BUILDING CUSTOMER

RELATIONSHIPS THROUGH
SEGMENTATION AND
RETENTION STRATEGIES
Dr. Scott Swanson

OBJECTIVES
• Discuss “Relationship Marketing”

• Note the segmentation bases for both

consumer and organizational markets.

• Present some target marketing

strategies.

RELATIONSHIP MARKETING
a focus on building and maintaining a base of loyal and
profitable customers.

• Attract, retain,
and enhance
customer
relationships.

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 A Portrayal of the Characteristics of
Relationship Marketing

The Firm provides The Customer provides

•Products/Services
•Repeat Purchase
•Individualized attention
•Increased Loyalty
•Continuous information
•Goodwill
•Price offers
•Positive word-of-mouth
•Customer services
•Lower costs for the firm
•Extras and perks, etc.

A MARKET IS DEFINED AS A
GROUP OF PEOPLE WHO:
• Need and want a particular product.
• Have the ability (i.e., buying power) to
purchase the product.
• Are willing to spend resources to
obtain the product.
• Have the authority to buy the product.

Three Phases of Marketing

Strategy
• Phase 1: Market Segmentation

• Phase 2: Target Market and Marketing Mix

Selection

• Phase 3: Product/Brand Positioning

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 Market Segmentation
The process of dividing a total market
into market segments or groups
consisting of people that share one or
more similar characteristics which
make them have relatively similar
product needs.

MARKET SEGMENT
TYPES
CONSUMER MARKET

ORGANIZATIONAL MARKET

Criteria For Effective

Targeting of Market Segments
• Identification
• Sufficiency
• Stability
• Accessibility

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 Common Bases for Segmenting
Consumer Markets
Demographics Psychographic

Geographic Behavioral

Sociocultural
Sociocultural

SEGMENTATION

• The process of
dividing the
market on the
basis of

•Zip Code Analysis

•Regional Analysis

DEMOGRAPHICS - the process of

dividing the market on the basis of

•Age
•Gender
•Income
•Others

• Demographics give us an understanding of

how people look and act on the exterior.

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 Analysis
• Life-style refers to how people live, how
they spend their money, and how they
allocate their time

The distinction between personality

and life-style:

– Personality refers to the internal

characteristics of the person and life-style
refers to the external manifestations of how a
person lives.

Psychographic Analysis
• Psychographics is the quantitative
investigation of consumers’ life-styles,
personality, and demographic
characteristics.

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 AIO statements identify activities,
interests, and opinions of consumers
– Activity questions ask consumers

– Interest questions focus on

– Opinion questions ask for

consumers’

The Vals2 Inventory

• The VALS life-style classification
scheme is a psychographic inventory
of consumers developed by the
Stanford Research Institute (SRI).
• Goal of VALS 2 is to identify
specific relationships between
consumer attitudes and purchase
behavior.

ACTUALIZERS
Values and Lifestyle

High Resources
System (VALS2TM)
SRI Consulting’s

Principle Oriented Status Oriented Action Oriented

FULFILLEDS ACHIEVERS EXPERIENCERS

BELIEVERS STRIVERS MAKERS

Low Resources
STRUGGLERS

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 BEHAVIORAL
• Buyers are divided into
groups based on their
knowledge of, attitude
toward, use of, or
response to a product.

Organizational Markets
Geographic Type of
Location Organization

Size of Customer Product Use

Segmentation in the
Global Marketplace
• There are two approaches to market segmentation

– Localization: treating each country as a separate market

and seeking consumer segments accordingly

– Intermarket segmentation: selecting groups of

consumers who exhibit similar consumption behavior
across different countries

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 Target
Marketing

• The evaluation of the

attractiveness of the segments
and selecting ones the firm
will serve.

TARGET MARKET SELECTION

Undifferentiated or Mass Market Approach

Single Target
Marketing
Market
Mix

TARGET MARKET SELECTION

Concentration or Niche Approach

Segment I
Single
Segment II
Marketing (target market)

Mix Segment III

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 TARGET MARKET SELECTION
Differentiated or Multi-Segment Approach

Marketing Mix I Target Segment I

Marketing Mix II Target Segment II

Marketing Mix III Target Segment III

TARGET MARKET SELECTION

Mass Customization or “One-to-One” Marketing

Segment I
Single
Segment II
Marketing (target market)

Mix Segment III

THE SEGMENTATION PROCESS

• Isolate heavy, moderate, and light users.
• Divide user groups in terms of benefits derived for
the product and compare traits of the groups.
• Segment Identification
• Segment Attractiveness
• Selection of Target Markets
• Positioning Strategy
– Develop a communications strategy utilizing themes appropriate to
the chosen target.
• Positioning “Acid Test”
• Implementation

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 Positioning requires
designing a company and
product image and
Positioning developing a marketing mix
to promote the image to the
target segment(s).

Steps in Product Positioning

• Who are our competitors?

• How are our competitors perceived
and evaluated by consumers?
• How do consumers’ preferences
compare with competitor positions?
• How should we position ourselves
in consumers’ minds?

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