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Targeting & Segmentation
Food Marketing EconomicsApEc 4451/5451
Fall 2008October 28, 2008
Dennis Degeneffe Research Fellow
The Food Industry Center
Introduction• 24 Year Marketing Research Career on “Client Side”:
– General Mill – Cereals, Family Flour, Food Service, and Subsidiaries– McDonald’s– Oscar Mayer – Kraft Foods– Pillsbury– General Mills
• Independent Marketing Research Company – Consumer Centric Solutions LLC since 2002; Clients:
– Consumer Packaged Food– Food Service– Financial Services– OTC Healthcare– Personal Care– Small Appliances– Auto Care
• Academic– Research Fellow at The Food Industry Center– Occasionally Adjunct at Carlson School of Management – Part time MBA program
I want Something
light
I something exotic and interesting
I want Something
readily available
I want something to re-energize me
I want to Avoid fat & Cholesterol.
I want something indulgent.
I want something I can
carry with me
I want something easy to prepare
I want somethingon sale
I wantsomething to tide
me over.
I want Something Wholesome.
I wantfood that’s low
In fat.I want
something unique
I want an old standby
I want to avoid too
many calories
I want something That really tastes
great
I want something filling
I want something simple and basic.
I want somethingthat I crave.
I want somethingNatural/ organic
I want something that doesn’t cost a lot.
You can’t be everything to everyone.
Why Target Consumers?
Drivers of Buyer Behavior
• Who the Consumer is:– Demographics– Attitudes– Culture– Values
• The Situation a Consumer finds ones self in:– Needs Experienced– Benefit Sought
• Fundamental Elements:–Target – The Who–Benefit – The Why based on needs experienced in the situation
–Frame of Reference – The context–Support - How
Example of Positioning Statement:To Time Pressured Moms… Hamburger Helper is a great way to get an fresh hot
meal on the table in only a few minutes, that the entire family will love. That is because Hamburger Helper includes all the fixins – just add it to one pound of hamburger, simmer and serve.
Product Positioning
Good Segmentation Approaches
• Can be used to identify targets
• Discriminates behavior
• Provides insights
• Can be used to reach targets
Ways to Segment Consumers
• Geography – e.g. Minneapolis SMSA • Demographics – e.g. College Students• Lifestage – e.g. expecting moms• Behavior – e.g. McDonald’s Heavy Users• Attitudes:
– The basis for why consumers behave the way they do – closely linked to behavior.
– The insight to develop effective Marketing programs.• Products• Services• Advertising
Approaches to Attitudinal Based Market Structure
• Consumer Segmentation – Identify groupings of consumers with similar attitudes out of a diverse population.
• Need States – Identify product usage situations with similar set of consumer needs.
• Affinity Models – Identify groups of consumers with similar degrees of commitment to a brand.
Attitude Segmentation Methodology
Typical approach:
• Collected by a “survey.”– Questionnaire constructed to cover
comprehensive set of attitude statements– Also collects other measures to relate to the
attitudes.
• Uses a “cluster analysis” to identify segments.
HWE2001 Consumer Segments
17%
16%
12%13%14%
14%
14%
Seven Different Consumer Types With Respect to Food Attitudes
Mainstream Nurturing Cooks
Healthy Traditional
Cooks
Healthful ExplorersWeary ProvidersFood On Demand
Mobile Munchers
Traditional Recipients
From General Mills, How We Eat 2000
Excerpts from ADA Conference
Food Segment Profiles
Mainstream Nurturing CooksMainstream Nurturing Cooks• Nurture their family through foodNurture their family through food• Meal time = quality timeMeal time = quality time• Good taste is #1 considerationGood taste is #1 consideration• Want to make the occasion specialWant to make the occasion special
Healthy Traditional CooksHealthy Traditional Cooks• Also nurtures through foodAlso nurtures through food• Emphasis is on balanced nutritionEmphasis is on balanced nutrition• Favor wholesome, traditional foodsFavor wholesome, traditional foods• Discourage snacking Discourage snacking
Weary ProvidersWeary Providers• Dinner time is family timeDinner time is family time• Meals are a balancing act, and stressfulMeals are a balancing act, and stressful• Prefer easy, quick, familiar foodsPrefer easy, quick, familiar foods• Tend to cater to kids tastesTend to cater to kids tastes
•Each Segment has a distinctly different approach to eating.
Healthful ExplorersHealthful Explorers• Actively trying to eat healthyActively trying to eat healthy• Focus on quality/freshnessFocus on quality/freshness• Creative & Experimental tastesCreative & Experimental tastes• Frequently too busy to cook, need easily Frequently too busy to cook, need easily
accessible alternativesaccessible alternatives
Food Segment Profiles
Traditional RecipientsTraditional Recipients• Want good tasting, wholesome traditional foodWant good tasting, wholesome traditional food• Rely on someone else to prepareRely on someone else to prepare
Mobile MunchersMobile Munchers• Busy, active, on-the-goBusy, active, on-the-go• Meals and snacking blur togetherMeals and snacking blur together• Looking for portable foodsLooking for portable foods
Food on DemandFood on Demand• Other activities tend to have a higher priorityOther activities tend to have a higher priority• Do enjoy foodDo enjoy food• Food must be easy, accessibleFood must be easy, accessible• ……or not at all.or not at all.
•Each Segment has a distinctly different approach to eating…
HWE2001 Consumer Segments
17%
16%
12%13%14%
14%
14%
Food Segment Summary
Mainstream Nurturing Cooks
Healthy Traditional
Cooks
Healthful ExplorersWeary ProvidersFood On Demand
Mobile Munchers
Traditional Recipients
LoveBalance
FreshCompromise
Later
GrazingCatered
Food Is …
Scratch Pie ala ModeScratch Pie ala Mode Lighter Fruit TartLighter Fruit TartFrozen PieFrozen Pie
Pie to GoPie to Go Good Pie - Any PieGood Pie - Any Pie
Mainstream Mainstream Nurturing CooksNurturing Cooks Healthful ExplorerHealthful ExplorerWeary ProviderWeary Provider
Traditional Traditional RecipientsRecipients
Mobile Mobile MunchersMunchers
Examples:
Primary HH Shoppers
Feel About Shopping
Trip Planning
Savings / Deals
Budget Conscience
Stores Shop
Items Shop:
The Seven Consumer Grocery Shopping Styles
15%
Neat Foods, New Ideas,
Nice People … What's Not
to Like!
Love It!
Efficient(menus, lists)
CouponSavvy
Aware
Range -- Experiences
Exploration,Variety
Born To Shop
16%
Smart Shopper --
I Define The Term!
Committed
Sales / Savings
To The Max
No RealConstraints
Many … Best Prices
Sales, Deals
Savvy Game
Playing
14%
This ReallyIsn't Any Fun.
Too Many Decisions.
To Little Money.
StressfulChore
StretchBudget
Necessary -- Confusing
A MajorConcern
BestSales
Familiar
Budget Weary
16%
Careful Planning Makes All
The Difference!
Responsibility
Complete, Real Systems (menus, lists)
SupportPlanned
Purchases
No RealConstraints
Regular One
Routine
Practical & Systematic
6
39 Tue
14%
You Do What You Have To Do So You
Can Eat What You Want To Eat.
Means To End
Limited
Not WorthThe Effort
No RealConstraints
Usual One
PantryOption Loading
It’s Just Groceries
13%
Oops … I Forgot The Bread Again.
Guess I'll Just Come Back Tomorrow.
Disorganized
Ineffective
TooBothersome
SomeConcerns
Accessibility / Proximity
Sporadic, Forgetful
Haven’t A Plan
13%
Why Is It That No One But
Me Ever Buys Food For
This House?!
ActivelyDislike
Not --On The Fly
Oblivious
No RealConstraints
Wherever -- Not Loyal
Convenience
Want Out Of It
Segmenting Shoppers
Need State Segmentation Methodology
Typical approach:
• Collected using a “diary.”– Questionnaire constructed to cover multiple
occasions– Collects what needs consumers experience,
and the 5 W’s.
• Uses a “cluster analysis” to identify “need states.”
Need State Definition
• Hierarchy of needs surrounding usage occasions:
Consumer Needs
Nurture Others
Sensory Gratification
Nutrition
Emotional Needs
Indulgence
Hunger Satisfaction
Dinner Need States
Kid Pleasing Dinners Traditional Family Meals Budget Stretchers
Healthful Dinners Time Constrained DinnersQuality Time Dinners
Defining Needs and Benefits Sought:
Treat/reward myself and/or others 204To make the occasion special 199Fulfill a craving 191Show others I care for them 181Really enjoy eating 180To relax with 170Feel comforted 165Bring family/people together 159New and different 156Establish/maintain a family tradition 151Impress others 147Maintain a healthy lifestyle 131Enjoy the cooking experience 130
Requireing little effort or easy to prepare 69That I have always had/reminds me of the past 66Stay within my household budget 55Get a meal on the table quickly 38That can be eaten quickly 33Kids particularly like/ask for 26That can be carried away 20
Kids particularly like/ask for 217Get a meal on the table quickly 185Stay within my household budget 172Treat/reward myself and/or others 170That can be prepared at the last minute 161Show others I care for them 155Requireing little effort or easy to prepare 150Everyone would like 144Make something I frequently prepare 144That can be eaten quickly 139Easily cleaned up 138Bring family/people together 134
That I have always had/reminds me of the past 68To relax with 67Really enjoy eating 65Maintain/reduce my weight 65Feel comforted 55New and different 51Meet specific health needs 46Impress others 31Experiment 26
Are
Are Not
Quality Time Dinners Kid Pleasing Dinners
Vs.
Affinity Consumer Structure
• Divides consumers up into groupings with varying strengths of commitment to the brand:– Devoted … Staunchly loyal to the brand.– Adopters … Use the brand along with others.– Acceptors … Willing to try the brand, or infrequent user.– Available … Know little or nothing about the brand.– Rejecters … Brand is irrelevant, no intention to try it.
• Identifies the proportion of the volume coming from each group
• Identifies reasons for their commitment level.
Reasons For Commitment Level
• Guinness – Among Devoted, brand is:– Authentic.– Mark of personal distinction.
• Highly unique product characteristics• Heritage• Says I am a beer connoisseur
• Guinness – Among Adopters, brand is:– A change of pace.– Premium imported.
• Implication … Huge opportunity to leverage brand authenticity and unique product characteristics to deliver emotional benefits to users.
Summary of Segmentation
• A powerful marketing tool.• Many different ways to segment the market.• Should:
– Identify targets– Discriminate behavior– Provide insights– Be reachable
• Three types of Attitudinal Segmentation studies:– Consumer Segmentation – People based on attitudes– Need States – Occasions based on needs– Affinity Segments – People based on relationships