MARKET & PRODUCT SEGMENTATION DEFINITIONS

MARKET & PRODUCT SEGMENTATION


Product and Market Segmentations for the industry products and services is an essential consideration for all companies. These segmentations will help the companies in the marketplace to increase the attractiveness of their products and thereby assist market penetration.

There are 18 proposed scenarios which readers might consider:

1.

MARKET SEGMENTATION THROUGH PRICING - LOWER PRICE

2.

MARKET SEGMENTATION THROUGH PRICING - HIGHER PRICE

3.

PRODUCT SEGMENTATION THROUGH QUALITY - HIGHER QUALITY

4.

PRODUCT SEGMENTATION THROUGH - LOWER QUALITY

5.

MARKET SEGMENTATION THROUGH AVAILABILITY - GREATER AVAILABILITY

6.

MARKET SEGMENTATION THROUGH AVAILABILITY - REDUCED AVAILABILITY

7.

PRODUCT SEGMENTATION THROUGH PERFORMANCE VARIANCES

8.

PRODUCT SEGMENTATION THROUGH TECHNOLOGICAL + TECHNICAL FACTORS

9.

PRODUCT SEGMENTATION THROUGH WARRANTY VARIANCES

10.

PRODUCT SEGMENTATION THROUGH SERVICE FACTOR VARIANCES

11.

PRODUCT SEGMENTATION THROUGH PRODUCT FRAGMENTATION

12.

MARKET SEGMENTATION THROUGH CONVENIENCE FACTORS

13.

MARKET SEGMENTATION THROUGH DISTRIBUTION FACTORS

14.

MARKET SEGMENTATION THROUGH CUSTOMER FACTORS

15.

MARKET SEGMENTATION THROUGH PSYCHOGRAPHICS

16.

MARKET SEGMENTATION THROUGH BRANDING

17.

MARKET SEGMENTATION THROUGH MULTI-BRANDING

18.

MARKET SEGMENTATION THROUGH MARKET STRETCHING

Each of the above Market and Product Segmentation strategies are then applied to each of the commercial considerations, namely the specific products, markets, operations, geographic locations and competitors areas.

The calculation is made by applying the Segmentation Value to the Item Weighting to give the cell value, thus:-

   Value x Weight = Cell value

For example,

   80 x 1.1 = 88

 

C

08

11

E

L

L

03

05

10

15

06

V

A

L

x

U

E

04

09

14

13

02

07

12

01

RELATIVE IMPORTANCE TO SALES VOLUME, MARKET SHARE & PROFITABILITY

 

The values of base Factors (fields Crit_A to Crit_K), together with the data is for 15 sectors (products, markets, operations, geographic locations, competitors, et al) covered in each table (fields Headx01 to Headx15) represent the relative weightings.

One can plot these weightings as an initial analysis of the relative importance to the criticalness of the Factors and the criticalness of the factors (defined in fields A_Def to K_Def) to the individual Sectors (defined in fields Head01 to Head15). x = Base reference for the Factor.

In this example one can compare the weightings of one particular base Factor, x, with that of the 15 other sectors.

 
 

For example, if the cell value figure for " MARKET SEGMENTATION THROUGH PRICING - LOWER PRICE " is high, this will indicate that the Segmentation of a product or service by reducing prices would represent an opportunity to build sales volume, market share and profitability. Conversely, if an industry does not have a high score with this factor this will indicate that the market will not respond favorably to such a Market Segmentation tactic by the companies in the industry. Similarly the other Segmentation tactics can also be related to individual situations within companies.

The relative cell values and cell weights reflect the relative importance of that cell in terms of achieving greater sales volume, market share and profitability. Thus if the cell value is high then companies in the industry will have the opportunity to utilize such a tactic to achieve high sales volumes, market share and profitability. The converse is applicable if cell values are low and this indicates that the particular cell does not have much bearing or effect on sales volumes, market share or profitability.


THE DATABASE

There are a series of spreadsheet and database tables for this section, and each table will consist of a number of records for each of the specific products, markets, operations, geographic locations and competitors areas:

TABLE

Datafile

PRODUCT + MARKET SEGMENTATION

SG2 – SGP

TRADE CELL - PRODUCT + MARKET SEGMENTATION

SG3 – SGT

OPERATIONS - PRODUCT + MARKET SEGMENTATION

SG4 – SGO

COMPETITOR - PRODUCT + MARKET SEGMENTATION

SG5 – SGC

MAJOR CITY - PRODUCT + MARKET SEGMENTATION

SGB

There are 2 records for this section for each of the above sectors (headings indicate Field names):

MARKET & PRODUCT SEGMENTATION

CODE

CRITICALS

A_DEF

B_DEF

C_DEF

D_DEF

E_DEF

F_DEF

G_DEF

H_DEF

I_DEF

J_DEF

K_DEF

SEG_01

1: MARKET & PRODUCT SEGMENTATION

PRICING - LOWER PRICE

PRICING - HIGHER PRICE

HIGHER QUALITY

LOWER QUALITY

GREATER AVAILABILITY

REDUCED AVAILABILITY

PERFORMANCE VARIANCES

TECHNOLOGICAL & TECHNICAL FACTORS

WARRANTY VARIANCES

SERVICE FACTORS VARIANCES

PRODUCT FRAGMENTATION

SEG_02

2: MARKET & PRODUCT SEGMENTATION

CONVENIENCE FACTORS

DISTRIBUTION FACTORS

CUSTOMER FACTORS

PSYCHOGRAPHICS

BRANDING

MULTI-BRANDING

MARKET STRETCHING

The above table is then applied to the specific products, markets, operations, geographic locations and competitors for under 15 sub-headings (headings indicate Field names):

Items being considered (x)

Products, markets, operations, geographic locations and competitors

Field Name for Item

Field Name for Item Weight

For example:

Head01

Headx01

Product 1

Head02

Headx02

Product 2...

Head03

Headx03

 

Head04

Headx04

 

Head05

Headx05

 

Head06

Headx06

 

Head07

Headx07

 

Head08

Headx08

 

Head09

Headx09

 

Head10

Headx10

 

Head11

Headx11

 

Head12

Headx12

 

Head13

Headx13

 

Head14

Headx14

 

Head15

Headx15

 

FIELD MANIPULATION

MARKET & PRODUCT SEGMENTATION

CODE

CRITICALS

A01

B01

C01

D01

E01

F01

G01

H01

I01

J01

K01

SEG_01

1: MARKET & PRODUCT SEGMENTATION

110

100

98

80

70

80

85

90

100

121

80

The above fields (A01 to K15) represents the average VALUE for the Segmentation Factor, Eg. for SEG_01 – A =  "PRICING - LOWER PRICE". 

Headings A to K is the Segmentation Factors. 

The individual cells (Axx – Kxx) represent the VALUE for the Items Segmentation Factors, Eg. A to K.

Cells – where, A01-K01 = A - K, etc.

A01

B01

C01

D01

E01

F01

G01

H01

I01

J01

K01

   …  To …

A15

B15

C15

D15

E15

F15

G15

H15

I15

J15

K15

110

100

98

80

70

80

85

90

100

121

80

Where, the xx, (i.e. 01-15) represents the VALUE for each Heading (i.e. Head01 – Head15)

The Weight for each Heading is found in fields Headx01 to Headx15

Field Name for Item Weight

Headx01

Headx02

Headx03

Headx04

Headx05

Headx06

Headx07

Headx08

Headx09

Headx10

Headx11

Headx12

Headx13

Headx14

Headx15

Graphically, one can establish a base reference line for each Item (Eg. Headx) by multiplying the Ax field with the Headxx field, viz, A x Headx01.

Then one can plot the value of each Item in relation to the base reference line and the other Item in the set by multiplying the A01 field with the Headx01.

Segmentation Factor representation for table:

A

B

C

D

E

F

G

H

I

J

K

 

C

z

    

z= Base Reference

(A – K)

 

x= Head01

o= Head02

… Etc.

E

z

x

L

o

x

o

L

x

z

z

x

x

o

z

V

x

o

o

x

z

A

z

z

x

o

L

x

o

U

z

z

o

E

x

o

z

x

o

o

PRICING - LOWER PRICE

PRICING - HIGHER PRICE

HIGHER QUALITY

LOWER QUALITY

…Etc

= Segmentation Factors

RELATIVE IMPACT ON SALES VOLUME, MARKET SHARE & PROFITABILITY