(Doc) Market Segmentation - Assignment

10
CHAPTER II
LITERATURE REVIEW
II.1 Market Segmentation
Technically, market segmentation is the process of dividing the population
of possible customers into distinct groups. Those customers within the same
segment share common characteristics that can help a firm in targeting those
customers and marketing to them effectively (Lovelock and Wirtz, 2011).
Segmentation is one of the most important concepts in marketing. Firms
vary widely in their abilities to serve different types of customers. Hence, rather
than trying to compete in an entire market, firms should segment the market.
Through the process of market segmentation, firms will identify those parts, or
sections of the market, that they can serve best.
There are many ways to segment the market, including the following
common ways and these approaches can be used in combination:
a) Demographic segmentation, such as age, gender, income, has been widely
used. That works well, when demographics are highly associated with
needs and wants. However, such an association may often not be the case,
as two people with the exact same demographic characteristics may have
very different needs and therefore exhibit different buying behaviours.
b) Psychographic segmentation has become more popular as it reflects
people’s lifestyles, attitudes and aspirations. Psychographic segmentation
can be very useful in strengthening brand identity and creating an

11
emotional connection with the brand, but may not necessarily result in
sales.
c) Behavioural segmentation is based on product consumption-related
behaviours and can include frequency, volume and type of product usage.
This type of segmentation can be very powerful for firms that have a
membership-type relationship with customers, for example, via a contract
such as banks and telecommunications providers, or via loyalty
programmes. Here, firms can exactly observe consumption behaviour. A
drawback is that firms typically can only observe the behaviour with
regard to their own products, but not those of their competitors.
d) Needs-based segmentation groups customers based on similar needs and
wants, or benefits sought, with regards to a particular product or
consumption context. Needs-based segmentation is perhaps the
segmentation truest to the marketing concept, that is, satisfying customers’
needs and wants. For companies to increase their sales, segmentation
requires understanding customer needs, including those that are
underserved or even unmet.
II.2 Brand Community
A brand community is a community formed on the basis of attachment to a
product or marque. Recent developments in marketing and in research in customer
behavior result in stressing the connection between brand, individual identity and
culture. Among the concepts developed to explain the behavior of customers, the
concept of a brand community focuses on the connections between customers.

12
A brand community is a specialized, non-geographically bound
community, based on a structured set of social relationships among admirers of a
brand. It is specialized because at its center is a branded good or service. Like
other communities, it is marked by a shared consciousness, rituals and traditions,
and a sense of moral responsibility. Each of these qualities is, however, situated
within a commercial and mass-mediated ethos, and has its own particular
expression. Brand communities are participants in the brand’s larger social
construction and play a vital role in the brand’s ultimate legacy.
The research on brand community and brand loyalty has been developed
and some might have been well-implemented. In a study of Jeep and Harley
Davidson community, McAlexanderet al. (2002) said that community-integrated
customers serve as brand missionaries, carrying the marketing message into other
communities. By proactively providing the context for relationship to develop,
marketers can cultivate community in ways and increase the customer loyalty.
Customers who are highly integrated in the brand community are emotionally
invested in the welfare of the company and desire to contribute to its success.
In area of brand community and virtual community, Ouwersloot and
Odekerken-Schröder (2008) argues that heterogeneity within communities does
exist and treating them as a single, homogenous group may be a serious mistake.
Both suggest that communication with members should be differentiated and the
communication strategy used to promote the community also should be adapted to
the prime purpose in which the community is built.

13
Brand communities in general provide brand ability-related information
and integrity-level experiences. This in turn motivates customers themselves to
improve the brand with which they associate, since they strongly believe that their
opinions will be reflected in the brand management (Hur, W-M et al., 2011).
Muniz and O’Guinn (2001) who have carried out a lot of studies about the
brand communities focus on the three important elements of brand communities;
(1) Consciousness of Kind: Collective consciousness is about strong connection
feeling between community members. Members feel like they know each other,
although they have never met. Legitimacy and oppositional brand loyalty
concepts are important in collective consciousness. Legitimacy is about usage of
the brand with the “right reasons”. For instance, the community members do not
find the reason of “using the brand just because it is popular” legitimate.
Oppositional brand loyalty is about the thought that possession of that certain
brand makes members special and different. Brand loyalty is so critical for
continuity of collective consciousness (Muniz and O’Guinn, 2001:418). (2)
Shared Rituals and Traditions: The rituals and traditions are also among the
elements, important for the collective consciousness to develop and continue.
These are generally formed by “celebrating the history of the brand” and “shared
brand stories”. Stories about brand and celebration of noteworthy days of the
brand contribute to create and hear shared values amongst community members.
One of the stories about the brand history is logo or label of the brand. While
current logo or label has a commercial value, older one has a nostalgic value.
Stories in exchange are the elements that is shared and talked about by community

14
members. (3) Moral Responsibility: To insure the long-term survival of brand
communities, it is necessary to retain old members and integrate new ones. To
provide this, responsibility consciousness should be developed. A brotherhood
sense is created and the idea of “if you use another brand, you betray the
community” is developed. In this process, if some errors occur, community
members try to overcome them by helping each other. In this respect, brand
communities perform limited and specialized moral responsibility (Muniz and
O’Guinn, 2001: 415).
II.3 Consumer Motives In Joining Communities
Customer centric relationship model proposed by McAlexanderet al
(2002)is an extension of Muniz and O’Guinn (2001) brand community triad
model as well as a shift of perspective. In this model, there are four relationships
produced such as: customer to company, customer to product, customer to
customer, and customer to brand relationship. According to McAlexander:
“Construing brand community as a social aggregation of brand users and
their relationship to the brand itself as a repository of meaning overlooks
other relationships that supply brand community members with their
commonality and cultural capital (McAlexanderet al. 2002, p. 39)”
Communities, in Ouwersloot and Odekerken-Schröder (2008), might be
classified according to whether and to what extent they help customers to reach
their objectives. There are four objectives proposed by Ouwersloot and
Odekerken-Schröder in their study and segmented the community population on
the basis of the importance the members attach to the four relationships of the

15
customer-centric brand community model (McAlexanderet al., 2002). They
contend that such differences originate in the different motives consumers have to
join communities.
Table 2.2
Correspondence of Motives to Dominant Relationships in Community
Motive Dominant relationship
Assurance for credence good Customer-company relationship
High involvement in product category Customer-product relationship
Joint consumption Customer-customer relationship
Brand symbol Customer-brand relationship
Source: Adapted from Ouwersloot and Gaby Odekerken- Schröder (2008)
First, consumers may participate in a brand community because of their
need for quality reassurance. Quality assessments of search goods can be made on
the basis of visible cues that can be inferred a priori, whereas experience goods
allow for assessment immediately after consumption. For credence goods,
however, quality may be assessed only after continued consumption. In line with
this distinction, brand communities may function as groups of consumers that
provide reassurance about a credence product’s quality. Furthermore, the link a
community provides to the company may reduce consumer uncertainty. On a
more practical level, the community may serve as a platform for exchanging
experiences regarding the maintenance, repair, adaptation, or even basic usage of
the product. Within a community, members feel a responsibility (Muniz and
O’Guinn, 2001) to share this knowledge.

16
H1 Customers aims for customer to marketer/company relationship
Second, consumers may participate in a community to express their
involvement with the branded product. High-involvement product categories
typically are those with which the consumer wants to feel connected even beyond
the moment of consumption. Brand communities in general can help consumers
share their experiences with high-involvement products. In this sense, the
community serves to intensify or elongate the consumption experience.
H2 Customers aims for customer to product relationship
Third, consumers may require joint consumption and therefore join a
brand community. In line with Muniz and O’Guinn’s (2001) contention that
communities are more likely for publicly consumed goods, Ouwersloot and
Odekerken-Schröder note that some products must be consumed jointly rather
than individually.
H3 Customers aims for customer to customer relationship
Fourth, consumers may decide to participate in a brand community
because they want to live up to the brand’s symbolic function. The concept of
brand identity, as proposed by Aaker (Ouwersloot and Odekerken-Schröder,
2008), suggests that one dimension pertains to symbolic meaning. This identity
goes beyond a basic set of associations, in that some brands, such as Nike, reach
iconic status. For brands with important symbolic meanings, such as Harley-
Davidson, a community may strengthen that meaning and offer a meeting place
where members can express their devotion to the symbol.
H4 Customers aims for customer to brand relationship

17
In the other condition, customers joins communities because the need of
being a part of the communal feeling by understanding the value of the brand, get
involved in the product, and reassuring the quality of product used. It shows that
customers embrace all the four relationships elements as important, valuable, or
appreciated. Customers in this state are the ideal community members, for they
like everything related to the brand – the product, the brand, the company behind
the brand, and other community members (Ouwersloot and Gaby Odekerken-
Schröder, 2008).
H5 Customers aims for all aspects (customer to brand, customer to
customer, customer to product, customer to marketer/company)
relationship
As well as the high enthusiasm, there is also possibility of low even zero
enthusiasm. At first, customers join due to the curiosity of community. Eventually,
they end up feeling that becoming the member of this community is just part of
socializing and they seek of no further relation.
H6 Customers aims for no specific relationship
The last hypothesis created based on comparison made in matters of
consumer motives between communities.As both communities are randomly
picked by researcher, there are questions such as “what kind of person joins car
communities; Is this type of community dominated by men only?”and “does
people in Blazer community differs from people in Jazz community, in matters of
socio-demographic variables or their consumer motives?” that emerges.

18
These different motives to join a brand community may lead to different
levels of appreciation of the aspects of community life. The customer-centric
community model, which proposes four relationships consumers may have with a
brand community – product, brand, organization, and other consumers – provides
an effective means to understand and measure key aspects of communities
(McAlexanderet al., 2002). Later on, researcher will try to analyze how both
communities differ in a matter of valuing the four relationships.
H7: There is a significant join motivation differences between Jazz community
and Blazer community
Ashypotheses are built upon the customer relationships theory, researcher
is eager to find significant results and segmentation possibilities which available
in both communities.
II.4 Customer Centric Model of Brand Community
The framework proposed in this study implies the customer-centric
approach model McAlexanderet al. (2002) has proposed, which in that, the
existence and meaningfulness of the community inhere in customer experience
rather than in the brand around which that experience revolves. The framework in
this study overlooks the relationship between brand users to the brand itself and
other relationship that supply brand community members with their commonality
and cultural capital (Holt, 1998). The relationship continues to customers that
value the brand the possessed, the marketing agents, and the institutions that own
and manage the brand (McAlexanderet al., 2002).

19
Figure 1. Research Framework
Source: Adapted from McAlexanderet al (2002)
In Ouwersloot and Odekerken-Shcröder’s study, they investigate whether
the strength of customer-centric relationship’ bonds are equally strong for every
community member; whether difference exist among community members with
respect to the importance they attach to the four links of those relationships. So in
the beginning they have proposed four motivations customers might have when
they join a community such as reassurance of quality for products, high
involvement with the branded product category, opportunity for joint consumption
and to live up the brand’s symbolic function.
II.5 Previous Research
This research is written as the replication of study by Hans Ouwersloot,
who is an Associate Professor of Marketing at Maastricht University, and Gaby
Odekerken-Schröder, who is an Associate Professor in Marketing at Maastricht
Customer
ProductMarketer
Focal
Customer
Brand

20
University. The research title is “Who’s Who in Brand Communities and Why?”,
written in 2008. The research aims to explore whether a community population
can be meaningfully segmented on the basis of different motivations to join.
Second, with the title “Building Brand Community” was written in 2002
by James H. McAlexander and Harold F. Koenig, who are the Associate
Professors of Marketing, College of Business Administration, Oregon State
University. John W. Schouten is Associate Professor of Marketing, School of
Business Administration, and University of Portland. This research is about
analyzing brand community through its crucial relationships; including those
between the customer and the brand, between the customer and the firm, between
the customer and the product in use, and among fellow customers and yields a
deeper study from the previous research.
The third journal written in 2002 by Albert M. Muniz, Jr and Thomas C.
O’Guinn with the title “Brand Community”.This article introduces the idea of
brand community, which exhibits three traditional markers of community: shared
consciousness, rituals and traditions, and a sense of moral responsibility. Brand
communities reveal the socially situated nature of brands as something more than
a summation of attitudes or impoverished critical stereotypes.