PRODUCT + MARKET SEGMENTATION

MARKET & PRODUCT SEGMENTATION DEFINITIONS

MARKET & PRODUCT SEGMENTATION

Product and Market Segmentations for the industry products and services is an essential consideration for all companies. These segmentations will help the companies in the marketplace to increase the attractiveness of their products and thereby assist market penetration.

There are 18 proposed scenarios which readers might consider:

1.	MARKET SEGMENTATION THROUGH PRICING - LOWER PRICE
2.	MARKET SEGMENTATION THROUGH PRICING - HIGHER PRICE
3.	PRODUCT SEGMENTATION THROUGH QUALITY - HIGHER QUALITY
4.	PRODUCT SEGMENTATION THROUGH - LOWER QUALITY
5.	MARKET SEGMENTATION THROUGH AVAILABILITY - GREATER AVAILABILITY
6.	MARKET SEGMENTATION THROUGH AVAILABILITY - REDUCED AVAILABILITY
7.	PRODUCT SEGMENTATION THROUGH PERFORMANCE VARIANCES
8.	PRODUCT SEGMENTATION THROUGH TECHNOLOGICAL + TECHNICAL FACTORS
9.	PRODUCT SEGMENTATION THROUGH WARRANTY VARIANCES
10.	PRODUCT SEGMENTATION THROUGH SERVICE FACTOR VARIANCES
11.	PRODUCT SEGMENTATION THROUGH PRODUCT FRAGMENTATION
12.	MARKET SEGMENTATION THROUGH CONVENIENCE FACTORS
13.	MARKET SEGMENTATION THROUGH DISTRIBUTION FACTORS
14.	MARKET SEGMENTATION THROUGH CUSTOMER FACTORS
15.	MARKET SEGMENTATION THROUGH PSYCHOGRAPHICS
16.	MARKET SEGMENTATION THROUGH BRANDING
17.	MARKET SEGMENTATION THROUGH MULTI-BRANDING
18.	MARKET SEGMENTATION THROUGH MARKET STRETCHING

Each of the above Market and Product Segmentation strategies are then applied to each of the commercial considerations, namely the specific products, markets, operations, geographic locations and competitors areas.

The calculation is made by applying the Segmentation Value to the Item Weighting to give the cell value, thus:-

Value x Weight = Cell value

For example,

80 x 1.1 = 88




	C								08			11
	E
	L
	L			03
						05					10					15
							06
	V
	A
	L																x
	U
	E
					04
										09					14

														13
			02
								07
													12


		01


RELATIVE IMPORTANCE TO SALES VOLUME, MARKET SHARE & PROFITABILITY

The values of base Factors (fields Crit_A to Crit_K), together with the data is for 15 sectors (products, markets, operations, geographic locations, competitors, et al) covered in each table (fields Headx01 to Headx15) represent the relative weightings.

One can plot these weightings as an initial analysis of the relative importance to the criticalness of the Factors and the criticalness of the factors (defined in fields A_Def to K_Def) to the individual Sectors (defined in fields Head01 to Head15). x = Base reference for the Factor.

In this example one can compare the weightings of one particular base Factor, x, with that of the 15 other sectors.

For example, if the cell value figure for " MARKET SEGMENTATION THROUGH PRICING - LOWER PRICE " is high, this will indicate that the Segmentation of a product or service by reducing prices would represent an opportunity to build sales volume, market share and profitability. Conversely, if an industry does not have a high score with this factor this will indicate that the market will not respond favorably to such a Market Segmentation tactic by the companies in the industry. Similarly the other Segmentation tactics can also be related to individual situations within companies.

The relative cell values and cell weights reflect the relative importance of that cell in terms of achieving greater sales volume, market share and profitability. Thus if the cell value is high then companies in the industry will have the opportunity to utilize such a tactic to achieve high sales volumes, market share and profitability. The converse is applicable if cell values are low and this indicates that the particular cell does not have much bearing or effect on sales volumes, market share or profitability.

THE DATABASE

There are a series of spreadsheet and database tables for this section, and each table will consist of a number of records for each of the specific products, markets, operations, geographic locations and competitors areas:

TABLE	Datafile
PRODUCT + MARKET SEGMENTATION	SG2 – SGP
TRADE CELL - PRODUCT + MARKET SEGMENTATION	SG3 – SGT
OPERATIONS - PRODUCT + MARKET SEGMENTATION	SG4 – SGO
COMPETITOR - PRODUCT + MARKET SEGMENTATION	SG5 – SGC
MAJOR CITY - PRODUCT + MARKET SEGMENTATION	SGB

There are 2 records for this section for each of the above sectors (headings indicate Field names):

MARKET & PRODUCT SEGMENTATION
CODE	CRITICALS	A_DEF	B_DEF	C_DEF	D_DEF	E_DEF	F_DEF	G_DEF	H_DEF	I_DEF	J_DEF	K_DEF
SEG_01	1: MARKET & PRODUCT SEGMENTATION	PRICING - LOWER PRICE	PRICING - HIGHER PRICE	HIGHER QUALITY	LOWER QUALITY	GREATER AVAILABILITY	REDUCED AVAILABILITY	PERFORMANCE VARIANCES	TECHNOLOGICAL & TECHNICAL FACTORS	WARRANTY VARIANCES	SERVICE FACTORS VARIANCES	PRODUCT FRAGMENTATION
SEG_02	2: MARKET & PRODUCT SEGMENTATION	CONVENIENCE FACTORS	DISTRIBUTION FACTORS	CUSTOMER FACTORS	PSYCHOGRAPHICS	BRANDING	MULTI-BRANDING	MARKET STRETCHING

The above table is then applied to the specific products, markets, operations, geographic locations and competitors for under 15 sub-headings (headings indicate Field names):

Items being considered (x)		Products, markets, operations, geographic locations and competitors
Field Name for Item	Field Name for Item Weight	*For example:*
Head01	Headx01	Product 1
Head02	Headx02	Product 2...
Head03	Headx03
Head04	Headx04
Head05	Headx05
Head06	Headx06
Head07	Headx07
Head08	Headx08
Head09	Headx09
Head10	Headx10
Head11	Headx11
Head12	Headx12
Head13	Headx13
Head14	Headx14
Head15	Headx15

FIELD MANIPULATION

MARKET & PRODUCT SEGMENTATION
CODE	CRITICALS	A01	B01	C01	D01	E01	F01	G01	H01	I01	J01	K01
SEG_01	1: MARKET & PRODUCT SEGMENTATION	110	100	98	80	70	80	85	90	100	121	80

The above fields (A01 to K15) represents the average VALUE for the Segmentation Factor, Eg. for SEG_01 – A = "PRICING - LOWER PRICE".

Headings A to K is the Segmentation Factors.

The individual cells (Axx – Kxx) represent the VALUE for the Items Segmentation Factors, Eg. A to K.

*Cells – where,* A01-K01 = A - K, etc.**
A01	B01	C01	D01	E01	F01	G01	H01	I01	J01	K01	… To …	A15	B15	C15	D15	E15	F15	G15	H15	I15	J15	K15
110	100	98	80	70	80	85	90	100	121	80

Where, the xx, (i.e. 01-15) represents the VALUE for each Heading (i.e. Head01 – Head15)

The Weight for each Heading is found in fields Headx01 to Headx15

Field Name for Item Weight
Headx01
Headx02
Headx03
Headx04
Headx05
Headx06
Headx07
Headx08
Headx09
Headx10
Headx11
Headx12
Headx13
Headx14
Headx15

Graphically, one can establish a base reference line for each Item (Eg. Headx) by multiplying the Ax field with the Headxx field, viz, A x Headx01.

Then one can plot the value of each Item in relation to the base reference line and the other Item in the set by multiplying the A01 field with the Headx01.

Segmentation Factor representation for table:

z= Base Reference

(A – K)

x= Head01

o= Head02

… Etc.

PRICING - LOWER PRICE

PRICING - HIGHER PRICE

HIGHER QUALITY

LOWER QUALITY

…Etc

= Segmentation Factors

RELATIVE IMPACT ON SALES VOLUME, MARKET SHARE & PROFITABILITY