MARK3054 Lecture Notes - Lecture 5: Multicollinearity, Null Hypothesis, Price Discrimination
Topic 5: Customer Heterogeneity and Segmentation
STP=
1. Segment (subdivide market into distinct subsets, homogenous within and heterogeneous
between)
2. Target (segments which can be reached profitably)
3. Position (focused marketing program)
Segmentation:
ST applications: sales force allocation/planning, communication, pricing (price discrimination etc.),
understand how you measure up to your competitors)
LT applications: understand emerging and changing needs of your segment, discover a new segment
which you can begin to serve, plan for segment development/growth, not-in-kind
competition/threats
Needs-Based Segmentation:
2 types of variables
1. Bases: characteristics that tell us why segments differ (e.g. needs, preferences, decision
processes)
2. Descriptors: characteristics that held us find and reach segments (once a market has been
divided into different bases, look at the different bases and find their descriptors)
IMPORTANT: descriptors are just there to describe a segment with the same needs, do not
segment markets using descriptors.
• B2B: industry, size, location, organisational structure
• B2C: age, income, education, lifestyle
Based on bases (or needs), consumers can be grouped into major groups. There are similarities and
differences in needs.
Modelling Customer Heterogeneity
1. Difference in values: compare means (of e.g. satisfaction levels) using t-test and ANOVA
2. Difference in direct impact: incorporate as a main effect
3. Difference in moderating relationships: incorporate as a moderating effect using interaction
i regressios or hierarchical odel (e.g. what is satisfactios effect o WTP, ow how does
gender moderate this relationship?)
Lecture Example: Digital Camera Study Data
Variables: WTP, SAT, INC, Education (High, Bach, Master)
1. Difference in values:
Independent samples t-test, null hypothesis = no difference, alt hypothesis= difference
Interpreting Results:
Significance= p-values
Size of effect= difference in means
2. Difference in direct impact:
Impact of income on WTP
Interpreting Results:
Significance = p-values
Size of effect= size of coefficient
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Document Summary
Stp: segment (subdivide market into distinct subsets, homogenous within and heterogeneous between, target (segments which can be reached profitably, position (focused marketing program) St applications: sales force allocation/planning, communication, pricing (price discrimination etc. understand how you measure up to your competitors) Lt applications: understand emerging and changing needs of your segment, discover a new segment which you can begin to serve, plan for segment development/growth, not-in-kind competition/threats. Important: descriptors are just there to describe a segment with the same needs, do not segment markets using descriptors: b2b: industry, size, location, organisational structure, b2c: age, income, education, lifestyle. Based on bases (or needs), consumers can be grouped into major groups. Variables: wtp, sat, inc, education (high, bach, master: difference in values: Independent samples t-test, null hypothesis = no difference, alt hypothesis= difference. Size of effect= difference in means: difference in direct impact: This does not include other personal characteristics which may also have an impact: difference in moderating relationships:
