 As-Salaam-Alaikum-Khawatin-Ohastarat. Vaseem Hassan welcomes you to lecture number 13 of Marketing for Non-Profites, MKT 628, at the Virtual University of Pakistan. The component of learning is going to be basis of segmentation. We already know what are the features of the different segments. In other words, what should be the characteristics when we draw the segmented lines. Now the question is, what should be the basis in which we should build these segments. There are so many different factors that we take into account to define the segmented lines and then to refine them. But before I get into the details, let me tell you there are two sets of measures that the marketers could generally consider before they get down to the process of defining the segmented lines. The reason that we get into segmentation is because we want to reach our target market. That's the key statement. If we were not to reach the target market, there would be no need for segmentation. So in other words, all the features that we have learned, meaning the feature of mutual exclusivity, exhaustiveness, major abilities, substantiality, all these features will add up to a zero sum game if we were not in a position to reach our targets. So in other words, two of the features which are known as reachability and responsiveness are the most important features. And it is for these two features that we undertake all the exercise of segmentation and then draw lines and then come up with appropriate ingredients of the marketing mix to come up with the right strategies to complete our mission. Therefore, reachability and responsiveness are the factors around which we knit the basis of segmentation. Like I said, there are two different sets of measures which marketers could generally deploy when defining segmental lines and further refining them. The one is known as objective measures whereas the other one is known as behavior-specific measures. Well, as the terminology goes, objective measures are supposed to be quite very reliable measures and they are the ones that have generalized applicability because they basically dig into demographics and demographics being the age factor, the generational characteristics, income level, education, religion, ethnicity and so on and so forth provide us with some traditional, accurate basis on which we can build our segments. The other set of measures which is about behaviors automatically means that those are very specific to specific situations and which essentially means that we have to look at a specific behavior in order to decide what segment should we really form on the basis of that particular behavior. And needless to say, these measures basically are a reflection of psychographics about which I'm going to talk a little later. Among the demographic measures, we know ages, one of the most time-honored and established way of looking at a group having similar characteristics or similar features, similar interests, similar values may show similar behavior. It is on the basis of age that we are going to classify who is going to qualify for being the resident of the nursing home. Generational features are very interesting basis of segmentation because they represent a certain set of beliefs on part of certain generations. For example, the generations of 60s and 70s may be more inclined toward making donations to all those causes that fight serious ailments. Whereas the generations of 30s and 40s may like to donate for those causes that deal with environment protection. This is just an example. So we look into all these features in order to draw lines between those groups of people who have dissimilarities. But when they are put together, they have a lot of similarities. The other one could be the income level. And we can take a look at the income level from two different standpoints. The one is from the customer standpoint and the other one is from the donor standpoint. And to give you the one example, we have to bring in to play the factor of income level when we get into classification of different households as to who are going to get free food and who are the ones that will be given food at a subsidized price. Any further subdivision of the segment into sub-segments is going to entail application of the same principles of drawing boundaries between different groups when it comes to defining further sub-segments. Let us now take the second standpoint which is about the income level as it relates to donors. You are going to have to take a look at the behavioral patterns of your donors in relation to the amount of money they give toward the cause and the frequency with which they give. The point here is that you get into segmentation not only with regard to your customers or meaning the subjects of the program, the target market, so to say, but you can segment the whole audience or the audiences that you are dealing with. May those be activists, the volunteers, the donors, or anybody else, meaning in addition to your real customers. There is yet another basis of segmentation as part of the demographics and that is ethnicity. It is a very interesting basis and we like to bring into force whenever we think we have to undertake a medium of understanding for a particular population. We like to come up with communication campaigns that represent their particular language and reach them with the help of the multimedia which could be like newspapers, television, or even moderators. Language is a big force and a great communication enhancer. It really actuates for the people to respond and we know that the basic objective of coming up with basis of segmentation is to reach people and to have responses from them the way that we want. Another basis of segmentation could be geographical segmentation. We know that the people living in one particular geographical area tend to represent one particular set of the habits, interests, and behaviors and therefore we can take it for granted that most of the people living in one particular area will come up with responses which are similar. So in other words, those people could be lumped together in one particular segment. The moment we find that we have people within that particular segment who come up with different responses and there is a very vivid divisive pattern of responses we have to divide that population into two different segments or maybe more different segments. But the point here is that geographical segmentation also has been a traditional well-established approach toward making segments. In developed societies, there is organized data available in terms of the demographics and the usage patterns and so much so that you also can lay your hands on their media habits but that is not the case in our society and therefore we have to resort to the concept of what marketers call geo-clustering. That also boils down to geographical segmentation but without the kind of organized data which is available or which may be available in ready-made form. You tend to move forward with the supposition that the people in that particular area will tend to exhibit the behaviors and interests which are rather common and which have a lot of similarities. It is because of that fact that you may like to totally eliminate one particular geographical area from your segments when it comes to generating donations and you may like to concentrate on another geographical area which you think is highly fertile and carries a lot of potential for generating the funds. Let us now get down to behavior-specific measures. These also happen to be pretty reliable and the interesting part of these measures is once you have unraveled different findings that you want to establish through research or through any of the means available to you within the organization, for example, information systems, then you go back to demographics. In other words, all the findings that you have unearthed could be related to the demographics making your findings even more reliable, authentic and valid. The very first one could be the social values and the family life cycle. Social values basically are a reflection of the different interests and habits and behaviors and values on part of certain groups of population that show a lot of commonalities and similarities in terms of their education, for example, their income levels and their consumption patterns. Therefore values, meaning social values, could be a very good basis of defining the segments, meaning defining the boundaries of the segments within which you have one group that is absolutely homogenized. And you, through the marketing research, can establish the divisive values which become the basis of defining so many different segments because we are operating in a market which is differentiated and which is not homogeneous and therefore we have to have different groups and we have to have different strategies to approach those groups and therefore we should get into marketing research to unearth all those values that may become the basis of dividing different groups into different segments. Different social values represent different social classes and the fact is that when different social classes are put together with the family life cycle, they give us further leads into segmentation. Now, the question here is what is a family life cycle so that we can understand the relationship of the social values, social classes and the family life cycle. Family life cycle basically is a reflection of all those graduating points which are exhibited by different families while they move from one particular phase to another. For example, a young family of young professionals with small kids is passing through the one particular phase of life and in about 10 to 15 years they will get into another phase meaning they graduate from one point to another. The reason family life cycle has a great impact on the way that we make the different segments or rather define different segments is because they have different priorities in life while they graduate from one phase to another. To give you one example, a young family with very small kids may be more apt to donate to your cause than a family which is in the middle age and which has greater responsibilities of educating their children and doing so many other things in relation to their children and their future. Conversely, a family that is in its later years or rather the latest years and happens to be in a fluent family they will have absolutely different kind of outlook to their life when it comes to making donations and you know what I'm saying. So social class, depending on certain sets of social values when connected, when the family life cycle gave us a lot of insights into what should be the basis of our segmentation. We may also look into customer lifestyle as a basis of segmentation and this is the equivalent of usage and attitudes as we try to establish from time to time on the commercial side. You know from the commercial marketing side that the marketing people almost on a continual basis come up with a program of marketing research that is destined to establish the usage patterns and attitudes of their target market. Meaning if there is a change in the attitude of their target market they should come up with appropriate fixes in terms of their strategic formulations and in terms of their tactical moves. Similarly, in the non-profit area we tend to study what we call AOI meaning activities, opinions and interests of the target audience. The reason I talk about target audience because I don't really want to confine our learning to just the customer's side rather I would take into consideration the total target audiences that consists of so many constituents that have to be integrated in order to fulfill our mission. Therefore, we have to look into their lifestyles from so many different dimensions. The findings that we get through the marketing research because this is an exercise that by and large underscores the importance of marketing research and tends to tag in that exercise in order to establish findings that we are looking for and therefore the findings that we get would be connected back to the demographics and that connection makes our findings extremely valid and authentic. So in other words the findings that we get through the study of lifestyle for which we may also have to carry out marketing research is something that gives us a very solid basis which is a combination of demographics and psychographics. Both. It is both because we first get into lifestyles and then relate the findings with the demographics and that is how we find out how and why people go across the segmental lines and show the particular AOI in the meaning if people from different demographic groups have a tendency to exhibit behaviors meaning activities and their opinions and the interests that have similarities that we really dig into psychographics and that we then determine as to why people from different demographic backgrounds behave in a similar way and then demonstrate those psychographics. The example of psychographics could be two different segments of the market in which you are trying to approach with one particular program and in order to generate funds you get into an exercise of a musical concert and a mafila milad so to say. So in other words you have two different segments of the program, the same cause but it is the beauty of segmentation that you are dividing two different groups and you are approaching them through two different promotional exercises and generate responses that you want to make your program successful. Let me talk about a couple of more bases of segmentation in relation to behavior specific measures and those are occasions where the user status the usage rate, the kind of features that we all are very familiar with from the commercial side but in the context of the non-profits. Let me give you a couple of examples in relation to occasions we know that people tend to donate more during the months of Ramadan and Rabi'l Awal so the implication for marketing people is that they have to have their marketing strategies and execution tactics all set to kick off a no sooner than these months approach. Segmentation can also be done on the basis of user status. For example if you are to kick off a family planning campaign you can divide different groups into like newly weds and 5 to 10 years weds and so on and so forth and by the same token you can segment the market on the basis of the usage rate and this basically talks about the intensity of the usage for example if you are to undertake an anti-smoking campaign you can divide the market into heavy smokers and the light smokers by the same token you can divide the market into careless drivers and absolutely reckless drivers when it comes to undertaking a program that is meant to improve driving habits of people on the roads. So these are some of the basis of segmentation that we take into consideration while we define our segments but like I always say we have to look at the marketing implications of all the concepts that we learn what is it that is going to be extremely strategic about the concept that we have just learned well about segmentation I think it is extremely significant that we need to have different strategies for different groups of people because we know we operate in a market which is highly differentiated in today's marketplace we have people who show the different behaviors the different habits, different interests and the fact of the matter is the ones we have defined in one particular segment in that segment we may have people who exhibit the different preferences and we may have to get into things like marketing and differentiated marketing now these are the kind of examples which I am going to give you as I go along the study of the segmentation and then look further into positioning but the fact remains that we need to put together variables of the marketing mix in order to come up with different strategies and different strategies have to be formulated for different groups meaning different segments of people and we have got to see to it that strategies that we come up with are most appropriate for the market that we are approaching so in other words we are approaching our targets and we have to approach them with just about the most appropriate strategy which is a reflection of our competencies and capabilities this component of learning is going to be on an example and I am going to give you one example of segmentation and I would like to draw your attention toward drawing segmented lines among donors of different kinds so in other words we are going to talk of the different segments from the donors side and not from exactly customer side let me emphasize here that we get into the exercise of segmentation not only in relation to the ultimate target market which is our customers we can get into segmentation of so many different constituents who form a very strategic link or a very strategic part of the whole chain and therefore the donors can also be divided into so many different segments for us to see as to what really are the motivations behind their making donations and those motivations can make them different people and all those people who have similar motivations will form with one particular segment and how many different segments can we form this is a hypothetical example with the help of which I think the concept is going to be crystal clear about the drawing the segmental lines but before I proceed further let me tell you here that one of the authentic basis of defining our segments is within the organization and that is our drawing on the data bank that we have in the form of information systems we can refer back to internal reporting system we can refer to the market intelligence system and of course we can get down to marketing research we can either get down to results of some research that we conducted in the past or we can get into some new research a new program in relation with the results that we had in the past that can give us further insights into how to define our segments or how to refine the segments that we are already working with because we want to come up with very effective marketing strategies to reestablish the position of our program, the meaning of a brand and we want to see whether or not there is a shift in the attitudes of people and in the interests that they take toward our cause so all these things that could be unearthed with the help of marketing research which again is part of the overall marketing information systems so marketing information systems MIS is something that we always refer to in terms of defining our segments and the factor is that information that we get through our reports is very authentic and valid information and therefore the segmentation that we come up with by and large is very valid and authentic now back to the example here we are in a situation where we have to classify the different donors based on certain motivations that they have toward making those donations that they do make toward the cause we think that we need to carry out marketing research it has to be a comprehensive quantitative research design where we have to come up with a comprehensive questionnaire asking different kinds of questions to our respondents so that we can unearth some very important demographic as well as psychographic features so in other words we have to have questions which really give us insights into what age brackets the respondents are in what are the income levels and what ethnicity that they have if at all the factor of ethnicity and what kind of social class they have fallen and the kind of family life cycles they have gone through or they still have to go through in other words we have to ask all those questions which leads into all those characteristics that define the good segmentation and if you refer back to the characteristics of the segmentation because you will recall that I am talking here essentially of mutual exclusivity of exhaustiveness of the measurability and substantiality with reachability and of course differential responsiveness so in other words because we have to put together our questionnaire with the help of a marketing research company of course that all those questions give us findings into the features that I have just talked about so that we can define our segments in a way without any awareness and without any ambiguity the segments could have got to be defined in a very vivid manner there has to be total clarity no blurring of the boundaries and total exhaustiveness you carry out this marketing research and collect a comprehensive amount of data and you are all set to analyze that data so that you can then get into the segmentation exercise you apply the different kinds of statistical techniques that are starting from some very basic to maybe some very complicated and sophisticated in order to cluster the findings of the data in categories which are very appealing from the standpoint of defining your segments in other words you have data in clusters that automatically tells you that this particular group has to be lumped together because they have the following similarities in terms of their demographics and in terms of the psychographics now do not forget the objective which is to establish what really it is that motivates them to make the donation so you have analyzed the data you have all those clusters in terms of interpretation and you classify those into four or five the different categories the regular donors because this is what you already have as part of your records if you dig out your internal reporting system you will find out that those respondents who already donate to what the cause are part of the system and you can double check that from the internal systems also who happen to be your regular donors so you can classify those donors as one particular category now this is not the end of it if this was to be the end of it you would have established that through internal reporting system but you here are trying to establish the motivation behind it and motivation is going to be on earth through different questions that you already have asked as part of the psychographics and you find out that regular donors are the ones who only because they know people who are either related to them or their friends who have been cured by the program that you have undertaken you are working on something so noble and you have cured so many people who are known to them that they have become regular donors to what the cause so you can establish a high level of confidence that those donors your target market meaning those people who have been treated through a program of yours are the ones who tend to be regular donors and therefore you are going to have a strategy which is going to reinforce their thinking into keep on making donations towards your cause the second classification could be that of casual donors now this again is something that you have found through research they are not through your internal reporting system but any complementary data which you may get through those systems you may lay your hands on that and see how you can draw certain correlations but here basically I am talking about your findings through the market research on the motivational side of making donations so casual donors could be the ones who make donations casually because they think that the cause you are working on happens to be a good cause and somehow they have heard about it and they think whenever they could spare some extra the money they should make the donation towards your cause so here your marketing strategy is going to be very different because this segment is the one that does not consist of regular donors it consists of casual donors but you have the opportunity to convert this segment into regular donors so therefore your marketing strategy here is going to be reinforcement of not only the casual behavior but rather doing something which can really push them up the ladder and make them become regular donors that's where the catch is and that's the beauty of the marketing strategy and this beauty of marketing strategy is based on your findings because without that you can come up with some strategic formulation based on very keen observations but not on established findings you can talk to the group of donors could be those who happen to know certain volunteers, activists or your staff members and they say we know the people working for the cause and we know it's a good cause and therefore we can make donations towards this cause to the ones in Hawaii and here again you have an opportunity and you know what I'm talking about the meaning doing something so that you can create brand loyalty something that people come into the fold of regular donors and then you may have a classification of those donors who came to donating to your cause through a cost marketing relationship you carried out a cost marketing exercise you joined hands with a corporate entity because of which your cause got highly publicized and the people got to know about it they started buying the product from the commercial side because it was making contribution towards the cause and after the relationship is over those socially conscious customers can happen to be your donors as well so here the strategy is going to be a little different in terms of its execution because you're dealing with the customers who are in profile and then you may have another very significant portion of the market which is yet another very interesting segment and that may consist of people who have religious leanings and you find out through research that here are the people who like to make donations because they think it is a religious obligation on their part to make those donations now these are the people as the common sense goes they will keep on making donations no question about it but there is no guarantee that they will keep on making donations to your cause because there are so many different good causes and they have an opportunity of shifting their priorities towards another cause even more pressing and is desirous of their higher attention in comparison to yours and therefore you have to come up with a strategy which is very relevant in that particular situation so this is an example of segmentation of donors and by this the mechanism you can get into an exercise that can draw segmented lines based on research on all those matters on which you may not have complete information or very authentic information and you happen to be in a situation that you can afford a certain level of marketing research and you get into that exercise to establish all those facts which are going to strengthen your program towards its fulfillment so here again the implication for the marketing people is that they have to deal with so many different segments and all the segments they have defined and have drawn lines within are the ones that happen to be their target market there has to be a set of strategies that are meant for those different segments and for those strategies there have to be a very relevant and appropriate execution of the framework and there has to be just about the most appropriate combination of the variables of the marketing mix that are going to be at play when you execute those strategies for example you have to have the mixed bag of communication campaigns for one particular program now depending upon the fact how differentiated your market is and depending on the fact how many different segments you are going to be dealing with you come up with the different strategic dispensations for example if you are to undertake the anti-smoking campaign here you are not going to deal with just one segment think about this statement you are going to be dealing with maybe four different segments and you know why and how because you may like to divide the population into two major segments one rural and the other urban and the reason you divide the population into two major segments because you have to have two different campaigns the meaning two different communication campaigns in terms of reachability I indicated you can deal with four different segments I have talked about two meaning the rural smokers versus the urban smokers but then you also need to have two different segments of volunteers and activists people who are going to help you with their inputs to make people quit smoking and therefore you need to have a group of people who is going to deal with the rural segment of smokers and you are going to have a group of or a segment of activists and volunteers working for the urban smokers so in this particular example what you really can look at interestingly is you have one program and you have four different segments that you are dealing with so this is a case of one program for segments the beauty of the exercise of segmentation is that it lets us deal with the segmental divisions but it also lets us have a very good understanding of the strength of various segments and when we know that variation among different segments we can come up with appropriate strategies we know that the strategy toward regular donors is going to work very well but then we have to do something with the strategies that are tailored for those segments with less substantiality so to say meaning the casual donors and those who are known to the volunteers and our staff members are to be approached with more intensity so that they can change their behavior toward making it regular and become our regular donors and we also can draw further the causal relationships as we already have learned from the example as to what are the demographics related to the amount of donation they give and the frequency with which they give those donations but the underlying factor here is that we have to bring into play the capabilities and core competencies of the organization to make up strategies more effective just to give you a recall toward that concept we need to have those competencies which are not substitutable in other words those capabilities which are very special to us meaning all those specialties which cannot be copied by others very easily and the way we can sustain those capabilities that's what we call core competencies and we make those core competencies as the basis of the strategies that we need to formulate in order to improve our segmentation concept in terms of its strength meaning strength of different segments within the overall market and we know that the market is highly differentiated here as well we are operating in a very highly differentiated market and we need to divide and subdivide different groups so that together we can pinpoint the various values and characteristics and the interests and behaviors of the people we are dealing with and together we can lump them in appropriate groupings so that together we can have a strategic formulation that trickles down to that level that we are trying to approach in a very well focused manner that's the crux of the whole thing we can say here that the marketing has become so specialized that differentiated marketing also leads toward the niche marketing here the question is why would you like to get into niche marketing well the answer lies in you are not having resources more than you really can deploy what that particular one niche that is the precise answer let me give you the example of a non-profit organization that may like to get into the cause of protecting greenery in other words trees in the city and they may like to exclude another very attractive segment called controlling environmental pollution the reason this organization may like to stick to one particular segment that is conservation of trees and not extending its operations into controlling environmental pollution is this organization is very realistic about not having the compatible resources so until the time that we have a resource base and core competencies that can back up the segment are segments that we really can serve that we should not be getting into those segments and that is why organizations like to specialize in one particular niche so much of specialization is taking place and markets are becoming so differentiated that we are moving toward the concept of customization and we know that once we have defined one particular segment we may still have to draw certain distinctions between that so called homogeneous segment and to make certain adaptations and adjustments in response to the varying needs of the segmented population let me give you the example of a non profit organization that helps disadvantaged people acquire missing body parts that you are dealing with the people who do not have major limbs for example their legs, their forearms or their hands or their feet and you as part of that organization are helping those people acquire those missing parts because that's the way the things are happening in the world today so you may have to bring about certain adjustments in those parts because not everybody has the same anatomy this is an example of meeting different varying needs within one particular segment by way of customizing and this is a very important basis of segmentation with all these examples let me now give you a quick summary of the concept of segmentation because this is going to be the basis of all the strategies that we are going to make as part of the business plan of that matter the program for the cause we are working for we first of all have to be very sure about defining the segments in terms of the characteristics which talk about exclusivity, exhaustiveness reachability, responsiveness measurability and substantiality and so on and so forth then we have to draw certain bases which take into consideration two of the major areas one pertaining to demographics and the other two psychographics and the fact of the matter is that the combination of both we use in order to make our segments very separable from each other the ones that we have defined the segments then we put together different strategies in order to approach those segments because these are the segments that happen to be our target market and target marketing is all about having the right groups of people approached with the help of the right most strategies and it is that way that you are going to extract the responses that you are looking for and segmentation as I said earlier is all about reachability and responsiveness and this reachability and the responsiveness because they will not make themselves very prominent until the time we have divided the segments very clearly until the time we have put together appropriate strategies backed by capabilities and our core competencies the ones that we have all these ingredients put in place we are all set to go ahead with execution of our programs to make them a success