Segmentation for Mk CH Design Ch2

Segmentation for Marketing Channel Design: 

Segmentation for Marketing Channel Design Service Outputs Abdullah AlOmar, IPA

Introduction: 

Introduction Segmentation: involves identifying groups of consumers who respond relatively similarly to different treatments maximally similar within group and maximally different between groups Starting with the end-users The main goal of marketing channels The “ how ” not the “ what ” Value added not the core porduct Grouping end users in the market

End–User Channel Preferences: 

End – User Channel Preferences How the end-user wants to buy Different methods of buying and selling the product and its associated services

Service Outputs: 

Service Outputs The how of distributing products Bucklin's Theory Bulk breaking Spatial convenience Waiting or delivery time Product variety Customer service Information provision

Slide 5: 

Bulk breaking : End-user ’ s ability to buy its desired number of unites of a product or service. Purchases can more easily move directly into consumption The need to carry unnecessary inventory can be reduced More bulk breaking>>smaller amount>>higher SO level>>^^price

Slide 6: 

Spatial convenience : reducing transportation requirements and search costs increase consumer ’ s satisfaction. Ex. Neighborhood supermarket (Ruken Alothiem) Waiting time or delivery time : the time period that the end-user must wait between ordering and receiving goods. Pricing of delivery reflects the value consumers place on getting merchandise sooner rather that later. Yield management in service The beer market in Mexico

Slide 7: 

The breadth of assortment: the product variety available to the end-user Greater variety (more inventory) >> higher output>> higher overall distribution costs Variety vs. assortment

More of Service Outputs: 

More of Service Outputs The four SOs are wide ranging, but may not exhaustive in all situations Customer Service: easing the shopping process for end-users

Slide 9: 

Information provision or customer education as SO: education of end-users about product attributes or usage capabilities, or prepurchase and postpurchase services. The formal or informal provision of info before or after the product sale. EX. DIY, Mac PC @ Apple store Ex. After-sales service

Slide 10: 

Different product and geographic markets may naturally demand different SOs. Kudo in Riyadh vs. Hail ^^ level of SOs demanded by meaningful segments of end-users, ^^ intermediaries will be included in channel structure. Bulk breaking SOs are produced through the costly activities (ownership, promotion..etc.) of channel members

Slide 11: 

End users have a choice between a low SO, low price channel and high SO, high price channel Price and physical product attribute are not SOs, but yet still affects an end-user ’ s overall utilty

Segmenting The Market by Service Output Demands: 

Segmenting The Market by Service Output Demands It is about using marketing research to generate a comprehensive understanding of all the relevant SO demanded by different end-users. Thus, consider the issue of channel segmentation according to SO demands. How customers want to buy

Meeting Service Output Demands: 

Meeting Service Output Demands Creating and running a marketing channel system that produces the service outputs demanded by targeted end-users segments

Slide 14: 

Key factors determining whether and how quickly to respond to knowledge about unmet SO demands: Cost: Cost of providing SO higher than end-user willing to pay Competitiveness: Service output level provided by competitors and final price

Slide 15: 

Easy of Entry: Current, potential competitors, or new entrants Other elements of excellence in the marketing offering: Ex. Low price

The Role of Service Output demand Analysis in Marketing Channel Design : 

The Role of Service Output demand Analysis in Marketing Channel Design Assessing segment attractiveness Targeting a channel segment: focus on segment chosen (the most attractive one) Customize the marketing channel system solution used to sell each targeted segment

Assignment : 

Assignment Q 1&2 P. 64 Read last paragraph p. 63