McDonald, Malcolm and Dunbar, Iain - Market Segmentation.pdf

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Market Segmentation
How to do it
How to profit from it
Malcolm McDonald and Ian Dunbar
AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD • PARIS
SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO
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Elsevier Butterworth-Heinemann
Linacre House, Jordan Hill, Oxford OX2 8DP
30 Corporate Drive, Burlington, MA 01803
First published 2004
Copyright © 2004 Malcolm McDonald and Ian Dunbar.
All rights reserved
The right of Malcolm McDonald and Ian Dunbar to be identified
as the authors of this work has been asserted in accordance with the Copyright,
Designs and Patents Act 1988
No part of this publication may be reproduced in any material form (including
photocopying or storing in any medium by electronic means and whether or not
transiently or incidentally to some other use of this publication) without the written
permission of the copyright holder except in accordance with the provisions of the
Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the
Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London, England W1T 4LP.
Applications for the copyright holder’s written permission to reproduce any part of this
publication should be addressed to the publisher
44) 1865 853333,
e-mail: permissions@elsevier.co.uk. You may also complete your request on-line via the
Elsevier homepage (www.elsevier.com), by selecting ‘Customer Support’ and then
‘Obtaining Permissions’
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British Library Cataloguing in Publication Data
McDonald, Malcolm, 1938–
Market segmentation : how to do it, how to profit from it
1. Market segmentation
I. Title II. Dunbar, Ian, 1951–
658.8'02
ISBN 0 7506 5981 5
Library of Congress Cataloguing in Publication Data
A catalogue record for this book is available from the Library of Congress
For information on all Elsevier Butterworth-Heinemann publica-
tions visit our website at http://books.elsevier.com
Printed and bound in Italy
Permissions may be sought directly from Elsevier’s Science & Technology Rights
Department in Oxford, UK: phone: (
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Contents
Foreword
xi
Preface and acknowledgements
xiii
An important note to the reader from the authors
xv
List of figures
xix
List of tables
xxiii
1 The state of marketing
1
Summary
3
Achievements
3
Practitioners
3
Consultants
7
Academics
8
Recapturing the high ground
9
Review
9
References
10
2 The central role of market segmentation in profitable growth
11
Summary
13
From tactics to strategy
13
Define markets and segments, and understand value
15
Determine the value proposition
16
Integrated marketing communications
18
Delivering the value proposition
19
Monitor value
25
Marketing’s role in value creation
27
Review
29
References
30
3 Preparing for segmentation – avoiding the big mistakes
31
Summary
33
Definition of market segmentation
33
International market segmentation
37
Objective of this book
39
Segmentation archetypes in companies
41
Company archetypes
41
Case study conclusion
44
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vi Contents
Classifying market segmentation in organizations
46
Classification conclusion
48
Effective market segmentation
48
The ‘postmodern’ customer
51
Segmentation team
52
Data for segmentation
53
Rules for segmentation
54
The advantages of segmentation
55
Segmentation process summary
56
Developing segments
56
Prioritizing and selecting segments
58
Marketing objectives and strategy
58
Segmentation case histories
59
Case history conclusion
62
Review
62
References
64
4 Determining the scope of a segmentation project
65
Summary
67
Fast track
67
Geographic scope
68
Defining markets
70
Developing the market definition
71
Whose needs are being defined?
78
Ensuring the definition is meaningful to your company
81
Markets and SBUs
84
Sizing the defined market
85
Process check
87
Case study – Agrofertilizer Supplies
88
Further examples
90
Reference
91
Exercises
91
5 Portraying how a market works and identifying
decision-makers
95
Summary
97
Fast track
98
Constructing your market map
100
Getting started
101
Initial quantification of the market map
109
Adding junction types
111
Market maps in the tabular form
113
Market leverage points
114
‘Shared’ decision-making
116
‘Cumulative’ decision-making
117
Selecting the junction to be segmented
118
To include or exclude non-leverage groups
120
Testing current views about segments: preliminary segments
122
Sizing preliminary segments
124
Process check
124
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Contents vii
Case study
125
Further examples
128
Exercises
131
6 Developing a representative sample of different
decision-makers
135
Summary
137
Fast track
139
The components of a ‘micro-segment’
143
Key Discriminating Features (KDFs)
144
KDF guidelines
146
What, where, when and how
152
Price
155
Profiling and ensuring it is practical
156
Profiling – standard categories
158
Profiling – additional categories
160
Profiling – keeping it practical
161
Developing micro-segments
162
Getting micro-segments up and running
163
Managing micro-segments – keeping control
174
Process check
176
Case study
178
Further examples
183
A selection of standard approaches to profiling businesses
185
A selection of standard approaches to profiling individuals
189
Exercises
194
7 Accounting for the behaviour of decision-makers
197
Summary
199
Fast track
200
Explaining customer behaviour
202
From ‘features’ to ‘benefits’
204
Standard, company and differential benefits
206
Looking beyond the status quo
207
Price
209
Micro-segments and their Decisive Buying Criteria (DBCs)
212
Defining micro-segments by their needs
213
Expressing the relative importance of DBCs numerically
217
Techniques for uncovering unsatisfied needs
220
Addendum for those intending to test the validity of
a current SBU structure
226
Process check
226
Case study
227
Further examples
229
Reference
232
Exercises
232
8 Forming market segments out of like-minded decision-makers
237
Summary
239
Fast track
240
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