It’s a curious thing when you have a document and are unsure of how much of it you wrote, how much was borrowed from you and surfaced later on the net, how much you borrowed and how much you extended it. My web searches on this one are inconclusive.

Be that as it may, it is probably worth reviewing this simple market segmentation approach.

It does indeed have the virtue of simplicity - at least on the surface - but may not be simple to implement or to use (at least the 12 group solution).

I’d certainly want to rethink it a bit, and maybe - if one is in search of a simple solution, rather than a full attitudinal market segmentation - use a framework based on lifecycle, or one of our “power questions” which elicits the main brand loyalty patterns with just a single question. I have written on this elsewhere.

As it stands, I don’t now find the segmentation structure below “satisfying”. But, fwiw

Segmentation based on brand loyalty

One method of classification of buyer groups relies heavily on the phenomenon of brand loyalty.

Brand loyalty can be defined as regular (repeat) purchase of the brand based on a favourable price-and-promotion-resistant attitude toward it.

Brand loyalty is therefore an attitudinal and behavioural concept.

1. New category users (NCU) who enter the category by buying our brand.

2. Brand loyals (BL) who regularly buy our brand.

3. Brand switchers (BS) who may occasionally buy our brand or could be induced to do so.

4. Other-brand loyals (OBL) who regularly buy a brand other than ours.

Why focus on attitudes as well as buyer behaviour?

The answer is that the would-be buyer’s attitude has to be known in addition to behaviour in order to assess sales potential. Consider the following:

1. New category users may or may not represent good sales potential depending on their attitude toward the category and not just their attitude toward our brand. Note that behaviour is not sufficient to assess the NCU’s sales potential because those with favourable attitudes toward the category are no different behaviourally from those with neutral or negative attitudes (they all are non-buyers). We have to know their attitudes in order to assess NCU’s sales potential.

2. Brand loyals already have a strongly favourable attitude toward our brand and are the core of our current and future expected sales. They may not, however, represent good potential for increased sales beyond the rate at which they are buying now.

3. Brand switchers, provided that they include our brand in their switching behaviour, presumably have at least a moderately favourable attitude toward our brand; otherwise they would not buy it at all. We have to know their attitudes to see if they could be made loyal or whether they will always be just moderately favourable, attracted to our brand for variety or whenever it offers a promotion.

4. Other-brand loyals usually have the least sales potential because they are satisfied with, and are therefore committed attitudinally to, another brand. Although their behaviour looks more promising than that of the NCU because they already purchase within the category, the attitudes of OBL’s, which often are decidedly neutral or more often actively negative toward us, may make them our worst prospects.

If we consider the likely advertising and promotion leverage of the four general prospect groups:

1. New category users (NCU) have decreasing leverage as the product category matures. Early in the product life cycle, NCU’s offer good sales potential but it also costs a considerable amount to get them to try our brand. By the maturity stage, NCU’s have virtually zero leverage because their sales potential is now very small and the cost of converting them to buying a product (category) that they have already decided against would be very high, if indeed they could be converted at all. Leverage for NCU’s therefore proceeds from moderate to low during the product life cycle.

2. Brand loyals (BL) have less and less potential for additional sales as the product life cycle advances - but they are also cheaper to retain. Since they like the brand, it will tend to “sell itself” without heavy additional advertising or promotion. The leverage for BL’s is only moderate because additional advertising and promotion would not have a large additional sales effect.

3. Brand switchers (BS) have the largest potential for additional sales. Early in the product life cycle, when there are many experimental brand switchers, leverage will be high. But it also will be high later, too, in that routinized brand switchers can be held with less advertising (though continued promotion). Overall, the BS group has high leverage.

4. Other brand loyals (OBL) have very low sales potential. Those who are not fully 100 percent loyal to another brand may be converted temporarily by heavy promotion, but this would be at high cost. The OBL group therefore has low leverage.

Extensions to a brand loyalty based framework can lead to a 12 group target audience definition …

1. Negative new category users (NNCU)

2. Unaware new category users (UNCU)

3. Positive new category users (PNCU)

4. Single-brand loyals (SBL)

5. Multi-brand loyals (MBL)

6. Experimental other-brand switchers (EOBS)

7. Experimental favourable brand switchers (EFBS)

8. Routinized other-brand switchers (ROBS)

9. Routinized favourable brand switchers (RFBS)

10. Favourable other-brand loyals (FOBL)

11. Neutral other-brand loyals (NOBL)

12. Unfavourable other-brand loyals (UOBL)