. Решение Glint намного дальновиднее.

Многие наверняка слышали о «Хоторнском эффекте». Это открытие было сделано в 1920-х годах, в ходе экспериментов на фабрике «Вестерн электрик». Психологи отметили, что после того, как в рабочих помещениях поставили дополнительные лампы, производительность тут же возросла. Но когда лампы отключили, производительность продолжала расти!

Такие неожиданные результаты позволили предположить, что работниц воодушевила совсем не освещенность, а сам факт, что руководство проявило внимание к их нуждам и стало что-то делать ради улучшения условий труда.

Следовательно, позитивные перемены произойдут лишь в том случае, если руководители будут изучать итоги опросов и обсуждать их с людьми.

Как подтолкнуть руководителей к действиям

Как уже говорилось, нужно объединять культуру и технологии. Прежде всего, понадобится поддержка высшего руководства, поскольку остальные руководители вряд ли будут вести себя по-другому, пока не убедятся, что забота о сотрудниках действительно приносит пользу. Тем временем оцените возможности новых инструментов.

Например, система Glint мгновенно обрабатывает данные опросов и отправляет результаты в личный кабинет руководителя, а вместе с ними — конкретный план действий. Все просто и доступно, более того, когда пользователь нажимает на кнопки и ставит отметку «выполнено», система обучается и становится еще эффективнее.

Собственно план подается в форме подсказок и предложений, а в дальнейших версиях пользователи будут перенаправляться непосредственно на короткие обучающие видеоролики и курсы LinkedIn Learning, что поможет добиться еще больших успехов. Все связи построены на результатах опросов и комментариях сотрудников.

Фактически технологии превратили систему опросов из обычного инструмента обратной связи в систему изменения поведения, в основе которой лежат реальные данные. Только представьте себе, насколько расширятся возможности платформы, когда каждая рабочая группа получит результаты и руководители увидят реальный эффект своих действий.

В Glint не просто разработали платформу, но и испытали ее на себе. Вовлеченность сотрудников, чьи руководители просто следовали предложенным планам, выросла на 7%, а уровень вовлеченности сотрудников, с которыми обсуждали эти планы, оказался в 8 раз выше, чем у коллег. Как видим, Хоторнский эффект работает, независимо от того, насколько тщательно «выписаны» мероприятия по улучшению.

Как применить это на практике?

Придется ли обновлять инструменты? Хотелось бы ответить «да», ведь для этого есть все предпосылки, и вам наверняка захочется выйти за рамки обычных опросников и найти систему, которая давала бы ценную оперативную информацию. Но рынок таких программ еще очень молод: для многих компаний в новинку регулярные опросы, а некоторые только начали собирать данные о сотрудниках.

Тем не менее, я бы советовал менять привычный подход уже сейчас, независимо от того, когда у вас появится новая технология. Всем HR-профессионалам стоит воспринимать эту область деятельности как «способ достижения результатов», а не как «сбор данных для оценки текущей ситуации».

Взгляните, как выглядит процесс. Первый шаг — собрать данные из всех доступных источников, что решается с помощью программных средств. Следующий шаг — информационные панели, совещания и другие мероприятия, на которых руководители могут обговорить мнения сотрудников. Третий шаг — помочь руководителям определить дальнейшие действия, четвертый — призвать их к открытому обсуждению планов по улучшению. И наконец, снова собрать обратную связь и посмотреть, что получилось.

Технологии очень пригодятся, но все это можно сделать и вручную. Мы справлялись с этой задачей еще в 1980-х, когда проводили в IBM «Ежегодный опрос мнений». Каждый год все линейные менеджеры в обязательном порядке проходили все вышеописанные шаги. Тогда на это уходил не один месяц, но сегодня все намного проще.

Помните, что руководители не всегда понимают, что делать

Позвольте напомнить кое-что важное. Многим из нас хочется думать, что мы всегда поступаем правильно, но когда нас критикуют, мы начинаем сомневаться в своих силах. Поэтому необходимо, чтобы руководители получали советы, рекомендации, технические средства, и даже коучей, которые помогли бы справиться с проблемами.

В сущности, Glint создает новую систему развития лидерства. Лидеры видят отзывы, понимают, где у них слабые места, получают рекомендации по улучшению, и спустя некоторое время от этого выигрывает их команда, а значит и вся компания. Это не просто инструмент обратной связи и не платформа управления вовлеченностью — это новая модель менеджмента, которая помогает руководителям всех уровней видеть ситуацию со всех сторон и поддерживать высокую производительность.

Кроме того, замечания не относятся лично к вам. Люди говорят о работе, условиях, правилах и процессах. Сотрудники лучше нас знают, что их беспокоит, а это чрезвычайно ценная информация. Помните, большая часть из того, что вы узнаете — это всего лишь недочеты, которые надо исправить. Создавая «осмысленную» культуру, где принята здоровая критика и открытые обсуждения проблем, мы видим ситуацию как есть, и понимаем, что каждый сотрудник может улучшить рабочую обстановку.

В очередной раз происходят серьезные перемены, и нам предстоит многому научиться. Но в то же время все просто. Пора менять стратегию вовлеченности персонала, переходить от обратной связи к действиям, подбирать инструменты и обучающий контент, чтобы упростить эту задачу. Культура сегодня стоит на первом месте, но я с удовольствием отмечаю, что у нас в руках потрясающие HR-технологии, с которыми мы сможем постоянно повышать привлекательность работы.

Источник

https://tinyurl.com/4hhryjtv