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Ford Ka Assignment

Team Segmentation Exercise


Team 15
7653315
76355156
76012153
<check the first student no, seems to be missing a digit, + 2
more student ids to be entered>
OUR Marketing approach for Ford Ka IS highly likely to
succeed AMONG ALL other approaches BECAUSE of our due
diligence in strategically positioning Ford Ka in a segment with
high profit potential and stability of preference.
1. Paste the original segmentation matrix that one of your team members created for the
original class discussion of the Ford Ka case. It does not matter which team members you
use, just choose the one that you think is the most well done (the team member does not
need to be identified). Based on that segmentation matrix, indicate which segment(s) you
had planned to target and why. This will not be graded as part of the assignment. The
purpose of including it is to serve as a point of comparison as you answer the remaining
assignment questions below.

We will target the Stylists Group (Married, age 35-60, income > 175K) because according to
the Word Association Task in Exhibit 10, Ka Choosers have a positive preference for Stylish
physical design, external appearance for small car, rather than the practical functionality. In
addition, based on Exhibit 6, those who prefer Renault Twingo (the car that Ka Chooser put
on their top 3) belongs to the age group of 35-60, married, and with a household income of
>175K.

2. The original case assignment asked whether different demographic variables separate
Ka Choosers from Ka Non-Choosers? Follow the SPSS instructions for Question #2 at
the end of this document to run a cross-tab analysis on choice and interpret the output by
answering the following:
a. Which, if any, demographic variables have a relationship with choice? Explain what
you find.
We have identified three variables that have a relationship with choice; Marital
Status, Age, and Income. These variables have an impact on choice in the following
ways;
Assumption: If the percentage variation is within close proximity of 10%, we have
chosen to recognise the variation as significant for consideration.
1. Marital Status: According to the data, Among Married people 56.9%
tend to be Ka choosers vs. 47.2% Non-choosers, Whereas among
Singles 31% tend to be Ka choosers vs. 44.4% Non-choosers. The
gap between choosers vs. non-choosers, based on our assumption,
indicates that this is a differentiable variable. Moreover, 12.1% of Ka
Choosers identify as Living together with a partner, which we
identified as couples who share resources. Thus, we feel it is a fair
assumption to group Ka Choosers who are married with those who
are living together, making up a total of 69% of Ka Choosers versus
55.5% of Ka Non-Choosers.
2. Age: We have identified a strong variance in the percentage of Ka
choosers (31%) vs. non-choosers (20.8%) for the age bracket of 4044, which indicates that this bracket may be a strong differentiable
variable between Ka choosers and non-choosers.
3. Income: Among Ka Choosers, we have identified income to be a major
influence of choice, as those who earn 250k and above make up
42.2% of Ka Choosers versus 27.8% of Ka Non-Choosers.
b. How do the results compare to your earlier opinion based on your earlier analysis of
the case?
b. What implications do the results have on the marketing plan?
b) While these results are fairly similar to those of the original segmentation
matrix, the original analysis relies on demographic data from other cars (ie.
Renault Twingo and Peugeot 106), which decreases the reliability and accuracy.
The crosstab analyses offer a more detailed and clear correlation between
demographic variables and Ka Choosers and Non-Choosers.
c) By identifying the above demographic variables as having an impact on choice,
we may need to strategically position our marketing plan to cater to these
variables. Although this marketing plan offers much of the same emphasis as the
one that would have previously been designed (based on our original analysis),
we are now in a position to focus on a much more concise segment. As such, we
will need to market the Ford Ka in a way that offers no gender bias, so that it will
resonate with both male and female drivers. Furthermore, in order to resonate
with potential buyers in the identified age bracket, and with the identified income
bracket, a certain focus should be made towards marketing the Ford Kas luxury
accessories. Ultimately, the marketing plan should focus on the more
sophisticated buyers who are comparitively well placed financially than the
average car buyer.

3. The original case assignment asked whether there are distinct attitudinal segments.
Follow the SPSS instructions for Question #3 at the end of this document to run 3 different
cluster analyses and interpret the output by answering the following:
a. Which of the three cluster analyses is the most useful to you as a manager? In other
words, which analysis gives you the clearest view of the market? Why?
We analyzed the three different cluster analyses by color coordinating the
samples responses to give us a visual representation of what is important, and
what is not (Appendix A). We did this by assigning a color to each of the three
ranges:
1-3.49 Disagree
3.5-4.49 Neutral
4.5-7 Agree
This showed us that the most useful cluster analysis to us, as managers, was the
four-cluster analysis, as it segmented cluster 1 (107 sample size) from the threecluster analysis into two individual segments New cluster 1 and new cluster 3 of
75 and 32 sample sizes respectively displaying distinct psychographic behaviors;
for instance, the newly-created cluster 3 demonstrates a desire for high
performance and deep care for their car, something that does not appear in
cluster 1. Furthermore, we found the five-cluster analysis to be of less value, as
two clusters (2 & 3) had overlapping preferences (both positive and negative),
preventing us from identifying separate, and individual segments.
4. Take the output from the 4-cluster analysis and interpret the output by answering the
following:
a. Create a new segmentation matrix that summarizes the various psychographic
characteristics and attitudes of each segment.
b. Follow the SPSS instructions for Question #4 at the end of this document to run a
cross tab analysis on the 4 segments to identify choice preferences and
demographic characteristics of each segment. Use the results to add rows to your
segmentation matrix that summarize the choice preferences and demographic
characteristics of each segment.
c. Name the segments using terms that you feel are representative of each segments
attitudes.
POWER
NONPRAGMATISTS
FASHIONISTA
DRIVER
CONFORMISTS

Behaviour

Safety first

Value car image

Practical

Fashion
conscious

Loyalist

Trendy style

Economical
Environmentally
friendly
Treat car as a
commodity not
associate it with
identity
Urban users

Not price
sensitive
Car is part of
identity
Show-off
Urban users

Performance
driven
Hi-Spec
minded
No preference
with respect to
size of car
Less price
sensitive

Have basic needs


Practical /
Comfortable
Does not prefer
small cars

Value their car

No need for self


Identity

Demand
quality

Anti-Mainstream
Urban users

Marital
status

Neutral

Neutral

Neutral

Age

Neutral

Neutral

Skewed in age
groups 40-44

Income

Skewed above
Income >250K

Skewed in 200K300K

Neutral

Skewed towards
female users at
61.5%
Skewed towards
users >40 years old
Skewed towards
users having income
100K-200K

d. How does your new segmentation matrix compare to the original matrix you created
for class discussion. In other words, how has the data changed your perception of
segments?
The new segmentation matrix, which was developed using a far greater number
of data, differs substantially from the one originally created for class discussion.
However, the original segmentation matrix was based on limited information
based on two segments: Ka Choosers and Non-Choosers. The above matrix
identifies variations in the psychographic behavior between the four segments,
which enables us to closely analyse the factors that are important to each
segment. Thus, the above matrix has given us a far clearer idea of what is
important to each segment

5. Create a table that evaluates the four segments using the target market selection criteria
learned in class. Which segment(s) would you target and why?
Criteria
Well-defined
Accessible
Competitor
Intensity
Stability of
Preference
Profit Potential

Yes
Yes

POWER
DRIVER
Yes
Yes

NONCONFORMISTS
Yes
Yes

Medium

Medium

High

Medium

High

High

Medium

Low

Medium

High

High

Medium

PRAGMATISTS

FASHIONISTA

Yes
Yes

Based on the segmentation matrix and selection criteria table above, we decided to target
segment 2 (Fashionista) to market the Ford Ka car. This segment is the most appealing in
terms of profit potential and stability of preference. We used a process of elimination to
select the most appealing market.
Segment 4 (Non-Conformists), for instance, does not prefer small cars as their choice and
has a low stability of preference, which is indicated by the statement that they preferred a
cult car. Thus, this does not look like an appealing market for the Ford Ka.
Segment 3 (Power Driver) looks appealing from a profitability perspective, but has a very
high competition intensity as this segment is quite indifferent about car size; thus other big
car competitors have an upper hand in this market. In addition, this segment cares more
about a cars performance, and the barrier to provide similar high spec, high performance
vehicles is not high for competitors. This ultimately leaves us with broader competitors in the
market. Additionally, the market size for segment 3 is relatively small compared to other
segments.

The remaining two segments, 1 (Pragmatists) and 2 (Fashionista), have a very different
approach in terms of identifying themselves with their car. Therefore, communication to
these two segments will have to be different, which indicates that we have to choose one or
the other as our target market. Segment 2 is more appealing as it is much less concerned
with budget as long as the people from this segment can identify with the car. The market
size is also relatively large compared to the other three segments. In addition, segment 1
would prefer to buy a car from the same manufacturer, and the crosstab analysis showed
that 81.3% of the segment had already purchased a car before. This poses a substantial risk
with the assumption that a large proportion of these purchases were not Ford models.
Furthermore, segment 1 has a higher proportion of Ka Non-Choosers, at 30.7% versus
16.7% in segment 2.
6. What did you learn from this exercise? What are the implications for how you approach
segmentation in the future?
This exercise clearly demonstrated that it is imperative to know what the market demands in
order to place your product accordingly, giving it the best chance to succeed. To do this, the
collection of relevant data is crucial, and must be followed by a very thorough analysis and
systematic approach. The cluster analyses performed on the Ford Ka data allowed us to
clearly segment the market, and strategically focus on a segment that we believe the Ford
Ka will resonate with most.
The takeaways from this exercise for us as a group are that its not just data that is crucial,
but the right data. We learned that it is imperative to gather relevant data of the market and
take a step-by-step approach to segment the market. This, in turn, will allow us to
understand what the customer needs are straight from the source, rather than letting this
idea be affected by our own perspective.

Appendix A

Red:

1 3.49

Yellow:

3.5 4.49

Green:

4.5 7