Research on the market segmentation of Logistic model (1)

Market segmentation occupies a very important position in strategic marketing. Marketing Guru Kotler (1999) defines market segmentation as "consumers who divide the market into different groups with significant needs, characteristics or behavioral differences, and each group of consumers has a homogeneous demand for the product or marketing mix." Dibb, etc. (2001) that market segmentation is the process of clustering consumers with heterogeneous characteristics, each category of consumers with similar needs or purchase characteristics. According to their own resources and external competition, enterprises choose their own niche market which has comparative advantage or think more investment value as the target market of enterprises. All marketing strategies of an enterprise must be based on market segmentation. No market segmentation, enterprises in the business as "elephant, needle in the haystack", can not lock their own target market, it will not be able to find their own position in the market competition. Without a clear market positioning, enterprises will not be able to plan and shape a differentiated brand image and give the brand unique core value, of course, more can not be targeted to design unique products to meet the market. Only by Market segmentation, marketing strategy is differentiated. Therefore, market segmentation is an important part and platform of enterprise strategic marketing.

The basis (or subdivision) of the market segmentation is usually the demographic characteristics of the consumer, such as age, gender, geography, educational level, disposable income, occupation, consumption concept, personal preference, etc. The aim of market segmentation is to find the target market so that the enterprises can implement the marketing strategy in a targeted way. In this case, why not according to the characteristics of the market itself (such as market endowments, products in the market diffusion rate, market size, etc.) Market segmentation? Based on this consideration, this paper chooses market endowment and interpersonal communication speed for market segmentation. Market endowment refers to the ability of a market to accept new products in its initial state, which is related to the maturity level of the market and the level of economic development. In our country, the eastern coastal region's market endowment is higher than the Midwest region, the acceptance ability of new products is stronger. Interpersonal communication (Word of mouth) is important for product promotion. Compared with other forms of marketing promotion, such as media advertising, interpersonal communication has incomparable richness and flexibility. In the transition period of new media to traditional media, interpersonal communication is still in the top position in brand marketing and leading sales, and is considered as one of the most effective marketing promotion forms. Therefore, it is of great significance to select market endowment and interpersonal communication speed as market segmentation basis. Perhaps because these two indicators are more difficult to quantify, so far there is no research in academia and theorists.

This paper first takes the mobile phone product as an example, according to the logistic model to estimate the market endowment and the interpersonal speed two parameters respectively to the national 31 provinces and cities, then takes this as the subdivision basis to carry on the regional market subdivision to the provinces and municipalities, and analyzes each market segment characteristic, hopes to the enterprise's marketing promotion work to be helpful.

　　Second, the research method

(a) Product selection

To study the characteristics of our country's market, we must first choose a representative product. This paper chooses the familiar mobile phone products as the analysis object. Mobile communication technology is one of the most rapidly developing technologies in recent years. By the end of 2002, the number of mobile phone subscribers worldwide exceeded the number of fixed-line subscribers for the first time, up to 1.15 billion. By the end of 2005, the number of mobile phone users worldwide has exceeded 2 billion. At the end of 2006, China's mobile phone production of about 400 million, accounting for 40% of the world's total sales, become the first mobile phone manufacturing. With the increasing number of mobile phone users and the rich mobile phone capabilities, mobile phones have penetrated all aspects of social life, to the political, economic, cultural, educational and personal life, and so has brought profound influence.

The phone has complex product attributes. For different consumers, it may be a simple function, the value of hundreds of yuan of low-end consumer goods, but also may be set cameras, MP3, GPS, computers and other functions as one of the tens of thousands of high-grade consumer goods, may be the living necessities of the rich, but also may be the luxury of the poor, can be used for decades of durable goods It may also be a consumable item that is often replaced. It can be said that mobile phones are the most representative commodity in modern society, the proliferation of mobile phone products to study the market is more appropriate.

　　(ii) Selection of models

The most commonly used model for new product diffusion is the famous bass model, but the model only applies to durable goods that are not re-purchased, but not to the complex product of mobile phones, which, according to statistics, will be replaced by a new handset on average every other year or two.

The logistic model is used in this paper. The model was first discovered in biological propagation studies by American biologists and Statisticians pearl (R.pearl) and J.reed (1920), and was widely used in the characterization of biological growth processes and industrial growth processes. Empirical evidence shows that many of the successful promotion of new products and technologies such as fax machines, CDs, color televisions, e-mails and the internet, whose diffusion processes and paths are similar. It manifests itself as an "S" type of growth feature, that is, it starts slowly and then grows at a high speed, slowing down and becoming saturated. This paper argues that the characteristics of mobile phone products can be analyzed by logistic growth curve function, which has higher similarity and feasibility.

The logistic model assumes that the diffusion rate of products in the market is proportional to the product of its market share and potential market capacity. Its function prototypes are:

(1)

where T is the time, y is the dependent variable, here refers to the mobile phone product market Size, L is the maximum limit value of Y, indicating the saturation (or maximum) market capacity of the product. M and R are controllable parameters respectively. From the (1) Type solution

(2)

In the (2) formula to make t=0,

(3)

The parameter m is mainly related to the initial market sales y (0) and the saturated market capacity L (3), and the latter depends on the maturity of the market and the characteristics of the consumers ' purchasing ability and the product itself, so the parameter m represents the "market endowment". By the (2) formula, the higher the market endowment of a region, the greater the sales volume of new products in the market.

As can be seen from the (1) formula, parameter R reflects the influence of the interaction of the consumer (number Y) of the purchased handset (L-Y) and the consumer without buying the handset on the expansion speed of the mobile phone market, so it is called interpersonal communication (or word-of-mouth) influence parameters. By (2), the greater the r, the greater the sales of new products in the market Y.

　　(iii) data collection and selection

This article does not use the mobile phone in the market actual sales, but the adoption of penetration indicators, it refers to the number of mobile phones accounted for the proportion of the region's total population. There are two reasons for this: Sales figures are affected by the total number of people in the region, and the penetration index eliminates this effect. Second, penetration can eliminate the impact of several mobile phones. China's market is growing fast, in order to reflect the current situation of the mobile phone market, the data used in this paper for the period from 2002 to 2006, all the relevant data from the Ministry of Information industry official website and the calendar of China Statistical Yearbook.

　Third, the results of the study

　　(i) logistic model parameter estimation

Since the parameters in the formula (2) are three L, M and R, the OLS method can not be used, this paper uses the statistical analysis software SPSS for Windows 13.0 Nonlinear least squares method, respectively to the national and provincial and municipal estimates, the results are shown in table 1.

According to the quasi-fit R2, the fitting values of all regions are above 0.96, which shows that the fitting effect of (2) is good; from the t statistic, the T-Statistic of the model parameters in the provinces and cities has reached a significant level, indicating that the estimation of parameter L, M and r is effective.

If the market endowment m for the horizontal axis (for the clear display, M in logarithmic form), interpersonal transmission speed is the longitudinal axis, and the national m and r values as the average horizontal dividing line, then the national 31 provinces and cities were divided into Ⅰ, Ⅱ, Ⅲ, Ⅳ four market areas, 1, including the size of the circle of the provinces and cities to reflect the Because the saturation market capacity L is not statistically stable, the error is large, so this article according to the 2006 provinces and cities of mobile phone actual penetration rate to characterize the size of the circle. It should be noted that the actual penetration of the area near the saturation market capacity L (such as Beijing, Shanghai, etc.) does not mean that the market does not have room for growth because the types of consumers in these regions are mainly mobile phone replacements rather than new purchases.

"For more information on business intelligence, business intelligence solutions and business intelligence software downloads, visit Finebi Business Intelligence official website www.finebi.com"

Research on the market segmentation of Logistic model (1)