Conglomerate Incs New Pda

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Question 3

Rerun the analysis in Exercise 1 with Discrimination. How would you go about targeting the segments you picked in question 2?

The discrimination analysis uses the classification data collected from the respondents and allows us to understand who those fours clusters are in order to better target them. Each cluster typical profile is summarized in the previous table in column two.

Looking at Exhibit 3, Cluster 1 members are relatively older (generation X) than other PDA enthusiasts and mainly work in sales (insurance, pharmacy etc.) and spends some time away from the office. A large proportion is a current user of PDA. They mainly read Business Week. To target this segment, the company should emphasize the connectivity of the device, PIM functions and the multimedia capabilities (product) and price it according to the high features (price). It should focus its promotional message on rational content that emphasize the product features and functionalities more suitable to an expert, older audience (promotion). Ads should be placed in Business Week magazine and also other media such as TV or radio.

Cluster 4 is made of high education, high income professionals (executives, lawyers, consultants etc.) who belong to generation X or Y and spend very little time outside of the office. Most of them already own a PDA, therefore the advertising campaign wouldn’t need to educate them about the product but rather emphasize the innovative features of ConneCtor. To target them, ads should be placed in both Business Week magazine and PC magazine, TV commercials but also Internet ads because they are technology-savvy and probably spend a high amount of time browsing the web: for instance, paid ads on relevant websites (news, financial websites etc.), SEM etc. (promotion). ConneCtor’s price should signal quality and performance and thus be high enough to convey exclusivity (of possessing the lastest technology) to please this segment (price).

Question 4

How has this analysis helped you to segment the market for ConneCtor?

This analysis has helped us compare and contrast segments of the PDA market in terms of customer needs and find meaningful differences to separate segments. Once the number of segments was chosen, we tried to reconcile their characteristics with the strengths (functionalities) of ConneCtor to select the target segments. The discriminant variables (or descriptor variables) then allowed us to get to know each segment better to be able to cater the first step of a marketing campaign to reach them.

Question 5

What concerns do you have with the approach (data collection, analysis, etc.) so far?

The following concerns (non-exhaustive and comprehensive list) can be raised regarding the methodology:

- The sample size was 160, which might be too small to be representative of the total population of PDA enthusiasts (current users plus people having shown an interest in becoming users)

- Was the survey randomly distributed or to a pre-defined target audience (selected companies etc.)?

- Using a quantitative survey and no qualitative questionnaire might limit the potential information we could get. For instance, customers might have needs that are not known to the company and thus don’t appear in the list

- Was the responses anonymous? If not, it might suffer from social desirability biases whereby people tend to reply to appear intelligent and the surveyors e.g. regarding the use of multimedia, it might be not perceived well int eh work environment

- We have addressed the product-market fit aspects but not the size and potential growth of each segment (no data on this) in order to do targeting

- To understand the customers’ consumption of media and readership, other magazines should have been included as well as media other than print

Question 6

What are the next steps you would recommend for Netlink and the development of ConneCtor?

The next steps for Netlink is to market test the prototype of ConneCtor in the market segments selected for instance through focus groups to get customer feedback. Once it is set on a specific model (performance, design, functionalities etc.), it should create a comprehensive marketing plan to reach and serve those chosen segments.

In the future, it will have to constantly update the product to cater to the customers’ increased sophistication and evolving needs: increase the battery life, create an intelligent personal assistant (like Apple’s Siri) etc. Also, to capture more mainstream segments and engage in market development when the market for professionals will be saturated, it will have to add popular functionalities like a camera or colour screens.

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Appendix

Exhibit 1

Dendogram obtained with hierarchical 9 cluster analysis

[pic 3][pic 4]

Exhibit 2

Diagnostics for K-mean clustering

Cluster Sizes

The following table lists the size of the population and of each segment, in both absolute and relative terms.

Size / Cluster

Overall

Cluster 1

Cluster 2

Cluster 3

Cluster 4

Number of observations

160

58

48

16

38

Proportion

1

0,363

0,3

0,1

0,237

Segmentation