Principles of segmentation of the consumer market. Basic principles of consumer market segmentation
Segmentation by attitudes (behavioral reactions) of buyers depends on the knowledge of buyers, their experience of using this product and their reaction to a particular product.
Behavioral reactions include: the reason for the purchase, the expectations associated with the product, the status of the user, the intensity of consumption, the degree of loyalty (predisposition), the degree of readiness to purchase and the attitude towards the proposed product. This is an approximate list of behavioral variables that are taken into account when segmenting markets according to behavioral characteristics.
Reason to buy. Every customer has their own reason to buy. The stimulus for the appearance of the idea that something should be bought, the incentive for the purchase itself and for the use of this product can be something new every time, and it can be anything. But usually the reasons for people coincide to some extent. For example, students often buy computers to study better or for playing computer games, while older people buy computers for work or for their children. The company should try to offer the customer as many reasons as possible to use the product. If this succeeds, then the intensity of use of the product increases and, accordingly, the aggregate demand for it increases. There are companies specializing in the provision of services or the production and distribution of goods related to memorable events in the life of each person: birthdays, anniversaries, weddings, holidays, etc.
product expectations. Expectations associated with the same product from different buyers are always somewhat different. Someone expects that his new one is very expensive, the latest brand mobile phone will ensure his success with the opposite sex and increase his significance among peers, and someone assumes that now he will always be in touch, and the numerous functions of the device will make it easier for him to do business in terms of communication. Companies in this case can be advised to create such offers that would coincide with the expectations of consumers, and at the same time would differ from the offers of competitors in better side for price, design and other additional characteristics. Sometimes firms create products with such unique properties that competitors do not have anything like it, and will not appear in the near future. With such goods or services, companies tend to either quickly conquer almost the entire market and make huge profits or incur large losses.
User status. All consumers, in relation to the use of a product or service, fall into one of several categories: do not use the product, used it but stopped, potential users, new users or newcomers, regular or traditional users.
The firm should always ensure that people in the first four categories change their status to more and more close to the status of a regular user. The most valuable category of consumers is regular customers. Even with a relatively small number of them, the volume of the company's activities can account for a significant part of these people.
In addition, each of the company's regular customers usually "brings" some other person who tries to use the product, and at best becomes a regular consumer himself. The loss of a regular customer, his transition to the consumption of a competitor's product is a very painful moment for any business.
consumption intensity. If people consume something, then they can do it with varying degrees of intensity: high, low or medium. The company should focus its efforts on attracting active consumers. Even with a relatively small number of them, the volume of the company's activities can account for a significant part of these people. It has been established that working with one active consumer is much more profitable than with several low-consuming ones. Often active consumers of a product have the same demographic and psychographic characteristics and they have the same reactions to the same advertising media. Such information helps in carrying out an advertising campaign and the implementation of the marketing program as a whole.
degree of loyalty. The predisposition of consumers to specific brands of goods can be divided into several groups:
absolute loyalty - a person always purchases goods of the same brand,
relative loyalty - a person trusts two or three brands and makes a choice among them,
inconsistent loyalty - a person rather quickly changes his attitude to various brands of goods and is inconsistent in their choice,
indefinite loyalty - this person cannot be seen in any preferences, he most often has a vague idea of \u200b\u200bthe differences between one brand and another, and either he is always looking for something new, or he buys the cheapest or most expensive on this moment, or whatever the last ad they saw would suggest.
If a company is going to enter a market where the majority of consumers have absolute or at least relative loyalty to already existing brands, then it will be very difficult for such a company to do this.
Degree of readiness for acquisition. Some potential consumers still do not know anything about the product, others know about its properties, others would like to purchase it, and others have already planned a purchase.
attitude towards the proposed product. Attitude towards the proposed product can vary from enthusiastic to sharply negative. To improve marketing effectiveness, a firm segments the market based on product attitudes and targets different audiences in appropriate ways to change the product's attitudes for the better. To do this, you need to know the reasons why this or that relationship develops.
After the market segmentation is completed according to behavioral principles, the dependencies between the various features of consumers and their attitude towards this product are determined. Properly conducted segmentation gives the company a powerful tool for assessing and selecting those market segments in which it is going to work, the development of which will become its goal. In accordance with the results obtained, the company builds its strategy in the market.
There is no single method of market segmentation. The marketer needs to experiment with segmentation options based on different variables, one or more at a time, in an attempt to find the most useful approach to consider the structure of the market. Now we will look at the main geographic, demographic, psychographic and behavioral variables that are used when segmenting consumer markets:
Figure 2.5. – Types and criteria of segmentation
Geographic segmentation involves breaking down the market into different geographical units: states, states, regions, counties, cities, communities. The firm may decide to operate: 1) in one or more geographic areas, or 2) in all areas, but taking into account differences in needs and preferences determined by geography. For example, General Foods' Maxwell House ground coffee is sold nationwide and is flavored locally. Stronger coffee is preferred in the West than in the eastern regions of the country.
Table 2.1.- Segmentation of the market by geographical features
Demographic segmentation is the division of the market into groups based on demographic variables such as gender, age, family size, stage life cycle family, income level, occupation, education, religious beliefs, race and nationality.
demographic variables, the most popular factors that serve as the basis for distinguishing consumer groups. One of the reasons for this popularity is that needs and preferences, as well as the intensity of consumption of a product, are often closely related precisely to demographic characteristics. For example, Ford Motor Company used the age characteristics of customers when creating a target market for its Mustang model. The car was designed to appeal to young people who needed an inexpensive sports car. However, the firm soon discovered that Mustangs were being bought by all age groups.
The real target market for the Mustang was not those who are young in years, but everyone who is young at heart!
Table 2.2. - Market segmentation by demographic characteristics
Another reason is that demographic characteristics are easier to measure than most other types of variables. Even in cases where the market is not described in terms of demographics (say, based on personality types), it is still necessary to make a connection with demographic parameters.
We will now illustrate how certain demographic variables are used to segment markets.
Age and stage of the family life cycle. The needs and capabilities of buyers change with age. Even a 6-month-old child already differs in its consumer potential from, say, a 3-month-old. Realizing this, the toy firm Aleybe Products developed 12 different toys to be used consistently by their children from three months to a year. One is for use when babies are just starting to reach for objects, the other is for when the baby develops grasping movements, etc. This segmentation strategy helps parents and other givers to easily select the right toy based on their child's age.
However, variables for age and family life stage can be unreliable. Floor. Gender segmentation has long been applied to clothing, hair care products, cosmetics and magazines. From time to time, the possibility of segmentation based on gender is also discovered by other market players.
income level. Another age-old technique for dividing the market for goods and services such as cars, boats, clothing, cosmetics, and travel is segmentation based on income. Sometimes the possibilities of such segmentation are recognized in other industries. Segmentation by multiple demographics. Most firms segment the market based on a combination of two or more demographic variables. For example, a boarding house takes care of blind people, takes care of maintaining their psychological state, provides professional education. However, due to limited capacity, the boarding house is not able to provide assistance to all blind people of different social status. An example of multifactorial segmentation of these individuals by age, gender and income level. The boarding house chose to serve blind men of working age with low level income, because its management believes that it is in the best position to meet the needs of this particular group potential clients.
Table 2.3.- Segmentation of consumers by life cycle stages
| Life cycle stage | Possible segments |
| Unmarried, bachelor period | Young people living separately |
| Newly created families | Newlyweds without children |
| Complete family, 1st stage | Young couples with young children under 6 |
| Complete family, stage 2 | Young couples with children aged 6 and over |
| Complete family, stage 3 | Married couples living with minor children |
| “Empty Nest”, Stage 1 | Elderly couples with whom working children do not live |
| “Empty nest”, stage 2 | Elderly couples with no children are retired |
| Elderly singles | Widowed persons with whom children do not live |
Psychographic segmentation. In psychographic segmentation, buyers are divided into groups based on social class, lifestyle, and/or personality characteristics. Members of the same demographic can have vastly different psychographic profiles. Lifestyle has an impact on people's interest in certain products. Brand and generic sellers are increasingly segmenting markets based on consumer lifestyle. For example, a jeans manufacturer wanted to create jeans for one of specific groups men, such as "active earners," self-indulgent pleasure-seekers, "traditional" homebodies, restless laborers, "business leaders," or successful "traditionalists." For each of these groups, jeans of a special cut will be needed, according to different price offered through various advertising texts, through various trading companies, etc. And if the company does not announce the lifestyle representatives of the product, its jeans may not cause much interest in one group of men..
Choice of target market segments. Marketing segmentation reveals the possibilities of various market segments in which the seller has to act. After that, the company needs to decide:
1) how many segments should be covered
2) how to determine the most profitable segments for it.
Let's consider these two problems in turn.
Market segmentation- the main method of marketing, with the help of which the enterprise divides it, taking into account the results of the analysis on certain grounds, into certain segments of consumers. It is carried out for the subsequent allocation of target segments that require a different approach in the strategy of developing new types of products, organizing product distribution, advertising and sales promotion. The market segmentation strategy allows the company, given its strengths and weak sides when choosing marketing methods, choose those that will ensure the concentration of resources in precisely those areas of activity where the enterprise has maximum advantages or, at least, minimum disadvantages. When selecting segments and choosing a target one, one should always take into account the scale of the market and emerging trends in it.
Segmentation according to the degree of consumer readiness for a positive perception of new products is very important. On this basis, a fairly stable division of consumers has developed.
Table 2.4. - Segmentation of consumers according to their behavior in the market
| Signs of segmentation | Possible segments |
| Consumption norms Purchasing motives Degree of need for the product Seeking benefits Degree of willingness to buy the product Emotional attitude to the product Price sensitivity Advertising sensitivity Service sensitivity | Not using this product; using a lot; average; little savings; status; reliability; prestige, etc. Needed constantly; needed from time to time never required to search the market; high quality goods; good service; lower than usual prices Unwilling to buy; not ready to buy at present; not informed enough to buy; interested in the product; seeking to buy; necessarily buying Positive; indifferent; negative; hostile Indifferent; prefers low prices; prefers high prices (as an indicator of quality); avoids very high prices Indifferent; sensitive to small advertising; sensitive to strong advertising Indifferent; very dependent on good service |
When segmenting based on the behavioral characteristics of buyers are divided into groups depending on their knowledge, attitudes, the nature of the use of the product and the reaction to this product. Many marketers consider behavioral variables to be the most appropriate basis for shaping market segments.
Reasons for making a purchase. Buyers can be distinguished among themselves on the basis of the idea, the purchase or the use of the product. For example, the reason for air travel may be something related to entrepreneurial activity, vacation, family. An airline may specialize in serving people who are dominated by one of these reasons. So, charter airlines serve those whose vacation includes an air flight somewhere.
Cause-based segmentation can help firms increase product usage. One powerful form of segmentation is to classify customers based on the benefits they seek from a product. D. Yankelovich applied segmentation based on the desired benefits to the purchase of watches. He found that approximately 23% of shoppers purchased watches at the lowest prices, another 46% were guided by buying factors of durability and overall quality of goods, and 31% bought watches as a symbolic reminder of some important occasion.
Benefit Segmentation requires identifying the core benefits that people expect from a particular class of products, the types of consumers seeking each of these core benefits, and the major brands that share some of those benefits. One of the most successful examples of segmentation based on benefits was presented by R. Haley, who studied the toothpaste market. As a result of his research, Haley identified four segments according to the types of benefits: savings, curative effect, cosmetic effect, palatability. The audience of each segment had demographic, behavioral and psychographic characteristics inherent only to it. For example, consumers interested in preventing tooth decay turned out to be people with large families, active consumers of toothpaste, conservatives by nature. In addition, representatives of each segment had their favorite brands of pasta. A toothpaste company can use these results to find out which benefit segment likes its product, to determine the main characteristics of the representatives of this segment and to identify the main competing brands. The firm may also look for some new benefit and launch a branded paste on the market that provides this benefit.
User status. Many markets can be broken down into non-users, former users, potential users, new users, and regular users. Large firms seeking to gain a large market share are especially interested in attracting potential users, while smaller companies seek to win regular users for their brand. Potential users and regular users require different marketing approaches.
Particular attention is paid to the status of users of public marketing organizations. Substance abuse clinics are developing rehabilitation programs to help those who regularly use drugs to kick the habit. In particular, talks of former drug addicts are organized, designed to repel young people (not using) from trying to try drugs.
Consumption intensity. Markets can also be divided into groups of weak, moderate and active consumers of the goods. Active users often make up most market, but they account for a large percentage of the total consumption of the product. The example of beer consumption shows that 68% of respondents do not drink it. The remaining 32% were divided into two groups of 16% each. One was made up of weak consumers, which accounted for 12% of the total volume of beer consumption, the other was active, consuming 88% of beer, i.e. seven times more weak. Naturally, a brewer would rather attract one active consumer for his brand than several weak ones. Active consumers of the product have common demographic and psychographic characteristics, as well as common commitment to advertising media. In the case of active beer drinkers, it is known that among them there are more workers than among weak consumers, and that their age is from 25 to 50 years, and not under 25 and over 50 years old, as is observed among weak consumers. They usually watch TV for more than three and a half hours a day (not more than two hours like weak consumers) and still prefer sports programs. Such data assists the marketer in setting prices, developing advertising messages and strategies for the use of advertising media. Public marketing organizations often face the active consumer dilemma in their work. Family planning agencies usually focus their efforts on large families, although it is in such families that they most stubbornly oppose the perception of appeals with calls for birth control. The National Safety Council focuses its efforts on offending drivers, even though these drivers are the least receptive to calls for safe driving. These organizations have to decide whether to focus on a small amount the least susceptible hardened offenders, or on a larger group of more susceptible petty offenders.
Degree of commitment. Market segmentation can also be carried out according to the degree of consumer commitment to the product. Consumers may be loyal to brands, stores, and other stand-alone entities. Imagine five branded products: A, B, C, D and E. According to the degree of commitment to them, buyers can be divided into four groups: Unconditional adherents. These are consumers who buy the same brand of goods all the time. Thus, an A, A, A, A, A, A buying behavior pattern represents a consumer with an undivided commitment to brand A.
Tolerant adherents. These are consumers who are committed to two or three brands. A, A, B, B, A, B buying pattern represents a consumer with a shared commitment between branded products A and B.
Fickle adherents. These are consumers who transfer their preferences from one brand to another. The A, A, A, B, B, B pattern of buying behavior suggests that the consumer has shifted his preference from brand A to brand B.
Wanderers. These are consumers who do not show commitment to any of the branded products. The pattern of A, C, E, B, D, B buying behavior suggests that we have a disloyal consumer who either buys any brand currently available or wants to buy something different from the existing assortment.
Any market consists of different numerical combinations of buyers of these four types. A brand loyalty market is a market in which a large percentage of buyers demonstrate an unreserved commitment to one of the brands it contains. In this sense, toothpaste and beer markets can be called rather high brand loyalty markets. It will be very difficult for firms trading in the brand loyalty market to increase their share in it, and for firms seeking to enter it, it will be very difficult to do so.
A firm can learn a lot from analyzing the distribution of commitments in its market. She should definitely study the characteristics of unconditional adherents of her own branded product. The Colgate firm found that its unconditional adherents are mostly middle-class people with large families and increased concern for their own health. These characteristics clearly define the boundaries of the firm's target market for toothpaste.
By studying tolerant adherents, a firm can identify brands that compete most sharply with its own. If many customers of Colgate buy Crest as well, the firm might try to improve its brand positioning in relation to Crest, perhaps by direct comparison ads. Studying consumers who are abandoning its brand in favor of others will help the firm learn about its marketing weaknesses. As for consumers who do not have commitments, the firm will be able to attract them by offering its brand.
At the same time, the firm must remember that the nature of buying behavior, which would seem to be explained by loyalty to the brand, may actually be a manifestation of habit or indifference, a response to a low price or lack of other brands on sale. The concept of "brand loyalty" is not always understood unambiguously, and therefore should be handled with care.
The degree of willingness of the buyer to perceive the product. At any given time, people are in varying degrees of readiness to make a purchase. Some of them are not aware of the product at all, others are aware, others are informed about it, fourth are interested in it, fifths want it, sixth intend to buy it. The numerical ratio of consumers of different groups to a large extent affects the nature of the developed marketing program. In general, the marketing program should be built in such a way that it reflects the redistribution in the numerical composition of groups of people who are in varying degrees of readiness to make a purchase.
attitude towards the product. The market audience can be enthusiastic, positive, indifferent, negative or hostile to the product. Campaigners of political parties, making pre-election rounds, are guided by the attitude of the voter, deciding how much time should be spent on working with him. They thank enthusiastic voters and remind them to make sure they vote; do not waste time trying to change attitudes from negative or hostile voters; on the other hand, they strive to strengthen in their opinion those who are positively disposed and to win over the indifferent to their side. The more clearly relationships can be identified with demographic variables, the more effective an organization can be in reaching the most promising potential customers. The market segment profile is college students. A recent study looked at spending patterns and other characteristics of a particular segment of the college student market.
Among other types of expenses, the study examined the cost of acquiring food products and drinks. Beverage consumption by this audience is particularly high. Among the preferred soft drinks are orange juice, milk and various soft drinks. In another group of drinks, beer and wine turned out to be the most popular, while lovers of stronger alcoholic drinks preferred rum. In addition to basic food items, students most often buy light snacks. On average, a college student makes seven shopping trips each month, with 76% of the students in the study group shopping at a supermarket.
Toiletries are very popular within this segment. Thus, 81% of female students buy hair care products and 80% - cosmetics. Shaving creams and facial soaps are also popular.
The best means of communication with this group of buyers are institute newspapers, which, according to them, are regularly read by 87% of the respondents. Radio and television are less effective in this sense. Many students are willing to take advantage of coupons, discount offers, or free samples.
Basic principles of segmentation of markets for industrial goods. Most of the same variables used in segmenting consumer markets can be used as the basis for segmenting markets for manufactured goods. Buyers of industrial products can be segmented geographically and across a range of behavioral variables, based on benefits they seek, user status, intensity of consumption, degree of commitment, willingness to accept and attitude towards the product.
Most often, the segmentation of markets for industrial goods is carried out according to the types of end consumers of the goods.
Different end users often look for different benefits in a product. So, in relation to them, you can use different marketing mixes. Let's take the transistor market as an example.
The transistor market consists of three sub-markets: military, industrial and commercial.
Military buyers pay great attention to the quality of the goods and their availability. Firms selling transistors on the military dash should invest large funds in R&D, use sales agents who are familiar with military procurement procedures, and have a fairly narrow product line of production.
Buyers of industrial goods, such as PC manufacturers, are interested in high quality products and a well-established system. Maintenance. The price, if it does not become excessive, is not decisive for them. In this market, the transistor manufacturer makes a modest investment in R&D, employs salespeople with technical expertise, and offers a wide product range. Commercial buyers, such as manufacturers of pocket radios, are primarily interested in price and delivery time when purchasing components. In this market, the transistor manufacturer spends little or nothing on R&D, employs aggressive salespeople with no technical training, and offers a generic range of products that can be mass-produced. Another variable that can be used to segment the market for manufactured goods is the weight of the customer. Many firms establish separate systems for serving large and small clients.
Industrial firms typically evaluate the capabilities of their target markets by applying several variables simultaneously to segment them.
Market segmentation is the division of the market into groups of consumers to which different marketing complexes impacts, while determining various ways market segmentation and develop market segment profiles. Then the segments are analyzed in terms of their attractiveness for enterprises and one or more of them are selected for further research. The third step is positioning the product in the target market segment and developing an appropriate marketing mix. This work is devoted to market segmentation and the allocation of target segments.
Market segmentation is carried out according to various parameters individually, or by combining them in various combinations. The number and size of segments depend on the goals of the company, the type of product or service. For each segment, individual requirements and features are allocated, which are taken into account when developing a service or product. The approach to consumers should be individual, however, with segmentation, it is possible to combine consumers into larger groups.
When segmenting, several criteria are taken into account:
Geographic (region, city, population density, climate);
Demographic (sex, age, income, occupation, education, nationality, religious views);
Psychographic (personality type, lifestyle, social class);
Behavioral (user status, reason for purchase, attitude towards the product).
During the segmentation process, it is necessary to ensure that the resulting segments satisfy several criteria:
There must be differences in segments between consumers;
For each segment, it is necessary to have enough similarities of consumers to develop a marketing plan;
To further assess the potential of a segment, they must be measured;
Segments should not be small, otherwise it will not be possible to develop a marketing program;
To apply competitive advantages in working with a segment, consumers must be sufficiently reachable;
When evaluating the long term and sustainability, segments should be stable. This point is especially important when the product/service creation cycle is long.
When dividing consumers into segments and analyzing their differences, the company decides which of them to offer a product or service, then it is determined what exactly is important for target consumers. Only after dividing the market into segments, one can have an idea of the current position of the enterprise in the market, then a market coverage strategy is selected and developed.
Segmentation strategies
There are three options for a segment maintenance strategy:
Mass Marketing Strategy
This strategy gained momentum during mass production when one product concept was offered to the majority of consumers. Mass marketing strategies have economies of scale, but there is the potential for dissatisfaction among all consumers. However, today the number of companies using this strategy has decreased. This was facilitated by: growing competition, stimulating demand through entering various market segments, improving the quality marketing research, capable of pinpointing the desires of different segments and the possibility of reducing overall production and marketing costs through segmentation.
One segment strategy
Using this strategy, efforts are concentrated on one segment of the market, and sales are usually not maximized. On the contrary, the company sets itself the goal of achieving efficiency, attracting a large share of one market segment at manageable costs. The company does not diversify and strives for a calling as a specialist.
An important point is to tailor the marketing program to its segment much better than the competition. A potentially profitable segment may be one that competitors ignore. The single segment strategy allows the company to get the highest profit per unit of production, rather than total income. It also allows a firm with small resources to compete effectively against larger firms in specialized markets. This is an economical resource allocation option, but it is highly risky, as the selected segment may not meet expectations due to its size or profitability.
Multi-segment strategy
As part of this strategy, each selected market segment has its own product concept. The company has the possibility of the best combination of mass marketing and market segmentation - targeting several segments with the development of a marketing plan for each of them. A multi-segment strategy requires careful study, capabilities and resources of the company should be enough for the production and marketing of several brands, goods.
Multiple segmentation enables a company to achieve multiple goals, such as maximizing sales. Very often, a company, after establishing itself in one market segment, enters other undeveloped segments, which makes it possible to maximize profits. If the company develops a specific marketing plan for each segment, then the profit per unit of production will also be high and consumers will pay a higher price for services or products specially designed for them.
When choosing a strategy, companies need to consider several factors: the resources of the enterprise, the degree of homogeneity of the product, the homogeneity of the market, the strategies of competitors. When developing an optimal segmentation strategy, an enterprise achieves several goals at once:
Maximum satisfaction of the needs and needs of consumers, based on their desires and preferences;
Strengthening competitive advantages, increasing the competitiveness of the company and product;
Avoiding competition by entering undeveloped market segments;
Orientation to a specific consumer when conducting marketing analysis.
An in-depth study of the market suggests the need to consider it as a differentiated structure depending on consumer groups and consumer properties of the product, which in broad sense defines the concept of market segmentation.
Market segmentation is, on the one hand, a method for finding parts of the market and determining the objects to which the marketing activities of enterprises are directed. On the other hand, it is a managerial approach to the decision-making process of an enterprise in the market, the basis for choosing the right combination of marketing elements. Segmentation is carried out in order to maximize the satisfaction of consumer requests in various goods, as well as to rationalize the costs of the manufacturer for the development of a production program, the release and sale of goods.
The objects of segmentation are primarily consumers. Highlighted in a special way, having certain common features, they constitute a segment of the market. Segmentation refers to the division of the market into segments that differ in their parameters or response to certain types of activities in the market (advertising, marketing methods).
After dividing the market into separate segments, it is necessary to assess the degree of their attractiveness and decide how many segments the company should focus on, in other words, select target market segments and develop a marketing strategy.
So, the purpose of this term paper is to determine the choice of target market segments.
To do this, it is necessary to consider the target market segment, market coverage options, segmentation criteria, and requirements for segmentation effectiveness.
1 TARGET MARKET SEGMENT
Target market segment - one or more segments selected for marketing activities enterprises. At the same time, the enterprise should, taking into account the chosen goals, determine strengths competition, size of markets, relationship with distribution channels, profits and your company image.
Marketing segmentation reveals the possibilities of various market segments in which the seller has to act. The firm then needs to decide 1) how many segments to cover and 2) how to identify the most profitable segments for it.
The goals of the enterprise can be set both quantitatively and qualitatively. They may concern the introduction of new products or the penetration of well-known products into new market segments. At the same time, the segment must have sufficient demand potential to be selected as the target segment. In addition, target segments must be stable, allowing sufficient time to implement the developed marketing strategy.
2 THREE MARKET COVERAGE OPTIONS
A firm can use three market coverage strategies: undifferentiated marketing, differentiated marketing, and concentrated marketing.
UNDIFFERENTIATED MARKETING. Perhaps the firm will decide to ignore the differences in segments and address the entire market at once with the same offer. In this case, it focuses not on how the needs of clients differ from each other, but on what these needs have in common. It develops a product and marketing program that will appeal to as many customers as possible. It relies on methods of mass distribution and mass advertising. It seeks to give the product an image of superiority in people's minds. An example of undifferentiated marketing is the Hershey firm, which a few years ago offered one brand of chocolate for everyone.
Undifferentiated marketing is economical. The costs of producing a product, maintaining its inventory and transporting it are low. Advertising costs with undifferentiated marketing are also kept low. The absence of the need for marketing research of market segments and planning broken down by these segments helps to reduce the cost of marketing research and product management.
A firm that uses undifferentiated marketing usually creates a product designed for the largest market segments. When several firms do this at the same time, there is intense competition in large segments, and buyers in smaller segments are less satisfied. Thus, the American automobile industry for many years produced only large cars. As a result, work in large segments of the market may be less profitable due to the fierce competition prevailing there.
DIFFERENTIATED MARKETING. In this case, the company decides to act in several market segments and develops a separate offer for each of them. Thus, the General Motors corporation strives to produce cars "for any wallet, any purpose, any person." By offering a variety of products, it hopes to achieve sales growth and deeper penetration into each of its market segments. She expects that by strengthening her position in several market segments, she will be able to identify in the mind of the consumer the firm with this product category. Moreover, it expects an increase in repeat purchases, since it is the company's product that corresponds to the desires of consumers, and not vice versa. An increasing number of firms are resorting to the practice of differentiated marketing.
CONCENTRATED MARKETING . Many firms also see a third marketing opportunity that is especially attractive to organizations with limited resources. Instead of concentrating efforts on a small fraction of a large market, a firm concentrates efforts on a large fraction of one or more submarkets.
There are several examples of such concentrated marketing. Volkswagen concentrated its efforts on the small car market, Hewlett-Packard on the market of expensive calculators. Through concentrated marketing, the firm secures a strong market position in the segments it serves because it knows the needs of those segments better than anyone else and enjoys a certain reputation. Moreover, as a result of the specialization of production, distribution and promotion measures, the firm achieves economies in many areas of its activity.
At the same time, concentrated marketing is associated with an increased level of risk. A chosen segment of the market may not live up to expectations, as happened, for example, when young women suddenly stopped buying sportswear. As a result, Bobby Brooks, the company that produces such clothes, suffered heavy losses. Or it may happen that a competitor wants to infiltrate your chosen market segment. Given these considerations, many firms choose to diversify into several different market segments.
3 SEGMENTATION CRITERIA
The first step in segmentation is the selection of segmentation criteria. At the same time, it is necessary to distinguish between the criteria for segmenting markets for consumer goods, industrial products, services, etc.
So, when segmenting the consumer goods market, such criteria are used as: geographical, demographic, socio-economic, psychographic, behavioral, etc.
Geographic segmentation - dividing the market into different geographical units: countries, regions, regions, cities, etc.
Demographic segmentation - dividing the market into groups depending on consumer characteristics such as: age, gender, marital status, family life cycle, religion, nationality and race.
Socio-economic segmentation involves the division of consumers by income level, occupation, level of education.
Psychographic segmentation is the division of the market into different groups depending on the social class, lifestyle or personal characteristics of consumers.
Behavioral segmentation involves the division of the market into groups depending on such characteristics of consumers as: level of knowledge, relationship, nature of using the product or reaction to it.
In accordance with the relationship, segmentation is distinguished: by the circumstances of use, based on benefits, based on the status of the user, based on the intensity of consumption, based on the degree of loyalty, based on the stage of readiness of the buyer to make a purchase.
Segmentation by circumstances of use - dividing the market into groups in accordance with the circumstances, reasons for the emergence of an idea, a purchase or use of a product.
Benefit Segmentation - dividing the market into groups depending on the benefits that the consumer is looking for in the product.
User status characterizes the degree of regularity in the use of a product by its users, which are divided into non-users, former users, potential users, novice users and regular users.
Consumption intensity - a measure on the basis of which markets are segmented into groups of weak, moderate and active consumers of certain products. Obviously, it is more profitable to serve one market segment consisting of a significant number of active customers than several small segments of weak customers.
The degree of loyalty characterizes the degree of loyalty, commitment of the consumer to a particular brand of product, usually measured by the number of repeated purchases of the product of this brand.
Buyer readiness stage - a characteristic according to which buyers are classified into ignorant and knowledgeable about the product, interested in it, willing to buy it, and intentional to buy it.
When segmenting the market for production and technical purposes, the following criteria are primarily used: geographical location; type of organization acquiring goods: amount of purchases; direction of use of purchased goods.
Segmentation can also be carried out with the sequential application of several criteria. It is important that the segments are not too small, i.e. unfavorable for commercial development. As an example, the figure shows a fragment of the results of a sequential three-stage segmentation of the aluminum consumer market.
4 REQUIREMENTS FOR EFFICIENCY OF SEGMENTATION
Without a doubt, there are many ways to segment the market - but not all of them are effective. For example, table salt users can be divided into brunettes and blonds. But hair color does not affect the demand for salt. Therefore, if consumers purchase salt every month, at the same price and presumably of the same quality, there will be no tangible benefit from segmenting this market.
To be useful, market segments must satisfy the following characteristics:
· Measurability - the extent to which the size and purchasing power of a market can be measured. For example, it is practically impossible to determine the number of left-handers - this is not indicated in any statistical collections. Common information bases companies do not contain such pointers either.
· Availability - the degree to which the market can be reached and provided with the required quantity of products.
Reality - degree of profitability and segment size. The firm must focus its marketing strategy on the largest homogeneous group of consumers - for example, a manufacturer will never make a car for people whose height is less than 1.20 m. - only to order.
· Effectiveness - the extent to which an effective marketing program can be used to attract consumers. For example, a small aircraft can satisfy 7 market segments, but the director of the company lacks the ability and ability to succeed in all market sectors.
5 IDENTIFICATION OF THE MOST ATTRACTIVE MARKET SEGMENTS
(practical part)
Assume that the criteria just described are used in selecting a market coverage strategy and that the firm chooses a concentrated marketing approach. Now she should identify the most attractive market segment for herself. Consider the following situation.
A successful snowplow manufacturer wants to create something new. The company's management explores several possibilities and settles on the idea of producing a snowmobile. The management believes that the company is able to master the production of any of the three types of snowmobile: with a gasoline, diesel or electric engine. And besides, the firm can create a snowmobile design for any of three markets: consumer, industrial and military. Assuming that the firm initially wants to focus on one single segment, management will have to decide which one.
The firm will need to collect information on all nine market segments. This should be information about sales volumes in monetary terms, expected sales growth rates, projected profit margins, intensity of competition, requirements for marketing channels, etc. The most profitable segment should have high current sales, high growth rates, high margins, low competition, and simple marketing channel requirements. As a rule, none of the segments meets all these characteristics to the desired extent, so compromises will have to be made.
Once a firm has identified segments that are objectively attractive to itself, it must ask itself which segment best fits its business strengths. For example, the military market may seem extremely attractive, but the firm may not have had any experience with it. Conversely, she may have extensive experience with the consumer market. So the firm should choose a segment that is not only attractive in itself, but also one in which it has the necessary business preconditions to be successful.
In some cases, an enterprise starting with a strategy of mass or concentrated marketing is able to go to undeveloped consumer segments(for example, switching from the production of universal shampoo (mass marketing) to the production of special shampoos for various types hair, for children). Or, on the contrary, having firmly established itself in one segment, the company expands its activities, mastering new segment. So, along with the release of products for children, Johnson & Johnson sells shampoo for women over 40 years old. In some cases, businesses use both mass and concentrated marketing in their strategy.
CONCLUSION
Ultimately, segmentation is not an end in itself. Its main task is to answer the question - whether stable groups of consumers of a given product can be identified. If such groups are not distinguished, then the company's activities can be focused on all buyers of these products (the so-called mass marketing strategy).
The need for market segmentation is explained by the following reasons:
Each market segment is characterized by its own type of demand, which must be analyzed before offering interactive services;
Market segments for which it is difficult to formulate any clear characteristics are less accessible to be covered by the offered interactive services;
Orientation to certain market segments is more promising than market orientation in general.
Market segmentation- division of the market into separate parts in accordance with their reaction, behavior or any changes in response to the measures taken by the enterprise.
The enterprise divides consumers into separate groups (segments) that have the same reaction to marketing actions, i.e. applies equally to the product, its design, color, packaging, price, delivery, service.
Consumer segmentation is carried out according to a number of criteria:
Ø by socio-economic factors (gender, age, family size, education, social class, income level).
Ø by geographical features (climate, population density, presence of water bodies, landscape).
Ø on cultural and historical grounds.
In addition, it is necessary to take into account psychological factors consumer behavior: there are buyers who buy goods in large and small quantities, buyers who love novelties and those who reject them or are neutral.
Segmentation levels:
· user status (potential users, non-users, first-time users, regular and occasional users);
The level of use of the product (how often and how much);
The level of loyalty to the product (unconditionally loyal, moderately loyal, disloyal);
Sensitivity to marketing factors (eg price).
Segmentation principles:
To conduct a successful segmentation of the market, it is advisable to apply the five principles tested by practical activity: differences between segments, similarities of consumers, large segment size, measurability of consumer characteristics, reachability of consumers.
1. The principle of difference between segments means that as a result of segmentation, groups of consumers that differ from each other should be obtained. Otherwise, segmentation will be implicitly replaced by mass marketing.
2. The principle of similarity of consumers in the segment provides for the homogeneity of potential buyers in terms of consumer attitudes towards a particular product. The similarity of consumers is necessary in order to be able to develop an appropriate marketing plan for the entire target segment.
3. The requirement for a large segment means that the target segments must be large enough to ensure sales and cover the costs of the enterprise. When assessing the size of a segment, one should take into account the nature of the product being sold and the size of the potential market. So, in the consumer market, the number of buyers in one segment can be measured in tens of thousands, while in the industrial market a large segment can include less than a hundred potential consumers (for example, for cellular or satellite communication systems, for consumers of power engineering products, etc.).
4. The measurability of consumer characteristics is necessary for targeted field marketing research, as a result of which it is possible to identify the needs of potential buyers, as well as to study the reaction of the target market to the marketing actions of the enterprise. This principle is extremely important, since the distribution of goods "blindly", without feedback from consumers, leads to the dispersion of funds, labor and intellectual resources of the seller.
5. The principle of reachability of consumers means the requirement for the availability of channels of communication between the firm-seller and potential consumers. Such communication channels can be newspapers, magazines, radio, television, media outdoor advertising etc. Reachability of consumers is necessary for organizing promotional campaigns, otherwise informing potential buyers about a particular product: its characteristics, cost, main advantages, possible sales, etc.
The basis of the market segmentation procedure, along with the application of segmentation principles, is informed choice appropriate segmentation method.
Stages of segmentation:
Market segmentation takes place in three stages: survey, analysis and definition of the segment profile.
1. Poll. The manufacturer must understand the motivation, attitude towards the product and the behavior of buyers. To do this, a survey of potential consumers is carried out, and then a discussion in a focus group. Based on the data obtained, a formal questionnaire is compiled to determine the main characteristics of the respondents and their degree of significance, the level of awareness of the survey participants about the main brands and brand ratings, ways of using goods by consumers, attitudes towards the product category.
2. Analysis. The researcher conducts factor analysis to exclude correlated variables, and then a cluster analysis of each group is performed to determine the specific number of clearly distinct segments.
3. Segment profiling. At this stage, a general characteristics selected segment, which indicates its profile, characteristics of consumer behavior, their demographic and psychographic characteristics.
Segmentation efficiency:
Efficiency in the selected market segment is a criterion that determines the level of experience in the selected market segment, product promotion, competition, sufficiency of financial and material resources to lead competition.
Features of segmentation of consumer and business markets:
Segmentation of consumer markets
The consumer market is the market for end consumers who purchase goods for personal, household or family use.
There is no single method for segmenting the market. An enterprise needs to test segmentation options based on different parameters (one or more at once) and try to find the most effective approach.
Geographic segmentation. The market can be divided into different geographical units: states, districts, cities, territories and microdistricts. A firm may decide to operate in one or more geographic areas, or in all areas, but taking into account differences in needs and preferences determined by local conditions.
Segmentation based on demographics. The market can be broken down into groups based on demographic variables such as gender, age, family size, family life stage, income level, occupation, education, religious beliefs, and nationality.
Psychographic segmentation. In psychographic segmentation, buyers are divided into groups based on social class, lifestyle, or personality characteristics. Members of the same demographic can have vastly different psychographic profiles.
Behavioral segmentation. When segmenting the market based on behavioral characteristics, it is possible to divide buyers into groups depending on their knowledge, attitudes, the nature of the use of the product and the reaction to this product. Behavioral variables are considered the most appropriate basis for the formation of market segments.
Thus, we found out that segments of the consumer market can be distinguished on the basis of regional criteria, demographic criteria, psychographic and behavioral criteria.
Let us now evaluate the possible criteria for segmentation of the industrial (business) market.
Segmentation of business markets
Business, or industrial, markets include manufacturers, capital goods, government agencies, contractors, wholesale buyers, retailers, banks, insurance companies and institutions that buy goods and services to help them run their own businesses. This may be raw materials or parts used in the manufacture of a product, or office furniture and equipment, means of transport, or various services necessary to run a business.
Products sold in business markets are often intended for resale to the general public, as is the case for a retail product.
In any case, the definition of the future consumer sector in the business market is as important as for the consumer market. Very often we can use the same indicators that were discussed above in relation to the consumer market. Most organizations can be segmented by geographic location and by several behavioral metrics such as benefits pursued, user status, usage activity, and acquisition frequency. However, business markets also have their own distinctive features: they can be subdivided according to the "Standard Industrial Classification" (SIC); they may be concentrated in a particular geographical area; they have a relatively small number of buyers; and they usually use a certain system to make purchases. All this is important to know for companies that are looking for ways to segment industrial markets.
Choice of target market segments:
It is important to correctly define target segment consumers who show interest in the product and are ready to buy it. These are the people to whom the main marketing impact of the enterprise is directed. It is for them that the company creates its products, and they create profit for the company.
Target segment characteristics:
1. the segment must have sufficient demand potential;
2. The segment must be sufficiently stable (the segment must not be resorbed).
Target market selection is based on three directions :
1. Product study:
1.1. Novelty and competitiveness.
1.2. Compliance with local legal requirements.
1.3. The ability to meet the current and future needs of potential buyers.
1.4. The need for its modification in the future.
2. Studying the market as a whole:
2.1. Possible buyers.
2.2. Typical uses of the product that are specific to these buyers.
2.3. Purchasing incentives.
2.4. Factors that shape buyers' preferences and their market behavior.
2.5. Ability to segment customers and the number of segments.
2.6. The usual way to shop.
2.7. Needs unsatisfied by goods of this type.
2.8. New needs (for example, as a result of scientific and technical progress).
3. Studying competitors.
3.1. The main 3-4 competitors, their trade marks:
3.2. Competitors that are the most dynamic in the market.
3.3. Features of competitors' products.
3.4. Goods packaging.
3.5. Forms of marketing activity.
3.6. Price policy.
3.7. Methods of product promotion.
3.8. R&D data (directions, expenses).
3.9. Official income data.
3.10. Announcements about new goods.
3.11. Information about them in the press.
Incorrect segmentation will lead to an ill-conceived expenditure of resources, and the company will not receive the necessary profit.
Having defined its segment of consumers, the company tries to satisfy their need for products or services. Here it is necessary to determine at what price the buyer of this segment is ready to purchase the product. The price, if it is incorrectly determined, will have a decisive influence on the process of buying a product. The Russian market is especially price sensitive. However low price may be associated with poor product quality. High price, is associated with the high quality of the product, but significantly reduces the consumer segment.
In a buying decision tree, the price factor is always present: for low-income shoppers, it is the most important or one of the most important factors in choosing a product, and for high-income shoppers, it is also important, although it does not have a decisive influence. For this reason, when forming the assortment, it is necessary to take into account different variants of this factor - price segments - in order to offer customers with different income levels a choice of goods.
The price segmentation of a retail company's assortment differs from the price segmentation of any product line in marketing, when all price options available on the market are analyzed. As a rule, marketers distinguish up to 7 price segments (Fig. 2. 7). However, a store of a certain format, designed for certain target customers, does not offer all the goods on the market in all price (and quality) options, covering only a part of the price offers. This is the reason why retailers usually distinguish less than 7 price segments.
Fig 2. 7. Seven price segments of the range of stores.
Price segmentation is one of the key points of the assortment policy, as it predetermines the choice of goods and suppliers. In cases where retail network did not carry out price segmentation of the assortment, problems occur:
The minimum and/or maximum price in a subcategory may be underestimated;
The minimum and/or maximum price in a category may be inflated.
This can lead to violations of the price balance of the assortment (Table 2. 6)
Table 2.6. Violations of the price balance of the assortment.
The purpose of price segmentation is to offer customers a wider choice of products within a category/subcategory at the prices most prefer.
Price segmentation begins with the determination of the minimum and maximum prices within a subcategory (a set of analogue goods).
The determination of the minimum and maximum prices is the result of competitive analysis. For example, you need to determine the minimum and maximum prices for apples. First, we will find out what these values are for our direct competitors, then for indirect ones. Further, taking into account our price positioning relative to these competitors, we determine what the minimum and maximum prices for apples should be.
Table 2-7 shows typical solutions for determining the deviation of the minimum and maximum prices from competitors' prices.
Table 2.7. Standard Solutions by determining the deviation of the minimum and maximum prices.
Next, when the minimum and maximum prices are determined, it is necessary to determine how many price segments to allocate. This task, in fact, is the task of determining how many segments to divide the distance between the prices of 49 and 120 rubles, so that each segment reflects a homogeneous consumer demand, i.e. unites the same type of buyers?
First of all, the number of price segments depends on the magnitude of the price spread between the minimum and maximum: the greater the spread in money, the more price segments need to be allocated in order to maintain the homogeneity of demand within each segment. At the same time, the number of segments is, in fact, the number of responses to a need. For example, most discounters and hypermarkets of low prices distinguish three price segments exactly in accordance with the accepted number of responses to a need.
The value of the spread between the minimum and maximum prices is called the spread. Table 2 8 shows examples of selecting three or four price segments depending on the spread, which is expressed as a percentage of the increase in the maximum price to the minimum.
Table 2.8. Examples of highlighting price segments
Next, you need to determine the share of price segments in the assortment (Table 2. 9). This is a very important question, the decision depends on the format of the store. There are no strict standards, the indicators are set by the company, taking into account its positioning.
Table 2.9. Determination of the share of price segments in the assortment.
The next step is to define the boundaries of price segments There are two approaches to defining the boundaries of price segments:
Formal, or mathematical;
Logical.
The mathematical method is to divide the difference between the maximum and minimum prices on the number of price segments and the calculation of the boundaries of the segments, i.e. the segments are equal to each other in terms of money.
As can be seen in option 2, dividing into equal intervals gives unequal price segments - too large a spread in prices in the low price segment - 200–12,650 rubles - indicates the heterogeneity of demand within the segment. Option 1, due to the small spread between the minimum and maximum prices, looks plausible.
In cases similar to option 2, the boolean method, or expanding range method. In this case, the boundaries are defined through an equal percentage of price increase between the minimum and maximum prices within the segment, i.e., the percentage of price increase increases with price growth.
Thus, we achieve homogeneity of demand within each price segment.
The calculation of the boundaries by a logical method is carried out by extracting the root of the spread between the minimum and maximum prices, the degree is determined by the number of price segments.
When the segments are defined, you can proceed to filling the assortment with specific products, i.e., to form an assortment matrix.
Another important issue related to the price segmentation of the assortment is the formation of a price assortment scale in the subcategory of the same type of goods. Commodity items should be differentiated by price and quality in such a way that the increase in price reflects the increase in the quality of the goods. In this case, the buyer will be able to easily navigate the retailer's offer and make a reasonable choice. It is undesirable to have goods of different quality with the same price, this is incomprehensible to the buyer and undermines his confidence in the store, creating confusion in the head and misunderstanding of pricing principles.
Figure 2 8 shows the scheme for constructing the price scale. The most significant interval should be between the first and second prices in the subcategory, and the intervals increase in the high price segment.
Fig 2 8 Scheme for constructing a price scale.
A significant difference between the first and second prices ensures that buyers who did not choose the cheapest product (due to suspicions of low quality) switch to a product that already has a normal margin for the retailer and a noticeable difference in quality for the buyer The increase in intervals in the high price segment is explained by the smaller number of SKUs.
Life cycle concept.
When planning an assortment, it is also necessary to take into account at what stage life cycle there is a product or trademark and the store itself.
As noted at the beginning of the book, the life cycle of a store is an S-shaped curve, divided into four stages: opening, strong growth, maturity, and decline. Each stage is characterized in a certain way:
store opening- sales are growing slowly, visitors are looking at the store and the product; external advertising is important, indicating the presence of the store and the benefits of visiting it; this period can take from one to six months;
intensive growth- sales growth rates increase, the first satisfied buyers begin to make repeated purchases; the store becomes famous and popular, especially among innovative buyers; this period can last from three months to one year;
maturity- the store is operating normally; the growth rate of sales is slowing down, it is necessary to find additional opportunities to make a profit (reducing costs, changing the assortment, etc.); this is a long stage, and its duration and sustainability will depend on a competent marketing policy;
recession- the store or goods in it are gradually losing popularity; it is important to understand the cause of the decline in time in order to take measures to save the store.
It is important to determine at what stage of the life cycle are both the product and brands you offer and the market in which your company operates.
Knowledge of the concept of the life cycle will help to correctly plan the assortment policy. For example, when laptops appeared on the computer technology market, at the implementation stage it was enough to present one or two models in your store. At the stage of intensive growth, the circle of buyers interested in laptops usually grows. You can expand the range of laptops by introducing models different manufacturers, different design or functional characteristics, as well as think over the range of related products.
At the maturity stage, you offer customers a wide selection of laptops. The product has spread, competition between stores is growing, the means of influencing customers are becoming more complicated. You offer not only laptops, but also additional technical devices for them. You start to analyze novelties on the market computer technology, which are designed to eventually replace laptops or significantly expand their capabilities.
During the recession phase, laptops will gradually lose relevance for buyers. The assortment will be reduced, individual brands or types will be abolished. And instead of laptops, goods of new computer technologies will appear on the shelves.
The contribution of different products to the achievement of store objectives.
Every retailer knows that different items in a store are important in different ways. Some items are needed because they are common knowledge and any customer expects to see them, such as a sweater, trousers and shirt in a clothing store or milk, eggs and bread in grocery store. Other items are needed to provide additional convenience to the customer, such as shoe care products and socks in a shoe store so that the customer does not have to run to another store for these items. You also need products that will somehow distinguish your store from other similar ones, so that customers remember and love you. For example, your hardware store has samples of natural stone tiles available to order. This is an expensive and rare commodity for a regular store, but you have created additional opportunity for the buyer to purchase it in your store And, of course, practically.
Category management is a modern approach to assortment management, which was formed in the 90s of the last century in America and Europe. Currently, this approach has a well-developed, systematized technology for the formation and management of the assortment of a retail company. This approach has been implemented in most major retail companies around the world, including in Russia, any store must have changing seasonal and holiday assortments in order to attract customers.
Thus, it can be said that different products play different roles in the store, but they are all important and necessary, only each in his own way category management- a new approach to assortment management - all possible roles are described in detail. These roles are assigned to product categories into which category management divides the entire range (the division into categories is not necessarily carried out in accordance with generally accepted groups and types of goods).
It is also important to understand how different types goods affect the achievement of the overall goals of the store On some goods, the store earns a profit, others give a "shaft" of cash, others retain the buyer and create an image. Category management gives a description of the types of goods, depending on their contribution to the achievement of the strategic goals of the store.
Let's consider two typical classifications that "cover" most of the options that exist in practice.
The first classification distinguishes five roles of product categories. Each product category should be assigned to one of the five roles. This classification is more suitable for retailers with a differentiation strategy or a cost-effective strategy. Here short description five role categories:
Unique– 1-3% of the number of categories in the store Product categories that play this role determine the image of the store, provide customer interest, and create long-term competitive advantages. These categories usually don't generate much revenue and may even be unprofitable. For example, home-baked bread, hot pizza or loose tea This is the highlight of your assortment, what makes you different from others and how you additionally attract your customers.
It is often difficult to maintain uniqueness, as all successful innovations are immediately copied by other players in the market. competitive advantage.
Priority– 20% These are categories of goods with a large margin, which are bought quite often. For such categories, it is important to correctly select products so that they attract a buyer and at the same time make a profit. For grocery retail, these are alcohol, sausage gastronomy, as well as coffee, yoghurts, fish delicacies. These are goods that are important for your target customer. He prefers your store precisely for the range of these categories of goods. And for you, these categories are also important - they form the basis of your income.
Basic– 40-60% This is the main assortment of the store Products in these categories make up the bulk of the consumer basket They have a high turnover, they bring profit, but not necessarily a lot. This, for example, pasta, juices, detergents, pet food. For these goods, it is important to have a competitive assortment, reasonable prices, but not "chase" for income, since the store does not earn money on them. These goods "must be, because they must be."
periodic (seasonal) - up to 20%. These are the goods that are bought from time to time or seasonally. Accordingly, the proceeds from their sale and profit are seasonal. Such goods include repellents, garden furniture, New Year's goods, goods for March 8, Easter, St. Valentine's Day, goods for the garden, climatic equipment etc. With these products, you attract additional customers during peak seasons. Seasonal products are extremely important - this is a promotion without a promotion. During normal periods, retailers hold numerous promotions to stimulate demand, but during the season there is no need to stimulate demand - it grows by itself, you just need to be ready for it in order to get good financial results and strengthen customer loyalty, which inevitably grows when customers successfully overstock the goods they need during the season at attractive prices.
Comfortable– 5–10%. The presence of these products maintains traffic to the store and creates the impression that everything can be bought in the store. The revenue and profit from the sale of products in this category are low. For example, this plastic tableware, napkins, disposable gloves, batteries, postcards. These products give the buyer the feeling that the store cares about them, offering them additional convenience. These categories do not exist in the store for the sake of money - from the point of view of financial efficiency, it is not advisable, for example, to keep postcards in the store with a monthly turnover of 5 thousand rubles and a margin of 2.5 thousand rubles with a total turnover of, for example, 30 million rubles.
However, in stores with low visitation frequency, this role of the category changes and becomes important. For example, home goods. bright and very effective example- Ikea. The buyer came for the sofa, he did not buy the sofa, but the store will not release it without a purchase: the store needs sales, and the buyer who bought at least something is always happier than the one who did not buy anything. It is important that the assortment contains all five roles of product categories - only in this case the assortment can be considered balanced. Most often, there are problems with the lack of a unique role for categories: “We do not have a product that can be defined as unique. How critical is this?
Example of a unique category
Network grocery supermarkets offers its customers products own production, but in addition to traditional cakes, salads and pastries, they also offer ready-made meals (soups, side dishes, main courses), snacks and desserts. There are frozen products of our own production - dumplings, handmade dumplings, chilled semi-finished products. What makes this category unique is a very rich assortment and high quality of home-made products without the use of preservatives and dyes. Investment in production technologies, quality control system and preparation production staff contributed to the creation of a truly unique production that cannot be fully copied by competitors. The unique product categories created in this way give the company an undeniable competitive advantage and distinguish it from other stores. In addition, they are quite profitable.
Priority category example
The priority category for one chain of women's clothing stores is business wear. Trouser suits, suits with a skirt, separately jackets, trousers and skirts of a business (office) style are presented quite widely. Since the products are mostly natural or mixed fabrics, the cost is quite high, and the store has the opportunity, by setting the usual markup, to make a good income. Target customers are working women aged 23-24 to 45 with an average and above average income, who spend a lot of time at work and are interested in a wide range of "work" clothes.
The basic categories for a jewelry store in the middle price segment are wedding rings, chains, gold pendants without inserts, silver rings and earrings - these are the types of jewelry that are sold most in piece terms, are most often in demand by customers and are necessarily present in the assortment of any jewelry store. The low price of these types of products allows many buyers to purchase them.
Periodic category example
In the children's goods store, the goods of the periodical category are:
Goods for summer recreation and entertainment (bicycles, roller skates, skateboards, scooters, etc.);
Goods for winter recreation and entertainment (skis, skates, sledges, etc.);
Seasonal shoes (sandals, boots, boots, felt boots, shoes);
Seasonal clothing (jackets, fur coats, coats, shorts, T-shirts, dresses, etc.).
Means for washing machines (washing powders, liquid detergents, cleaners for washing machines, fabric softeners);
Means for dishwashers(washing powders, rinses, 3-in-1 products, salt for PMM);
Stove care products (stove cleaners, scrapers and wet wipes for glass-ceramic hobs);
Means for removing scale on water heaters;
Care products for metal, plastic and wood surfaces;
Care products for LCD screens (wipes, cleaners).
These products do not have to be present in the assortment of the store. household appliances, but their presence will give the store's image additional positive features.
This is critical if you want to get the most out of your range. The absence of a product category of a unique role makes the assortment of your store “like everyone else”, that is, unremarkable, banal. Naturally, ceteris paribus, the buyer can easily change such a “regular” store to another, which has its own “zest” in the assortment. Caution is required with the unique role of a category: competitors can quickly copy your “flavor”, and this product category will no longer be unique. Most the best way– if your unique category is an exclusive product or cannot be copied.
Sometimes the store does not have products in the convenient role category because "these products are not required in our assortment." These are indeed optional products in the range, but their purpose is to create additional convenience for customers, thereby strengthening the positive image of the store. For example, many shoe stores sell nothing but shoes, and branded stores almost always stock related products: shoe care products, socks, insoles, bags, wallets, belts.
Category roles also influence metric planning economic efficiency categories: it is obvious that the same plans for the growth of turnover and profit for goods of different roles cannot be set.
In stores of the same product specificity, but different formats, the same products can play different roles, respectively, the same role can be represented by sets of different product categories. In addition to the format, such differences may be related to the established practice of the store. For example, there are two “near home” format stores in different residential areas: in one, customers mainly buy drinks, snacks, beer, since there is a youth disco and a square nearby, and in the other, traditional goods are mainly purchased - bread, dairy products , sausages (Table 2. 10).
Table 2.10. Examples of roles for product categories for stores of various formats.
The second classification of the roles of product categories identifies four roles (Table 2. 11).
Table 2.11. Four roles of product categories.
This classification is more common in discount chain stores, since there is no unique category role that is not required for a discounter, the main competitive advantage of which is low price, and not the uniqueness of the product offer.
Summarizing the topic of product category roles, it should be said that the category role, established and defined by the retailer, influences decisions regarding category products in all aspects of management (Fig. margins in general and the use of certain pricing methods (see the section “Pricing Issues” below), on promotion techniques and zoning of a category in trading floor(see chapter 3).
Fig 2. 9. The role of the product category.
Table 2.12. The contribution of categories and products within categories to the achievement of store objectives.
It is important to analyze the category in order to understand what products within it are not enough to achieve the goals of the store. Table 1 will help you with this. 2.14.
The data in Table 2. 14. mean that, for example, products for a unique category should be selected so that they achieve the following goals: attract customers, retain target audience, arouse desire and strengthen the image of the store.
Let us give an example from the life of a supermarket intended for buyers with an income level above the average, located in one of the regional centers of the Russian Federation (Fig. 2. 10, Table 2. 15).
Fig 2. 10. Examples of products that achieve store goals.
Formation of the assortment of goods in the store is one of the most difficult and responsible tasks facing the head. The assortment offered is decisive in choosing a store - sometimes even such a factor as location fades into the background, because for the sake of the necessary goods, buyers are ready to travel considerable distances. The price of an error in the formation of the assortment is very high: for most buyers, it is enough not to find the right product once in order to decide never to visit this store in the future.
Assortment along with pricing policy - main points competitive strategy. The “right” assortment creates an important competitive advantage, allowing the store to win the competition and create the basis for sustainable economic success.
