Conglomerate Incs New Pda
Essay by msab21 • March 5, 2017 • Case Study • 1,783 Words (8 Pages) • 4,335 Views
CASE #2
MKTG D76 – MARKETING ANALYTICS
Conglomerate Inc. new PDA Case
Netlink, a joint venture between American wireless carrier Conglomerate Inc. and a PC manufacturer has designed a new hybrid product called ConneCtor which integrate a Personal Digital Assistant (PDA) with a smartphone.
Context
The company wishes to segment the PDA market in order to assess which segment(s) to target for ConneCtor and how to position ConneCtor in the chosen segment(s).
To do so, the company hired a market research firm called Happy Valley Consultants (HVC) to collect information on the potential customers. Data for determining the segmentation-basis on the needs of customers was collected through 15-question quantitative survey, using a 7-point Likert scale. An additional 17 questions were used to identify variables for discriminant analysis.
Methodology and Assumptions
Cluster Analysis can help Nettlink identify different segments in terms of customer preferences and needs regarding PDAs. We use the need-based variables provided in the case to segment the market. First, we ran the Segmentation and Classification tool to identify the number of distinct segments in the market. We set-up the options as below, choosing to standardize the data because the scale was not the same for all the variables: for instance the monthly price is not rated against a 7-point Likert scale like the use of Instant Messaging service is.[pic 1]
- Step 1: Segment Respondents by Hierarchical Clustering Method (aka Ward’s method)
- Step 2: Base on the dendogram analysis, select the number of clusters = m
- Step 3: Resegment respondents for the chosen no of clusters = m from Step 2 by K-Mean Clustering Method. Then we profiled the clusters and decided which segment to target.
- Step 4: After which, we reran the analysis using discrimination (by checking the Discrimination option in the set-up) to identify who the customers were in order to decide how to target the segments previously selected.
[pic 2]
Question 1
Run Segmentation from the Segmentation and Classification tool in ME>XL (without Discrimination) on the data to try to identify the number of distinct segments present in this market. Consider both the distances separating the segments and the characteristics of the resulting segments.
The dendogram in Exhibit 1 is a graphical representation of the different clusters that can be designed regarding the market. The y-axis (vertical) named ‘distance’ shows the loss of information that stems from grouping different clusters together.
The graph shows that the following clusters can be grouped together with a relatively small loss of information since they are quite close to each other:
- clusters 4 and 9 at 0.25
- clusters 1 and 8 at 0.26
- clusters 5 and 7 at 0.27
A second level of grouping can be made without too much information loss, namely:
- clusters (1,8) and 6 ay 0.28
- clusters (5,7) and 2 at 0.34
If we were to push groupings further, that is between clusters (1,8,6) and (4,9), this would give way to a ‘big jump’ along the vertical axis and the distance would be much higher at 1.11. Therefore the following four-cluster grouping seems to be the most appropriate with the distance threshold of 0.34 as indicated by the dashed line on the graph:
- cluster (1,8,6)
- cluster (4,9)
- cluster (2,5,7)
- cluster 3
We then use the K-means clustering to calculate the final solutions. According to the table in Exhibit 2, there are significant differences in the 15 variables across the four clusters, which confirms our choice of 4 segments.
Question 2
Identify and profile (name) the clusters that you select. Given the attributes of ConneCtor, which clusters would you target for your marketing campaign?
To characterize the clusters, we look at the means of each cluster on the different variables and compare them to the overall means to detect strong deviations in Exhibit 2.
Cluster # | Name and profile (cf. Exhibit 3 for discriminant analysis) | PDA usage and needs | |
Cluster 1 | mobile professionals: white-collar workers (managers, office workers etc.) | - highest users of Personal Information Management tools (e.g. to do list) - need to be constantly connected (access to emails and the web while away from the office) - enjoy multimedia entertainment functions | |
Cluster 2 | administrative workers: includes secretaries | - technological laggards - highest Instant Messaging users - need to send information from a remote location - need large high resolution screen displays - don’t need to be ‘connected’ to emails and the web outside of the office - low consumers of entertainments - low WTP | |
Cluster 3 | blue collar workers: working class and manual workers | - low users of technologies, Instant Messaging and cell phones - give importance to information sharing and access in remote locations - don’t use emails or the web outside work - need convenient devices - high willingness to pay | |
Cluster 4 | innovators and elite: typically highly-skilled high-income professionals such as lawyers, and investment bankers who are tech-savvy | - equipped with the latest technology - don’t need to send information outside the office - need remote access to web and email and highest multimedia users - need ergonomic devices - high willingness to pay | |
ConneCtor’s attributes (cellphone, emails, PIM functions) are more in line with the needs of clusters 1 and 4 therefore those are the two segments the marketing campaign should target.
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