What are the different types of correlation

what are the different types of correlation

Common Mistakes In Market Segmentation

Segmentation studies tend to be large and complicated, so it’s easy for errors and mistakes to be made. Some of the most common mistakes:

  1. Segmenting a segment . For example, someone might want to segment the market for widgets among 18- to 24-year-olds who live in Vermont and buy brand XYZ. As is evident, the client is asking that a tiny sliver of the market be segmented. True, this tiny sliver can be segmented, but rarely are the resulting segments of any value, because they are just too small. General rule: segment the whole market, including all age groups. The market should be broadly defined for a segmentation analysis to be most effective. In other words, don’t preordain the results by sampling restrictions.
  • Overlooking the “universals.” Many attitudinal statements in the questionnaire will not show up in the final segments, because they tend to be the same across all segments. Statements that everyone agrees with, or everyone disagrees with (we call them “universals”) cannot explain much in the multivariate analyses. Variables have to move up and down for the multivariate analysis to work. The highest rated variables, and the lowest rated, are likely to fall out of the multivariate analyses. However, you should always look at these universal statements. Any one of them might be the basis for a positioning or a strategy that would appeal to everyone. If you find something unique that appeals to everyone, the heck with segmentation. Go for the whole hog.
  • Creating too many segments. There is a practical limit to the size of segments that companies can effectively target. If you create more than four or five market segments, you run the risk that the resulting segments will be too small to target, at least by mass media. This is not always true, but it is a good rule of thumb.
  • Targeting all segments. So you have carefully subdivided your target market into five mutually exclusive psychographic segments, and your boss tells you to develop a marketing plan to attack each segment. If all of your marketing is direct mail, and you can identify the addresses that belong to each segment, then you can attack all segments (assuming your product is relevant to all segments). But, if you use broadcast media in marketing your product, it is very difficult to target multiple segments because of media “spillover.” What you say to one segment will be muddled and confused by the different messages targeted to other segments.
  • Confusing the results. Segmentation studies are large and complicated, with enormous amounts of data. It is easy to get lost in this treasure trove of

    answers and come up with confusing and baffling results.

  • Overlooking the basics. The dazzle and glitter of the advanced, rocket-science multivariate analyses attract everyone’s attention. No one ever opens up the crosstabs and looks at the answers to the hundreds of questions asked. Often, hidden in plain view in the plain old crosstabs are tremendous findings that could form the basis for new or improved marketing strategies, advertising campaigns, or new products. Rarely does anyone analyze this basic data, however.
  • Targeting people instead of dollars. A market segment might represent a large percentage of the population, but a small part of the market. Always look at the dollar potential of market segments, not just the number of people in the segments.
  • Nonmutually Exclusive Segments

    Virtually all segmentation work, historically, has been based upon the assumption of mutually exclusive market segments. The mutually exclusive model, however, does not always apply to psychographic or lifestyle segmentation (since most of us hold many overlapping and/or conflicting beliefs and attitudes). Therefore, it is wise to develop two distinctly different segmentation solutions: one based upon mutually exclusive segments and one based upon overlapping segments. Both of these segmentation “solutions” should be crosstabulated by the original questionnaire variables to identify which type of solution yields the most meaningful (and actionable) market segments.

    Final Thoughts on Marketing Segmentation

    The concept of market segmentation is sound. It’s a way to apply greater marketing energy or force to a subset of the market. A great deal of money is wasted on psychographic segmentations that never lead to any marketing actions. If you segment the market by psychographics, there are several essential uses of the segmentation: first, target your brand to the largest segment with relevant brand fit (or even target two closely related segments) by media advertising and message . That is, the advertising message is the way to reach the psychographic segment (rarely can a psychographic segment be defined by demographics or geography). Second, segmentation can provide the guide rails for brand positioning. That is, positioning assumes, or takes place in relation to, a target market segment; you are positioning your brand in relation to a market segment. Third, the segmentation can define opportunities for new products targeted to each psychographic segment. That is, the market segments can be a template for new product development. For example, if you find that 15% of the U.S. population belongs to a “safety first” segment when it comes to buying cars, then you can design and build the safest car in the world to target this segment. So psychographic segmentation’s greatest value lies in positioning, targeting via advertising message, and defining new product opportunities. Go forth and segment.

    Source: www.decisionanalyst.com

    Category: Forex

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