investigacin sobre segmentacion por beneficios buscados

8/11/2019 Investigacin Sobre Segmentacion Por Beneficios Buscados

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Journal of Marketing Education

DOI: 10.1177/0273475399211005

1999; 21; 34Journal of Marketing EducationJohn A. Schibrowsky, Robert H. Collins and James W. Peltier

Bootstrap Benefit Segmentation as an Experiential Learning Activity

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APRIL 1999JOURNAL OF MARKETING EDUCATION

Bootstrap Benefit Segmentation as

an Experiential Learning Activity

John A. Schibrowsky, James W. Peltier, and Robert H. Collins

This article introduces an experiential learning activity

designed to provide business students with an understanding

of benefit segmentation, product positioning, and target mar-

kets. This bootstrap benefit segmentation method can be

taught without the need for primary data. It makes benefit

segmentation available as a short-term experiential activity

that can be accomplished in one or two class meetings or as

an assignment prepared outside of the classroom.

The new American Assembly of Collegiate Schools(AACSB) curriculum guidelines (1993) stress the impor-

tance of providing students with the necessary competencies

or skills needed to become successful businesspeople. To

meet this challenge, business curricula must establish learn-

ing environments that ensure that the classroom and the real

world are comparable (Nofz 1990; Schibrowsky and Peltier

1995). This perspective will inevitably resultin an increase in

educators use of experiential activities to provide students

with meaningful experiences and skills.While the importance of experiential learning activities

has been lauded for more than two decades, this new support

by the AACSB makes experiential learning experts valu-

able members of the faculty. More educational approaches

that provide students with the opportunity to gain practical,

hands-on experiences need to be identified (Benson 1993;

Hood and Young 1993; McBrierty and ONeill 1991;

Schibrowsky and Peltier 1995; Peltier, Schibrowsky, and

Kliemenhagen 1995; Robinson and Haynes 1991).

One of the biggest challenges facing marketing educators

is creating a mix of both short-term and long-term experien-

tial activities that provide students with an exposure to a wide

range of real-world business problems. While many of thesemester-long experiential projects provide excellent real-

world opportunities, many of the short-term (1 or 2 weeks)

class projects often limit the extent to which students can

learn valuable real-world skills.

The purpose of this article is to present an experiential

learning activity that has proven quite successful in enhanc-

ing students understanding of segmentation, product

positioning, and target markets. This approach does not

require the use of primary data or those fancy statistical

analysis tools often associated with benefit segmentation.

Moreover, this activity can be done in as few as two class

meetings or as an outside-of-class assignment. The authors

have successfully used this classroom technique for a wide

range of product categories and audiences. It is perhaps easi-

est to use this technique with common grocery store items,which are familiar to most students, but common services,

such as fast-food items, can work just as well. In addition,

more sophisticated products of special interest to members of

the class can be used successfully. These have included an

equally wide range of professional services, health care pro-

viders, sports teams, and travel/tourism products. The activ-

ity has been successfully used in the introductory marketing

course for both undergraduates and MBA students, as well as

advanced seminars in product management and planning and

advanced marketing management. The final product ranges

from a three- to five-page freestanding segmentation paper in

a basic marketing course to an integral section in a major

semester-long project in advanced courses. In addition, thetechnique has been appropriately modified and successfully

used in both executive/management development programs

and consulting assignments for a broad range of clients oper-

ating at different levels of sophistication and background.

34

John A. Schibrowsky is an associate professor and department chair in the

Department of Marketing, College of Business,at the Universityof Nevada,

Las Vegas. James W. Peltier is a professor in the Department of Marketing,

College of Business and Economics, at the University of WisconsinWhite-

water. Robert H. Collinsis a professorin theDepartment of Marketing, Col-lege of Business, at the University of Nevada, Las Vegas. Address all

correspondence to Robert H. Collins, Professor of Marketing, College of

Business, University of Nevada, Las Vegas, 4505 Maryland Parkway Box

456010, Las Vegas, NV 89154-6010; phone: (702) 895-1036; e-mail:

[email protected].

Journal of Marketing Education,Vol. 21 No. 1, April 1999 34-43 1999 Sage Publications, Inc.

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WHY BENEFIT SEGMENTATION?

In the 40 years since Wendell Smith (1956) first estab-

lished the idea of segmentation, it has become one of the key

ideas in marketing strategy (Rudelius, Walton, and Cross

1985; Wind 1978).During thepast four decades, a wide range

of segmentation bases has been suggested. The bases include

geographic, demographic, behavioral (heavy-half), personal-ity, psychographic, and benefits sought (Haley 1968, 1983).

Of the various segmentation approaches, demographic seg-

mentation is the most often employed segmentation tech-

nique by both industry and educators. The reasons are two-

fold. First, it is the easiest method to employ. The segmenter

simply selects a demographic group, then develops a product

and marketing program to meet that groups needs. Second,

most business students have only been exposed to demo-

graphic segmentation. The net result is a large number of

educated marketers who have not been exposed to

benefits-sought segmentation but only to demographic

segmentation.

The problem with demographic segmentation is that itassumes that all consumers with the same demographic pro-

file have similar wants and needs. This is seldom the case and

is themajorreason why demographic andpsychographic seg-

mentationoftenfail (Duboff 1987; Helfgot et al.1988). There

is little theoretical or empirical support for the view that

demographics or psychographics are highly correlated with

consumers wants or purchase behaviors (Fullerton and

Dodge 1992; Greenberg and McDonald 1989; Rudelius,

Walton, and Cross 1985).

The benefits-sought approach has always had an advan-

tage over the other methods of segmentation, since it is based

on causal factors (reasons for purchase) rather than descrip-tive factors (Day, Shocker, and Srivasan 1984; Haley 1968;

Peltier and Schibrowsky 1992; Young, Ott, andFeigin 1978).

When benefit segmentation was first introduced in 1961, the

notionwas uncomplicated. The best way to partitiona market

into homogeneous groups of demand was to concentrate on

causal factors (reasons for purchase) rather than descriptive

factors (Haley 1968).

The problems associated with teaching traditional benefit

segmentation and employing it in business settings are two-

fold. The first problem is that it is difficult to execute. Over

the years, marketing researchers have recast benefit segmen-

tation as a sophisticated market research exercise requiring

primary data collection and complicated statistical analysis(Johnson 1971; Lautman 1991; Wedel and Steenkamp 1992;

Wind 1978). While this traditional approach to benefit seg-

mentation has yielded a large number of positive results (e.g.,

Harvey 1990; Lautman 1991; Rudelius, Walton, and Cross

1985), it is so cumbersome that it is often impractical in both

practice and classroom use.

The second problem is consistency. Since benefit segmen-

tation is a multivariate post hoc approach, the results vary

from study to study (Green 1977; Greenberg and McDonald

1989). While well-designed benefit segmentation analyses

will yield similar results, they seldom yield the same set of

segments. This is due, in part, to differences in designing and

executingthe research project along with differences in inter-

preting the results along the way. As Greenberg and McDon-ald (1989) note, contrary to popular belief, data-driven, mul-

tivariate segments are not real; they are simply intellectual

constructs. Theresulting segments arenot totally objective or

statistically reliable.

Both of these problems have severely limited the teaching

and use of benefit segmentation in the classroom. This article

proposes a different approach to teaching the concept of

benefit segmentation. It describes a procedure for performing

a benefit segmentation analysis without collecting primary

data. The process is designed to use secondary data to perform

the benefit segmentation analysis. This method is referred to

as bootstrap benefit segmentation since it relies on surro-

gate information. It is elementary enough to use as an experi-

entiallearningactivityin a Principles of Marketingcourse yet

powerful enoughto predict theintroduction of Diet Mountain

Dew, superpremium root beers, and low-calorie sports drinks

in the soft drink market.

This approach allows marketing educators to expose the

student to benefit segmentation. In addition, it helps tie the

idea of segmentation to the marketing concept and a market-

ing orientation. The result is an analysis of the market that

provides the marketer with the information needed to develop

marketing strategies that take advantage of the diversity of

wants and needs in the marketplace.

THE DISTINCTION BETWEEN MARKET

SEGMENTS AND TARGET MARKETS

Market segmentation is defined as a process of clustering

people with similar wants and needs into groups. As such, a

marketsegment is a group of customers, with similar wants or

needs, who will respond to a marketing mix in a similar way

(Perreault and McCarthy 1996, p. 92). This similarity in

wants andneedsshould resultin similaritiesin brandsconsid-

ered and purchased. The resulting segments should be groups

of prospective buyers with a homogeneous demand (similar

wants and needs) (Haley 1968).

Target markets are defined as a (similar) group of custom-ers to whom a company wishes to appeal (Perreault and

McCarthy 1996, p. 48). Target markets are typically

described using demographics and psychographics since

media is often purchased using these as criteria. Target mar-

kets and market segments are related but they are not the

same.

JOURNAL OF MARKETING EDUCATION 35



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BENEFIT SEGMENTATION STEPS

AND DATA REQUIREMENTS

The steps presented in Table 1 have a proven track record

in both classroom activities and in consulting projects. They

are the result of numerous segmentation projects in product

categories ranging from breakfast cereals to a multifunction

entertainment facility. Through all these projects, the processhas proved to be extremely adaptable. An example using rice

is presented in the appendix to illustrate the process. We

highly recommend that relatively simple markets with a lim-

ited number of segments be used for class projects.

The data to support this segmentation exercise are rela-

tively easy to come by and can be gathered by student groups

or provided in-class by the instructor. If the class gathers the

data, it is simply necessary to send them to local stores to col-

lect data on all of the products they can find in the category.

The process can be most efficient if the instructor assigns

various storesor chainsto student groups. This ensures a wide

variety of data collected and that stores outside of the tradi-

tional student housing areas also will be selected.Students need to bring to class a listing of all of the brands

that they canlocate in themarket, as well as availablepackage

sizes and prices for each brand (including store brands and

private labels). To make the most efficient use of class time,

unit prices (on a per ounce basis) for each stockkeeping unit

(SKU) shouldbe calculated ahead of time, andthe lists should

be combined and compiled into one master listing of the

brand offerings available in the product category.

If instructors do not require this data collection effort as an

out-of-class assignment, instructors will need to collect the

data themselves. However, having students collect the data is

much preferred, even fornontraditionalclasses. The reasonis

simple: involvement in the data collection gives students afeel for the diversity and richness in the product category that

they may never have known before. In the rice example (see

appendix) prior to the grocery store trip, they are confident

that rice is rice. Its white, fluffy, and a commodity. One

rice is the same as the next. Afterward, they realize that rice

products are designed to meet a variety of wants and needs.

Gathering the data in the marketplace gives the average stu-

dent a much betterfeel forthe offeringsthan just a straightfor-

ward table presented on overheads in class. In addition, stu-

dents are quick to become experts for the product category,

making the project more involving.

Step 1:Define the product category.

First, the product category must be defined. This estab-

lishes the boundary of products and customers that will be

considered in the analysis. Sometimes it helps to list products

and brands that are included and not included in the product

category.

Step 2: Identify thefocal behavior that prompts the purchase andusage of the product.

This step attempts to answer the question, Why do con-

sumers buy this product? Students should identify who pur-

chases and uses the product, when the product is used, how

often it is used, how it is used, and why it is used. Do not let

the students rush through this step. A little extra effort at thispoint can add some real insight in later steps.

Step 3:List the benefits sought by consumers.

The next step is to have the class list the benefits sought by

the consumers. When primary data are being collected, this is

often accomplished by using focus groups. In class, this is

typically accomplished with a brainstorming session. The

key at this stage is to get the students to focus on benefits

sought rather than product attributes offered.

Once the benefits have been listed, they must be classified

as qualifying or determining benefits (Perreault and McCar-

thy 1996, p. 100). A qualifying benefit is one that is relevantto including a certain customer type in a product-market.

The qualifying benefit creates a reason for the consumer to

buy in the product category. These benefits are prerequisite

for a brand to be considered for purchase. Brands that fail to

provide these benefits will not be considered by consumers.

A determining benefit is one that actually affects the cus-

tomers purchase of a specific product or brand in the

product-market (Perreault and McCarthy 1996, p. 100). A

36 APRIL 1999

TABLE 1

BENEFIT SEGMENTATION STEPS

1. Define the product category.2. Identify the focal behavior that prompts purchase or usage of

product.

3. List benefits sought.Classify the benefits as qualifying and/or determining.

4. Build and name potential/logical/feasible segmentation bundles.5. Evaluate the potential segmentation bundles.

Determine the brands positioned toward each segment.Check for over- or undersegmentation and other possible

misspecifications.

Repeat steps 1-5 as many times as

is necessary to correctly segment the market

6. Provide a description of the segments in terms of consumption

patterns and other related information.

7. Describe each segment in terms ofa. Demographics.

b. Socioeconomic variables.

c. Geographic.d. Other factors.

8. Evaluate the segments in terms ofa. State of want satisfaction.b. Market potential.

9. Identify target markets.



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determining benefit creates a reasonfor theconsumerto buya

specific brand. Some benefits might be both qualifying and

determining. While qualifying benefits are requirements

needed to become a viable alternative in the product class,

determining benefits are the focus for benefit segmentation,

since they constitute the brands selected by consumers.

Step 4:Construct and name the segment bundles.

Next, the determining benefits must be combined into

benefit bundles. This is thekey activity in thebenefit segmen-

tation process. When primary data are being collected, this is

often accomplished by using focus groups and/or collecting

preference data. If this project is being conducted as an exten-

sive class project, the class can proceed by conducting focus

groupsof current purchasers. If theproject is being conducted

in class, the following approach is a beginning point.

Start by askingindividual students why they buy a particu-

lar brand. If the product category is something that students

do not typically buy, bring some typical customers to class

or ask students to find and personally interview some cus-

tomers using the process described below. Get them to talk in

terms of the benefits sought. If they mention benefits that

were not mentioned in step 3, go back to that step and make

the correction. One structured approach for this task is to

frame the discussion in context of a multiattribute utility

(MAU) model,focusingon theimportance weights. This pro-

cess typically yields a variety of single and multiple benefit

segments, and the activity is very similar to the investigative

work done in focus group research. Go around the class until

you have exhausted the differences in the class. Note that this

step is likely to yield differences across sections. This is all

right since the next step is designed to verify the segments.The construction of benefit bundles takes persistence and is

seldom accomplished in a single attempt.

Once thebenefit bundles areformed, they must be labeled.

The names should depict the important benefits of the seg-

ment. Good names help these consumer groupings come to

life (Greenberg and McDonald 1989); bad names impede the

process. Avoid cutsie names like Betty the gourmet and

Bob the big drinker. While lifestyle researchers such as DDB

Needham use these names, they shift the focus away from the

benefits sought.

Step 5:Check for misspecifications.

At this point with traditional benefit segmentation, the

market researchers would survey customers to collect data

about the importance of specific benefits and brands pur-

chased. The data would be used to verify the segments pro-

posed in step 4. With the bootstrap approach, existing brands

are used to verify the proposed segments. To perform this

analysis, the existing brands are positioned toward the pro-

posed segments. This is accomplished by comparing the

products attributes and the segments benefits sought. When

finished,the results areanalyzedin an attempt to identify pos-

sible misspecifications. This approach is based on the

assumption that the difference in brands in the product cate-

gory reflect differences in consumers wants and needs (see

Figure 1). This assumption has been employed by a numberof researchers in thepast (Day, Shocker, andSrivastava 1984;

Grover and Srivastava 1987; Srivastava, Alpert, and Shocker

1984; Srivastava, Leone, and Shocker 1981).

The first step is to identify brands that do not match up

with any of the proposed segments. In this case, the benefits

associated with these brands have not been grouped into a

segment. This suggests that additional segments might

improve the analysis.

The next step is to determine if the proposed segmentation

structure results in brands positioned to multiple segments. If

this condition exists, it signals the possibility that the pro-

posed segmentation structure has resulted in an overseg-

mented market and does not necessarily indicate a problem.However, the situation does indicate that the proposed seg-

ments do not match the current brands and marketers are cur-

rently using one brand to satisfy multiple segments. In new

product development classes, we often encourage students to

oversegment markets in order to identify new niches.

Thethirdstep is to determineif theproposedsegmentation

structure results in firm(s) with two or more brands posi-

tioned toward the same segment. This finding suggests that


FIGURE 1: Segmentation and Product Differentiation



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one firm has two or more brands positioned to meet the needs

of the same segment. Logically, this seldom makes sense

since these brands would be in direct competition and canni-

balize each others sales. The firm probably believes that

each brand offers unique benefits and is positioned toward a

different segment. When this multibrand situation exists, it

suggests that the proposed segmentation structure has under-

segmented the market. However, in some cases, the segmen-tation structure might be accurate. There are some situations

where a marketer might develop multiple offers for the same

segment. This is most likely to happen in situations where

consumers are heavy users and seek variety. An example

would be the breakfast cereal market. Consumers want the

same benefits but also variety. A firm like Kelloggs might

position multiple brands in a segment to offer consumers

variety without losing sales to the competition.

The final check is to compare the marketing mixes of the

brands that are positioned toward each segment. Brands that

arepositioned towardthe same segment arein directcompeti-

tion andare satisfying thesame wants andneeds. They should

have similar marketing mixes. These brands should possess

coinciding features and attributes. Their prices should be

comparable. They should be distributed the same way and

should end up in the same locations. The promotional strate-

gies should be similar in terms of target audience and mes-

sage. Large discrepancies in any of these marketing mix ele-

ments signal possible misspecifications and should be

scrutinized.

When misspecifications are identified, the student should

go back through steps 1-4to spot problems and make changes

in the segmentation bundles to better fit the available brand

information. The process must be repeated until the student

feels confident that the proposed segmentation bundles cap-ture the difference in wants and needs across the potential

consumers of the product category.

Step 6:Provide a description of the segments in terms of con-sumption patterns.

Once the segments capture the variation in customers

benefits sought, they arecharacterized in terms of differences

in consumption patterns between the segments. The informa-

tion developed in the analysis of focal behaviors provides a

good starting point. The student should focus on identifying

the key differences between segments.

Step 7:Describe the segments in terms of demographics.

Next, the segments must be described in terms of demo-

graphics, socioeconomic variables, geographic factors, and

other pertinent variables. With no primary data available, the

bootstrap approach must be employed. One approach that has

proved to work especially well in our classes is to use a sec-

ondary source of information such as Simmons Market

Research Bureaus Study of Media and Markets. This data

source covers a wide variety of product categories, ranging

from grocery store products to financial and travel services.

Typical demographic, socioeconomic, and media usage pro-

files areavailable on allmajorbrands in theproduct category.

Versions of this data source that are only a couple of years

out-of-date and no longer suitable for client purchase are

available to university libraries in either bound or CD-ROMformats at a very reasonable cost.

1The data on the leading

brands in the segment can be used as surrogate for a whole

segment. It should be noted that demographics are being used

to describe the segment, rather than as a segmentation base.

This step is necessary to identify target markets (Yuspeh and

Fein 1982). Recall that the segments represent groups of ho-

mogeneous demand, rather than similar demographics. The

marketer cannot communicate directly to the staples seg-

ment. Instead, target markets that contain a considerable

number of members of a segment must be identified (Yuspeh

and Fein 1982).

Step 8:Evaluate the segments.

The segments should be evaluated to determine satisfac-

tion levels and segment size. If the members of the segment

are happy with the current set of product offerings, they are

not likely to switch to new offers and would not be good tar-

gets for a new product offering. Since primary data are not

available, secondary information must be used to evaluate

satisfaction. Some key signals of dissatisfaction include

brand switching, unstable brand shares, and new products

positioned toward the segment.

In addition, segment size must be estimated. Since theseg-

ments have been developed using thebenefits sought, there isno direct way to determine the size of each segment. A boot-

strap approach must be employed. One way to obtain an esti-

mate of the size of a segment is to use the sales levels of the

brands positioned toward each segment as a surrogate mea-

sure of the size of the segment. If brands are positioned

toward multiple segments, the sales must be divided between

thesegments. These sales figures areavailable from a number

of sources including Advertising Age, the Census of Retail

Trade, Survey of Buying Power, Simmons Media/Marketing

Service, Nielsen Retail Index, Selling Areas Marketing Inc.,

trade journals, and trade associations. It might take some

detective work, but the numbers are nearly always available

and help students to become competentbusiness researchers.

Step 9:Identify target markets.

When employing a benefits-sought approach to segmenta-

tion, target markets must be identified. Target markets are

described using demographics and psychographics, since

they are the basis for media purchases. The approach is

straightforward. Target markets should be selected on the

38 APRIL 1999



7/11

basis of the likelihood that the targeted group contains a high

proportion of the individuals from the desired segment. This

is accomplished by matching up the demographic descrip-

tions of the segments with reachable target markets. The

higher the proportion of individuals from the desired seg-

ment, the more efficient and effective the targeting effort will

be. In the ideal situation, the target will contain an extremely

high proportion of the desired segment. In theworst-case sce-nario, the target will contain a proportion of the desired seg-

ment that is only slightly higher than a mass marketing

approach.

BENEFIT SEGMENTATION PITFALLS

The segmentation steps make the process appear simpler

than it actually is. The following tips are intended to help the

faculty member to alleviate reoccurring difficulties.

Focus on Brands Rather than Customers

With brand information used to verify the process it is

natural for students to focus on categorizing differences in

brands rather than focusing on customers. The net result is an

exercise in recognizing product market structures rather than

identifying customer segments. The teacher must continually

remind the students to focus on customers and benefits rather

than product attributes and brands (see Surasky 1994). Recall

that step 3 encouraged this activity.

Rush to Finish

Steps 1 through 5 are seldom completed without the need

for adjustments. In most cases, two or three iterations are

needed. The teacher must recognize that students arelikely to

defend the first set of segmentation bundles rather thanendeavor to make improvements.

Failure to Focus on Benefits

Whenever students end up with untenable results, go back

to the focal behavior and benefits sought. Typically, the stu-

dents have failed to focus on the underlying assumption in

benefit segmentation: differences in benefits sought lead to

differences in purchase and usage behaviors.

Outlier Brands

Typically, a few brands seem to be outliers that cannot be

positioned toward any segment. The task can be completed

by including a catchall segment. However, students mustcarefully evaluate each of these outlier brands. The benefits

should be identified, since these brands often supply insight

into the future directions of the market.

Variations among Students

Students are likely to come up with a number of variations

of segments forany product category.This does not necessar-

ily mean that one group of students is correct and the others

are wrong. They are simply different interpretations of the

same situation. This same result is likely to occur if two

research firms conducted independent data-driven benefit

segmentation analyses (Greenberg and McDonald 1989).

The differences should be discussed to see where and why

they differ.

Misspecification Indicators

When evaluating the proposed segments for misspecifica-

tions, a number of indicators are employed. These guidelines

do not automatically signify that something is wrong.

Instead, they shouldbe viewedas symptoms of possible prob-

lems. Since the indicators focus on the existing brands, the

differences imply that the analysis does match the marketing

strategies of thefirmsin themarket. In each case, theproblem

area should be investigated to understand why the discrep-

ancy exists.

Missing Information

Whenever secondary data (i.e., brand shares or demo-graphics) are unavailable, the students must attempt to make

expert judgments based on their review of the literature and

understanding of themarket. However, every effortshould be

made to identify available secondarysources of information.

CONCLUSIONS

Benefit segmentation is a powerful strategic marketing

tool. However, few students are exposed to it. The basic rea-

son for this is the difficulty involved in performing the task.

Instead, most students are exposed to demographic segmen-

tationbecause it is easy to demonstrate in a classroomsetting.

The process can be accomplished in one class meeting. Theonly problem with demographic segmentation is that it often

fails (Duboff 1987; Helfgot et al. 1988). There is little theo-

retical or empirical support for the view that demographics

are highly correlated with consumers wants or behaviors

(Greenberg and McDonald 1989). As a result, demographic

segmentation seldom leads to homogeneous groups of

demand. Firms and students using demographic segmenta-

tion instead of benefit segmentation areoperating at a distinct

competitive disadvantage. They are using old technology,

when newer, more effective approaches are available.

The bootstrap benefit segmentation approach alleviates

many of the disadvantages associated with teaching the tradi-

tional approach driven by primary data. First, the bootstrap

benefit segmentation approach is relatively easy to teach to

students who do not have a strong mathematical preparation.

The idea of individuals being divided into groups on the basis

of their benefits sought is intuitively appealing and the math

is minimal. Second, the activity can be conducted quickly. If

the instructor provides the secondary data to the students, the

exercise can be completedin oneor twoclassperiods.Asking

students to collect and compile the required data outside of




8/11

class will necessarily addto thetime required forthe exercise.

Third, our students indicate that this experientially based

exercise is a pleasant, as well as meaningful, learning experi-

ence. In too many cases, students feel that they know about

marketsegmentation butdo nothave thefoggiestidea on how

one actually segments a market. This exercise seems to leave

them with a sense of satisfaction and accomplishment that

simply explaining the process in class does not provide.

40 APRIL 1999

APPENDIXExample Using Rice Benefits Sought

1. Define the product category.For therice market, all dry, frozen, and instant rice products purchased by the end user will be considered. As defined, the market does not

include industrial/commercial purchasers or prepared rice products such as takeout from the Chinese restaurant.2. Identify the focal behavior that prompts purchase or usage of the product.Rice is used by both male and female adults. Rice is a starch that can be consumed as a part of any mealor as a snack, although most rice is

consumed at lunch or dinner. Rice canbe consumed as a part of themain meal, a side vegetable, or included in a dessert. Morericeis consumedby certain racial or ethnic groups, and in certain regions of the country.

Rice is prepared in a number of different ways. Ricecan be boiled or steamed in a pot, or a specialized ricecooker can be used for prepara-tion. In addition, variousinstant rice products areavailable, as well asfrozenor boil-in-the-bag rice products. Rice canbe served plain or flavored.

As a starch, rice competes with other common starch products,such as pasta and potatoes. For some consumers, these products may be the

preferred product and rice an acceptable substitute. For other consumers, rice will be the preferred product and a part of almost every meal. Inthis situation, there may be no acceptable substitutes.

3. List benefits sought.Classifythe benefitsas qualifying, determining,or both.There are a number of benefitsassociatedwith rice. Someconsumers seerice as

a low-priced starch that is central to their diet. Other consumers see rice as offering nutritional benefits, especially those who may be con-cerned about low-fat alternatives. Certainly rice products can offer a changeof pace from the usual starches, such as potatoesand pasta,formany consumers. In addition, rice products may be seen by some consumers as relatively easy to prepare or as requiring little preparationtime.

Thesebenefits maybe classified as qualifying, determining,or both (see Table A1). Forexample,the fast benefit is only provided by instantor precooked rice products. It is a determining benefit since it limits which brands a consumer would consider for use. Some benefits, such asnutritious, are both qualifying and determining benefits. The distinctive nutritional qualities of rice are not found in the quantities in otherstarch products and this makes nutrition a qualifying benefit.

TABLE A1

QUALIFYING AND DETERMINING BENEFITS

Qualifying Benefit Deter mining Benefit

Low-priced starch X

Nutritious X XEasy to prepare X

Fast X

Change of pace X XTaste X X

4. Build and name potential/logical/feasible segmentation bundles.While hundreds of potential benefit segments are feasible, the actual number to consider is dramatically less because of natural associa-

tions.For example, low-pricestarch andeasy to prepare do notlogically fittogether, butfast andeasy to prepare aredifficult to separate.TableA2 lists six potential segments and their related benefit weights. These were derived from an in-class discussion. Note that there are separateand distinct segments for low price and nutritious. In addition, there are two sets of similar segments that have been developed where ease ofpreparation and fast or change of pace and taste are important benefits.



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TABLE A2

POTENTIAL SEGMENTATION BUNDLES AND THEIR RELATED BENEFIT WEIGHTS

Rice Benefit Bundles

Segments and Weights

1 2 3 4 5 6

Low-priced starch 10 3 3 3 2 3Nutritious 2 10 3 3 3 3

Easy to prepare 2 2 10 7 3 10

Fast 2 2 7 10 3 10

Change of pace 3 3 3 3 10 10Taste 3 3 3 3 5 5

The rice segment names are based on the benefits desired (see Table A3).

TABLE A3

RICE SEGMENT NAMES

Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Segment 6

Primary Benefits Primary Benefits Primary Benefits Primary Benefits Primary Benefits Primary Benefits

Low price Nutritious Easy to prepare Fast to prepare Change of pace Change of paceFast and easy to prepare

Secondary Benefits Secondary Benefits Secondary Benefits Secondary Benefits Secondary Benefits Secondary Benefits

Fast to prepare Easy to prepare Taste

Name Name Name Name Name Name

Staple Health conscious Fast In a hurry Change of pace Fast and easy

Change of pace

5. Evaluate the potential segmentation bundles.Determine the brands positioned toward each segment. Check for over- or undersegmentation and other possible misspecifications. The

available brands were positioned toward the proposed segments. Note that if a number of brands cannot be positioned toward any of the pro-posed categories, then additional segments are needed to complete the task.

6. Provide a description of the segments in terms of consumption patterns and other related information.In therice example, thestaple segment provides a goodillustration. This segment of rice buyers tends to consume themajorityof their rice

asa part of their main mealand probably considers rice to be an important element of many entrees. They likely serverice every day and mayserve it more than once a day. They represent a majority of the heavy users of rice.

Consumers of rice products may belong to different segments on different occasions. For example, they may consume rice as a staple on

most occasions but switch to a flavored rice product as a side dish to complement a particular main dish they are serving. Since this occasioncalls for the benefits of change of pace and taste, they are part of the change-of-pace segment for this particular occasion.

7. Describe each segment in terms of demographics and so forth .To accomplish this task, representative brands are used as surrogates for the category. For example, the demographic and geographic data

for Mahatma can be used as a surrogate for the staple segment. Using the Simmons Market Research Bureau data and applying the bootstrapmethod, the demographic/geographic descriptions of the staples, change-of-pace, and fast segments are summarized in Table A4. Note thatthese segment descriptions have some intuitive logic to them and will have high face validity with the students. For example, the staples seg-ment is racially diverse and contains a significant representation of ethnic groups (Black, Asian, Hispanic) who have a rich tradition and his-




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tory of high rice consumption as a part of their diet. These ethnicgroups tend to be located in rentalhousing located in themetropolitan areas ofthe southern and western portions of the country. The large family sizes are also consistent with heavy product use in this category.

Interestingly enough, this is a market segment where benefit segmentation is probably a stronger predictor than standard demographicmeasures. The demographics are mixed and probably indicate a bimodal population, perhaps a combination of upscale and down-marketgroupswherethe benefit of a low-priced starchthatis part of a traditionaldietserves to bridgethe twogroups andunitethemas a commonmar-ket segment with similar needs.

TABLE A4

DEMOGRAPHIC MAKEUP OF SELECTED SEGMENTS

Segment 1 Segment 5 Segment 3

Staple Change of Pace Fast

Age 23-34 25-34 45-54

Education High school and college College graduates Some college

Employment Professional/managerial Precision craft Technical/salesFamily Married, parents Married, parents Married, parents

Race Black, other White White

Geographic location South, West West, Midwest Midwest

County size Metropolitan central city Suburban NonmetropolitanIncome More than $75,000 More than $40,000 Between $30,000 and $40,000

Less than $20,000Household size Five or more Five or more 3-4 personsOwn or rent Rent Own Own

8. Evaluate the segments in terms of (a) state of want satisfaction and (b) market potential .Consider thestaple segment as an example. Forthe most part,the brand sharesare stableand there appears to be limited brand switching.

In addition, there are few new brands positioned toward this segment. It can be concluded that this segment is relatively well satisfied. Whilethis is a relatively large segment, it would be difficult to establish a new brand in this segment.

9. Identify target markets.Considering the change-of-pace segment, a primary target would be 25- to 34-year-old parents living in the suburbs of a western or mid-

western city with incomes of more than $40,000 and a large family. A secondary target might be 35- to 44-year-olds with a similar profilebutsmaller families.A newtarget might be college students,sincethey often need a low-priced andnutritious starch as a part of their diet butsim-plydo not have thetime or inclination to include prepared rice as a regular food item. Of course, this group is currentlyeating frenchfries, so amessage noting that rice is available in various flavors might be successful.

42 APRIL 1999

NOTE

1. The entire data set is available to academic institutions for a fee of$500.00 from Simmons Market Research Bureau, Inc., 3802 CorporateDrive, Tampa, FL 33619, 1-800-223-7920.

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