1. MARKET SEGMENTATION Â Â Â Â Â Â Â Â Â Â Â Â Â
By means of the customer survey we want to know better the features and behaviour of our potential clients. To be able to perform this analysis in a suitable manner, first we need to limit the market and establish which group of clients we are going to address to, this procedure is called segmentation.
To segment is, therefore, to divide the market into homogeneous groups, which behave similarly in front of a product or service.
To carry out the segmentation we need to choose some criteria that are suitable for our activity. The criteria will be different depending on if we are using the segmentation for consume markets (if our target customers are people) or to industrial markets (our target customers are companies)
Segmentation criteria in Consume Markets
*     Geographical: region, town size, density, weather, urban-rural …
*     Demographical: age, sex, family unit, civil state, nationality, religion…
*     Socio-economic: incomes, social class, education, job, hobbies…
*     Psychological: values, kind of personality, lifestyle…
*     Behaviour: frequency of use, applications, expected benefit from the product/service…
*     Motivations for purchase: brands, prices, prestige…
Segmentation criteria in Industrial Markets:
*     Geographical: region, town size, density, weather, urban-rural…
*     Demographical: company size, activity sector, kind of company…
*     Resources-capacities: turnover, technology, resources (human, technical, economic…)
*Â Â Â Â Â Personal: values, technical vs. managing profile, negotiation process, attitudes in front of risk
*     Behaviour: purchase frequency, applications, profit expected from the product/service, purchase volume, order centralisation …
*     Motivations for purchase: brands, prices, prestige, speed, distance, adaptability…
Depending on the criteria chosen and by crossing them, we will get different segments. Let us see a simple example to understand the process better.
Example: for a project in the sector of children clothing, we have chosen as segmentation the age, sex and the families’ purchasing power. Each criterion has been allocated the following values:
Age: 0-2 years, 3-6 years, 7-12 years
Sex: boys, girls
Family power of purchase: medium, high
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If we cross them, we get 12 segments:
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Boys 0-2 medium | Boys 3-6 medium | Boys 7-12 medium |
Boys 0-2 high | Boys 3-6 high | Boys 7-12 high |
Girls 0-2 medium | Girls 3-6 medium | Girls 7-12 medium |
Girls 0-2 high | Girls 3-6 high | Girls 7-12 high |
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The next step will be to choose from these 12 segments those we find the most interesting for our business project.
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Segment choice
Once we have identified the criteria and we have got the market segments, the next stage is to evaluate them to determine the ones we will choose to address our offer.
The selected segments should be those answering the best to the following questions:
*Â Â Â Is the segment big enough?
*Â Â Â Which is its trend? Is it a growing segment?
*Â Â Â Is it an accessible segment for our company?
*Â Â Â Will we be able to defend our position in this market segment?
*Â Â Â Does focusing our offer on this segment mean a high degree of effort and difficulty for us?
*Â Â Â Is it a profitable enough sector?
*Â Â Â Does it correspond with the company strategy?
2. PURCHASE BEHAVIOUR OF THE CUSTOMER
Each group of customers might have different behaviours or motivations regarding the products and services. Correctly detecting these features will give us better knowledge of our potential market, and therefore better design of our marketing-mix, in accordance to it.
Motivations to purchase
When a customer purchases a product or service, he/she does it to meet certain need, but we have to remember that each one has a particular way of satisfying it. The motivations that lead us to buy a product might be rational or emotional.
Rational motivations, as their name indicates, are based on the use of reason and logic, that is, we acquire something because it is going to give us certain benefit, which we have evaluated and measured (durability, saving money, strength, efficiency…).
Emotional motivations, though, are based on human emotions (happiness, sadness, love, etc.). They are irrational feelings, impulsive or unconscious, that is, they do not undergo the filter of reasoning. The emotional reasons to purchase are linked to some elements, such as self-esteem, distinction, desire to belong to a social class, etc.
Factors to purchase
Depending on the motivations boosting the purchasers towards one product or another, certain factors will be determinant to influence directly the decision to purchase. These factors are of very different nature:
- Price
- The company prestige
- Brand
- Delivery terms
- Placement
- Product/service quality
- Customer service
- References
- Advertisements
- Credit terms
- Wide range of products/services
- Being close
- ………
Purchasing behaviour
Apart from knowing the reasons to purchase, it is also important to know how the potential customer behaves. Answering to the following questions, we can define better our target customer’ profile:
- What does he/she purchase? What need is he/she satisfying by acquiring this product?
- Why does he/she purchase? Which purchase factors does he/she estimate?
- Who purchases? The one who purchases is not always the same as the one who consumes. Therefore, it is important to distinguish the consumer (the one who consumes the product/service) from the purchaser (the one who performs the purchase) and the prescriber (the one who recommends the product/service). In some sectors several of these figures take part, so the behaviour analysis should be extended to each one.
- How does he/she purchase? Which purchasing channels does he/she use? (on line, being present…) Does he/she purchase alone or in group? Is he/she a reflexive or impulsive purchaser?
- When does he/she purchase? Does he/she concentrate the purchase in some months of the year? Which time band does he/she purchase? How often does he/she purchase?
- When does he/she purchase? Does he prefer shopping centres or traditional shops? Suburbs or city centre?
- How much does he/she purchase? What amount and which kind of formats does he/she purchase? Which is the average volume of purchase?
- What does he/she purchase for? How does he/she use it? What use or application does he/she make of the product?