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Benefit Segmentation Essay

3551 words - 15 pages

by Russell I. Haley

Benefit Segmentation: A Decision-Oriented Research Tool
Marketing insight is limited only by the imagination.

M

arket segmentation has been steadily moving toward center stage as a topic of discussion in marketing and research circles. The idea that all markets can be profitably segmented has now received almost as widespread acceptance as the marketing concept itself. However, problems remain. In the extreme, a marketer can divide up his market in as many ways as he can describe his prospects. If he wishes, he can define a left-handed segment or a blue-eyed segment or a German-speaking segment. Consequently, current discussion revolves largely around which of ...view middle of the document...

, points out that, in most product categories, one-half of the consumers account for around 80% of the consumption. If this is true, the argument goes, shouldn't knowledgeable marketers concentrate their efforts on these high-volume consumers? Certainly, they are the most valuable consumers. The trouble with this line of reasoning is that not all heavy consumers are usually available to the same brand because they

are not all seeking the same kinds of benefits from a product. For example, heavy coffee drinkers consist of two types of consumers—those who drink chain-store brands and those who drink premium brands. The chain store customers feel that all coffees are basically alike and, because they drink so much coffee, they feel it is sensible to buy a relatively inexpensive brand. The premium brand buyers, on tlie other hand, feel that the few added pennies which coffees like Yuban, Martinson's, Chock Full O'Nuts, and Savarin cost are more than justified by their fuller taste. Obviously these two groups of people, although they are both members of the "heavy half segment, are not equally good prospects for any one brand, nor can they be expected to respond to the same advertising claims.

BRIEFING
issue of Marketing Management we reprint an important 'Mticle from a past issue of one of our sister publications. This article •t appeared in the July 1968 issue of the Journal of Marketing. 'Originator of benefit segmentation and the matched checkerboard system of market testing, is a member of the AMA's Attitude Research Hall of Fame and the Market Research Council of New York's ''ame. Now head ofRuss Haley & Associates in Kennett Square, lys "benefit segmentation continues to...provide useful consumer markets."

MARKCTING MANAGEMENT

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These three systems of segmentation have been used because they provide helpful guidance in the use of certain marketing tools. For example, geographic segmentation, because it describes the market in a discrete way, provides definite direction in media purchases. Spot TV, spot radio, and newspapers can be bought for the geographical segment selected for concentrated effort. Similarly, demographic segmentation allows media to be bought more efficiently because demographic data on readers, viewers, and listeners are readily available for most media vehicles. Also, in some product categories, demographic variables are extremely helpful in differentiating users from nonusers, although they are typically less helpful in distinguishing between the users of various brands. The heavy-half philosophy is especially effective in directing dollars toward the most important parts of the market. However, each of these three segmentation systems is handicapped by an underlying disadvantage inherent in its nature. All are based on an ex-post facto analysis of the kinds of people who make up various segments of a market. They rely on descriptive factors rather than causal factors. For this reason,...

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