Page 267 - DCOM206_COST_ACCOUNTING_II

Cost Accounting – II

Notes
Table 14.1: Approaches to Defining Segmentation Variables
Customer Characteristics
Geographic Small communities as markets for discount stores
Type of organization Computer needs of restaurants versus manufacturing forms versus banks
versus retailers
Size of the firm Large hospital versus medium versus small
Life style Jaguar buyers tend to be more adventurous, less conservative than buyers
of Mercedes-Benz and BMW
Sex The Virginia slims cigarettes for women
Age Cereals for children versus adults
Occupation The paper copier needs of lawyers versus bankers versus dentists
Product Related Approaches
Use type Appliance buyer-home builder, re-modeller, homeowner
Usage The heavy potato user-the fast food outlets
Benefits sought Dessert caters-those who are calorie-conscious versus those who are more
concerned with convenience
Price sensitivity Price sensitive Honda civic buyer versus the luxury Mercedes-Benz buyer
Competitor Those competitor users now committed to IBM
Application Professional users of chain saws versus the home owner
Brand loyalty Those committed to IBM versus others

2. Construct segmentation matrix: After customer and product related variables have been
selected for identifying different segments, a segmentation matrix can be developed. Two
or more dimensions may be used to partition an industry.

Example: Restaurants could be divided into four dimensions; types of cuisine, price
range, type of service (e.g. sit-down, buffet, cafeteria, take-out, fast food) and location.
A segmentation matrix for the British frozen foods industry is presented. Five types of
product and five channels of distribution are used to construct the two-dimensional
segmentation matrix consisting of 25 potential segments. However, not every cell in the
matrix may be relevant. Empty cells may represent future opportunities for products or
services.

Table 14.2: Segmenting the British Frozen Food Industry

P Distribution channels
R Supermarkets Independent Specialist Caterers
O Grocery Freezer
Producers’ Retailers’
D Retailers Stores
Brands Brands
U
Vegetables
C
T Fruits
T Meat products
Y
Desserts
P
E Convenience Ready meals

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