Segmentation, Targeting

and the TIVO Case

Presented by:

Arjun Vidyarthi
Arpita Suvadarsinee Bal
Avinash Swain
Bhawna Kukreja
Binayak Sahu
 Factors influencing
Segment
buying patterns Conclusion Target
Position

Why Segment
• Orbitz in 2011 found • Marketers think that
• The marketing process of
that the average Mac consumer preferences in
STP identifies a firm’s
user was willing to pay various spheres (like OS
potential customers,

and Target?
$20-$30 more for a of your laptop) can be a selects which customers a
hotel room than an good indicator of which
company should pursue
average Windows user. products you are most
and then formulates its
• Mac users also had 40% likely to be interested in.
value proposition for
higher chance of those customers.
Deriving the need from selecting 4/5 star hotel • Organizations are
• Hence, they showed increasingly recognizing
examples. upscale selection of these preferences while
rooms to them. designing their products.
 STP in brief

Segmentation Targeting Positioning

Group similar customers Assess attractiveness of Define value proposition for
based on similar need. each segment. target segment.

Then profile each segment Select segments to target. Develop an action plan.
 Segmentation:
Fundamentals
• Segmentation is the separation of heterogenous
groups of customers into homogenous subgroups.
• Segmentation benefits both the customer and the
organisation.

Benefits to the Organisation Benefits to the Customer

• Identifying unfulfilled needs • Convenience and time saved

• Better product design • Tailored products/services
• Targeted promotions • Relevant offers
• Increased customer • Personalised experience
satisfaction

Sustainable Profit Growth Compelling Customer Experiences

Characteristics of a Useful
Customer Segment

Identifiable Substantial

Accessible Stable

Differentiable Actionable
 Segmentation: How to segment
GROUP THESE VARIABLES

Who’s buying?
MAJOR SEGMENTATION
VARIABLES How to select?

• Demographic What are they buying?

• Geographic
• Psychographic
• Behavioural
• Sought Benefits
• Buying Approach Why’re they buying it?
• Firmographics
 PSYCHOGRAPHICS GEOGRAPHICS

Who’s buying?

Form groups on the basis of available and

identifiable information.

DEMOGRAPHICS

B2B Markets B2C Markets

Type of industry, Age, Income, Education,
Psychographics, Family
Size of business size, Geographics
 R.F.M. BRAND LOYALTY
What are they
buying?

BRAND LOYALTY SHARE OF WALLET

RECENCY
FREQUENCY
MONITORY

SHARE OF WALLET
 Identified how the needs of Indian
consumers were different from their
Western counterparts.

Dinner generally served late and children

Why are they need snacks before.

Positioned itself as that snack.

buying it?
Why do people have dogs in the first
It is only through knowing why consumers make the place? And what do these reasons imply
decisions they do can we truly understand their needs about the dog food market?
and preferences. One company identified the following
segments:

• Functional: low priced food.

• Family Mutt: economical food.
• Baby Substitute: High-priced food.
• Nutritionist: Many feedings, high
priced food.
 TARGETING

Targeting involves evaluating the

attractiveness of each market segment,
selecting one or more segments to
pursue and then designing marketing
programs to serve them. 
 Mass Marketing vs One-to-One Marketing

Mass Marketing One-to-One Marketing

Virtually no differences in the needs of Personalised products as per customers
customers
 Selecting Target
Segments

Segment Company Fit Competition

Characteristics

Size Objectives Strength

Growth Rate Resources Intensity
Profitability Competencies Resources
 Number of Segments to
Target
Single Multiple All Segments
Segment Segments

Focus on a Target multiple Simultaneous

niche, exclusive segments in the targeting of all
product market segments in the
market
Ethical and Privacy
Issues
Firms increasingly mine customers’ purchase
data to target them, but this tactics raises
privacy concerns among consumers.
 Strategy Formation
Segmentation can significantly influence the organization’s product,
pricing, communication, salesforce and customer management strategies.

Product Strategy: Pricing Strategy

Product mix in Gap’s line Business and Economy in Airlines

Communication Customer Management

Strategy Strategy
Appropriate advertisements Using RFM, decide loyalty programs

Salesforce and Channel

Strategy
Different channels for delivery
TIVO
Segmentation
Analysis
 Problem TV viewing in US
• Viewers complained their • Average household has 2.4
favorite programs were TV’s
not on when they had
time to watch TV • Average of 7.4 hours a day
watching TV
• Watching was often
interrupted by phone calls • Popular shows between 8
and family demands and 11 pm have audiences
larger than 25 million
• VCR might have been used
but was difficult for many • Founders started by
viewers  focusing on the TV vs.
“home networking” idea

• Need to change customers

rituals on a mass scale
 What TiVo does v/s The challenges faced

What does TiVo do Challenges faced

• Takes feed and turns it into digital video • Biggest challenge was segmenting market.
• Its most important feature was its hard drive • They wanted to know Consumer’s point of
• Enables pause/fast forward/record view.
• Partnered with Sony and Philips who • ThinkAlike, TiVo’s partner consulting firm
manufacture, distribute, and promote TiVo had gathered some robust data from the
• Focuses on web and PR aspects company.
• Now they had to analyze the survey data if
their attitude matched with the consumer.
Segmentation and Analytics • Created a table with 14 attributes in
rows and columns to record their
Used Principal Component Analysis (PCA) to identify attributes in correlation.
data that are correlated with others.
• Value of every cell in diagonal was 1
(every attribute was perfectly
correlated with itself)

• Ran a correlation (r2) with all pairs of

attributes to identify attributes with
high correlation (r2 >0.45 is regarded
high).

• Highly correlated attributes were

ignored.

• Remaining 3 attributes were

considered as the basis for 3
segments.