[Assignment 8.1] Market research – Segmentation vs brand equity 1. What? How? When? Why? Which? 2. Definition Market segmentation is the act of dividing a market into well-defined slices for market targeting and positioning. A market segment consists of a


[Assignment 8.1] Market research – Segmentation vs brand equity

  1. 1. What? How? When? Why? Which?
  2. 2. Definition Market segmentation is the act of dividing a market into well-defined slices for market targeting and positioning. A market segment consists of a group of consumers who share a similar set of needs and wants. 5 requirements of effective segmentation • Measurable: Size, purchasing power, and characteristics of the segments can be measured • Substantial: The segments are large and profitable enough to serve. • Accessible: The segments can be effectively reached and served • Differentiable: The segments are conceptually distinguishable and respond differently to different marketing-mix elements and programs • Actionable: Effective programs can be formulated for attracting and serving the segments MARKET SEGMENTATION
  3. 3. Full market coverage: The firm attempts to serve same product (commodity or sole ones) to the great number of buyers via mass distribution and communications, when the market shows no natural segments. 4 LEVELS OF SEGMENTATION Multiple segments: The firm offer better design, price, disclose, and deliver the product/service, with fine-tune the marketing program and activities, to some specific groups sharing the same preferences. Single segment: The firm markets to only one particular segment. A niche is a more narrowly defined consumer group seeking a distinctive mix of benefits within a segment. More companies now practice individual and mass customization. The future is likely to see more individual consumers take the initiative in designing products and brands.
  4. 4. 2 BASES OF SEGMENTATION CONSUMER RESPONSES Psych ograp hic Life style Culture-oriented, sports-oriented, outdoor-oriented, tradition-oriented… Personality Compulsive, gregarious, authoritarian, ambitious… Behavioral Occasions Regular, occasion, special occasion… Benefits Quality, service, economy, speed… User status Nonuser, ex-user, potential user, 1st time user, regular user… Usage rate Light user, medium user, heavy user Loyalty status None, medium, strong, absolute Readiness stage Unaware, aware, informed interested, desirous, intending to buy Attitude toward product Enthusiastic, positive, indifferent, negative, hostile… Marketers use them singly or in combination
  5. 5. CONSUMER CHARACTERESTICS Geographic Region Asia, America, Europe, Africa City or metro size Under 5K, 5 – 20K, 20 – 50K, 50 – 100K, 100 – 250K, 250 – 500K, 500K – 1M, 1 – 4M, 4M+ Climate Northern, Southern, Eastern, Western Nationality North America, Latin America, British, French, Chinese, Japanese Demographic Age Under 6, 6 – 11, 12 – 17, 18 – 34, 35 – 49, 50 – 64, 65+ Family size 1 – 2, 3 – 4, 5+ Family life cycle Young, single; young, married, no children; young, married, youngest child under 6; young, married, youngest child 6 or older; older, married, with children; older, married, no children under 18; older, single, other… Income A, B, C, D, E, F Occupation Professional and technical; managers, officials, and proprietors; clerical sales; craftspeople; forepersons; operatives; farmers; retired; students; homemakers; unemployed… Education Grade school or less; some high school; high school graduate; some college; college graduate Religion Buddhism, Catholic, Protestant, Jewish, Hindu, Muslim… Race White, Black, Asian, Hispanic… Generation Silent generation, Baby boomers, gen X, gen Y Social class Lower lowers, upper lowers, working class, middle class, upper middles, lowers upper, upper uppers
  6. 6. Shampoo brands | Unilever DOVE SUNSILK CLEAR Morden woman 25+ YO A+ Traditional-oriented girls (with long black hair) 18 – 24 YO AB Female 18 – 24 YO AB For damage hair due to enviromental and personal impacts For rough and dry hair For dandruff troubles
  7. 7. EQUITYBRAND Brand equity is the added value endowed on products and services. It may be reflected in the way consumers think, feel, and act with respect to the brand, as well as in the prices, market share, and profitability the brand commands. It’s important intangible asset that has psychological and financial to value the firm (Meanwhile: Brand valuation – The job of estimating the total financial value of the brand) • Customer-based brand equity is the differential effect brand knowledge has on consumer response to the marketing of that brand • 3 key ingredients of customer-based brand equity: • No differences in consumer responses: The brand name product is essentially a commodity, and competition will probably be based on price. • Differences in response are a result of consumers ‘brand knowledge. Brands must create strong, favorable, and unique brand associations with consumer • Brand equity is reflected in perceptions, preferences, and behavior related to all aspects of the marketing of a brand. Key benefits of brand equity Improved perceptions of product performance, Greater loyalty, Less vulnerability to competitive marketing actions and marketing crises, Larger margins, More inelastic consumer response to price increase, More elastic consumer response to price decreases, Greater trade cooperation, Increased marketing communications effectiveness, Possible licensing opportunities, Additional brand extended opportunities, Improve employee recruiting and retention, Greater financial return
  8. 8. EQUITYBRAND BrandAsset® Valuator Model • Energized differentiation measures the degree to which a brand is seen as different from others, and its perceived momentum and leadership • Relevance measures the appropriateness and breadth of a brand’s appeal • Esteem measures perceptions of quality and loyalty, or how well the brand is regarded and respected • Knowledge measures how aware and familiar consumers are with the brand. • Energized differentiation + Relevance combine = Brand strength (Leading indicator that predicts future growth and value) • Esteem + knowledge = Brand stature (a “report card “on past performance and a current indicator of current value.) • Both form the power grid, depicting stages in the cycle of brand development in successive quadrants • Strong new brands show higher levels of differentiation and energy than relevance, whereas both esteem and knowledge are lower still. Leadership brands show high levels on all pillars. Finally, declining brands show high knowledge—evidence of past performance— a lower level of esteem, and even lower relevance, energy, and differentiation
  9. 9. EQUITYBRAND BrandAsset® Valuator Model
  10. 10. EQUITYBRAND BrandDynamics™ Pyramid • Presence. Active familiarity based on past trial, saliency, or knowledge of brand promise • Relevance. Relevance to consumer’s needs, in the right price range or in the consideration set • Performance. Belief that it delivers acceptable product performance and is on the consumer’s short-list • Advantage. Belief that the brand has an emotional or rational advantage over other brands in the category • Bonding. Rational and emotional attachments to the brand to the exclusion of most other brands “Bonded” consumers at the top of the pyramid build stronger relationships with and spend more on the brand than those at lower levels. There are more consumers at the lower levels, so the challenge for marketers is to help them move up.
  11. 11. EQUITYBRAND Brand Resonance Pyramid From bottom to top (1) ensuring consumers identify the brand and associate it with a specific product class or need (2) firmly establishing the brand meaning in consumers’ minds by strategically linking a host of tangible and intangible brand associations (3) eliciting the proper consumers’ responses in terms of brand- related judgment and feelings (4) converting customers ‘brand response to an intense, active loyalty ***The model emphasizes the duality of brands – the rational route to brand building (left side) and the emotional route (right side) ***Creating significant brand equity requires reaching the top of the brand pyramid, which occurs only if the right building blocks are put into place ***Resonance is the intensity of consumers’ psychological bond with the brand and the level of activity it engenders • Salience is how often and how easily consumers think of the brand under various purchase or consumption situations. • Performance is how well the product or service meets consumers ‘functional needs. • Imagery describes the extrinsic properties of the product or service, including the ways in which the brand attempts to meet consumers ‘psychological or social needs. • Judgments focus on consumers’ own personal opinions and evaluations. • Feelings are consumers’ emotional responses and reactions with respect to the brand. • Resonance describes the relationship consumers have with the brand and the extent to which they feel they’re “in sync”with it.
  12. 12. EQUITYBRAND Brand loyalty Reflect how likely a consumers will be to switch to another brand, especially when that brand makes a change, either in price or in product features Brand awareness A recognized brand will often be selected over an unknown brand. The awareness factor is particularly important in contexts in which the brand must first enter the consideration set. It must be one of the brands that are evaluated. Perceived quality Directly influence purchase decisions and brand loyalty (when a buyer is not motivated or able to conduct a detailed analysis) Support a premium price which, in turn, can create gross margin that can be reinvested. Basis for a brand extension Brand association Create a positive attitude or feeling that can become linked to a brand Competitors will find it hard to attack if a brand is well positioned upon a key attribute in the product class Other proprietary brand assets E.g: Patents, trademarks, and channel relationships.
  13. 13. EQUITYBRAND Brand audit – “Where the brand has been” • A consumer-focused series of procedures to assess the health of the brand, uncover its sources of brand equity, and suggest ways to improve and leverage its equity. • Conducting when setting up marketing plans and considering shifts in strategic direction. • Allowing marketers to keep their fingers on the pulse of their brands so they can manage them more proactively and responsively. Brand-tracking studies – “Where the brand is now” and whether marketing programs are having the intended effects • Collecting quantitative data from consumers over time to provide consistent, baseline information about how brands and marketing programs are performing. • Helping marketers understand where, how much, and in what ways brand value is being created, to facilitate day-to-day decision making. They are complementary, and marketers can employ both 2 APPROACHES TO MEASURE
  14. 14. EQUITYBRAND Brand Value Chain ***A structured approach to assessing the sources and outcomes of brand equity and the way marketing activities create brand value based on several premises ***The brand value chain links the two approaches: Brand Audit and Brand-tracking studies 3 multipliers moderate the transfer between the marketing program and the subsequent three value stages. • Program multiplier determines the marketing program’s ability to affect the customer mind-set and is a function of the quality of the program investment • Customer multiplier determines the extent to which value created in the minds of customers affects market performance. This result depends on competitive superiority (how effective the quantity and quality of the marketing investment of other competing brands are), channel and other intermediary support (how much brand reinforcement and selling effort various marketing partners are putting forth),and customer size and profile (how many and what types of customers, profitable or not, are attracted to the brand) • Market multiplier determines the extent to which the value shown by the market performance of a brand is manifested in shareholder value. It depends, in part, on the actions of financial analysts and investors.
  15. 15. EQUITYBRAND Audi SALIENCE PERFORMANCE IMAGERY JUDGEMENTS FEELINGS RESONANCE High Depth/ Breadth High digital recognition Strong heritage (Brand history) Strong brand awareness* (T.O.M 24.32% – 2nd behind BMW; Recall: 74.32% – 2nd behind BMW; 93% brand recognition/100% aided brand recognition) High performance cars: – Leader in endurance races (24h du Mans) – Customers want the Quattro Tech Innovative design – Steadily improving quality perception – Regained credibility after the 80s reputation slump. – Sales data shows it is now considered a valid alternative to BMW and Mercedes – Design as perceived strong point (2013 best car brand as for design/style according to U.S consumers – Hot on quality for 91% of respondent* Sports and Innovation – For modern customers – Looking to be different – Successful – Sporty Fun, excitement, social approval and self-respect The customer feels smarter, able to challenge old conventions and habits Emotional association: Beauty, prestige, power, speed, safety, competition, happiness, young Relationship with the brand (According to Lovemarker): A commodity for 53.6% A brand for 13% A lovemark for 33.3% Active engagement through social networks Brand loyalty still relatively low (47.5% in USA – 2013) but strongly improving over the last years Fan community with engagement Blockbusters (Iron Man, I Robot) *Questionnaire tested the difference in the brand awareness and image of Audi and Mercedes-Benz with young consumers, also making use of the Lovemarker tool. We had 74 respondents of age between 15 and 34 years old, residing in several countries, mainly France (66,2%), Italy (18,9%) and other European countries (6,8%). The sample was composed by females at 59,5% and by males at 40,5%.
  16. 16. EQUITYBRAND Mercides-Benz SALIENCE PERFORMANCE IMAGERY JUDGEMENTS FEELINGS RESONANCE High Depth/ Breadth High digital recognition Strong heritage (Brand history) Strong brand awareness* (T.O.M 21.62% – 3rd; Recall: 72.97% – 3rd behind BMW and Audi; 93% brand recognition/100% aided brand recognition) Premium quality cars – One of the leaders in Formula 1 – Efficient design – High prices – 3rd best car brand for quality, 2nd best for tech/innovation (US consumer – 2013) – Hold a guaranteed place in the consumers’ set of choices thanks to its worldwide popularity and success – Still a leading car brand, though it appears to be losing ground to BMW and Audi – Hot on quality for 78% of respondent* Premium and elegant – For customer who want to be part of the myth – Selling a brand heritage – Traditional, Loyalty Warmth, security, social approval and self-respect The customer feels he/she deserves the redefined pleasures of life and knows how to enjoy them Asserts a privileged lifestyle: “The best or Nothing” Emotional associations: Elegance, comfort, classic, safety, timeless, tradition, olf, noble Relationship with the brand (According to Lovemarker): A commodity for 46.9% A brand for 18.8% A lovemark for 34.4% Users are loyal to the brand (Brand loyalty: 55.9% – 2nd best car brand in US 2013) Engagement in F1 each year with a branded team as an engine supplier for other teams *Questionnaire tested the difference in the brand awareness and image of Audi and Mercedes-Benz with young consumers, also making use of the Lovemarker tool. We had 74 respondents of age between 15 and 34 years old, residing in several countries, mainly France (66,2%), Italy (18,9%) and other European countries (6,8%). The sample was composed by females at 59,5% and by males at 40,5%.
  17. 17. THANKYOU!

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