Describe a product you like that you believe more people

| February 25, 2017

Question

Chapter 5

1.Describe a product you like that you believe more people should purchase. As a marketer, how would you reposition the product in the cusomer’s mind to increase its purchase? Outline your strategy. Create a new tagline for this product.

Note: Please review my expectations for the assignment. I expect your response to include 2 or more references from the APUS Library system (the attached CHAPTER I am including…..) (failure to include such references will detract from your grade on the assignment), and be presented in APA Format. Deliverable length is a minimum of 3 body pages. NOT INCLUDING REFERENCE OR INTRO PAGE. MUST BE IN CURRENT APA FORMAT.

CHAPTER 5 Market Segmenting, Targeting, and Positioning
Suppose you have an idea for a great new offering you hope will become a hot seller. Before you quit your day job,
you’ll need to ask yourself, “Does my idea satisfy consumers’ needs and add value to existing products?” “Who’s
going to buy my product?” and “Will there be enough of these people to make it worth my while?”
Certain people will be more interested in what you plan to offer than others. Not everyone needs
homeowners’ insurance, not everyone needs physical therapy services, and not every organization needs to
purchase vertical lathes or CT scanners. Among those that do, some will buy a few, and a few will buy many. In
terms of potential buyers, not all of them are “created equal.” Some customers are more equal than others,
however. A number of people might be interested in your product idea if it satisfies a need, adds value, is priced
right, or if they are aware when your product exists in the marketplace.
Your goal is to figure out which people and organizations are interested in your product ideas. To do this you
will need to divide or segment the people and organizations into different groups of potential buyers with similar characteristics. This process is calledmarket segmentationand involves asking the question,What groups of buyers are similar enough that the same product or service will appeal to all of them?[1]After all, your marketing budget
is likely to be limited. You need to get the biggest bang for your buck by focusing on those people you truly have a
shot at selling to and tailoring your offering toward them.
1. TARGETED MARKETING VERSUS MASS MARKETING
LEARNING OBJECTIVES
1. Distinguish between targeted marketing and mass marketing and explain what led to the rise of each. 2. Describe how targeted marketing can benefit firms. 3. Explain why companies differentiate among their customers.
Thesegment(s)orgroup(s)ofpeopleandorganizationsyoudecidetoselltoiscalledatargetmarket. Targetedmarketing,ordifferentiatedmarketing,meansthatyoumaydifferentiatesomeaspectofmarketing(offering,promotion,price)fordifferentgroupsofcustomersselected.Itisarelativelynewphenomenon.Massmarketing,orundifferentiatedmarketing,camefirst.Itevolvedalongwithmassproduction and involves selling the same product to everybody. You can think of mass marketing as a shotgunapproach:youblastoutasmanymarketingmessagesaspossibleoneverymediumavailableas oftenasyoucanafford.[2]Bycontrast,targetedmarketingismorelikeshootingarifle;youtakecareful aim at one type of customer with your message. AutomakerHenryFordwasverysuccessfulatbothmassproductionandmassmarketing.Fordpioneeredthemodern-dayassemblylineearlyinthetwentiethcentury,whichhelpedhimcost-effectively pump out huge numbers of identical Model T automobiles. They came in only one color: black. “Any customer can have a car painted any color he wants, so long as it is black,” Ford used to joke. He also
FIGURE 5.1 You could forget about buying a custom Model T from Ford in the early 1900s. The good news? The price was right.
advertisedineverymajornewspaperandpersuadedallkindsofpublicationstocarrystoriesaboutthe new, inexpensive cars. By 1918, half of all cars on America’s roads were Model Ts.[3] Then Alfred P. Sloan, the head of General Motors (GM), appeared on the scene. Sloan began to segmentconsumersintheautomobilemarket—todividethemupbythepricestheywantedtopayand thedifferentcarstheywantedtobuy.Theideawastoofferacarforeverytargetmarketorforeveryincome level. His efforts were successful, and in the 1950s, GM overtook Ford as the nation’s top automaker.[4](YoumightbeinterestedtoknowthatbeforeGMdeclaredbankruptcyin2009,itwaswidely believed the automaker actually had too many car models. After eliminating many models including Pontiac and Oldsmobile, General Motors made a turnaround and posted a large profit for 2011.)
1.1 Benefits of Segmenting and Targeting Markets ThestoryofGeneralMotorsraisesanimportantpoint,whichisthatsegmentingandtargetingmarkets doesn’tnecessarilymean”skinnyingdown”thenumberofyourcustomers.Infact,itcanhelpyouenlargeyourcustomerbasebygivingyouinformationwithwhichtosuccessfullyadjustsomecomponent of your offering—the offering itself, its price, the way you service and market it. More specifically, the process can help you do the following: < Avoid head-on competition with other firms trying to capture the same customers. < Develop new offerings and expand profitable brands and products lines. < Remarket older, less-profitable products and brands. < Identify early adopters. < Redistribute money and sales efforts to focus on your most profitable customers. < Retain "at-risk" customers in danger of defecting to your competitors. Thetrendtodayistowardmoreprecise,targetedmarketing.Figuringout"who'swho"intermsofyour customers involves some detective work, though—often market research. A variety of tools and researchtechniquescanbeusedtosegmentmarkets.Governmentagencies,suchastheU.S.CensusBureau, collect and report vast amounts of population information and economic data that can reveal changingconsumptiontrends.Technologyisalsomakingiteasierforevensmallcompaniesandentrepreneurs to gather information about potential customers. For example, the online game company GamePUMA.com originally believed its target market consisted of U.S. customers, but when the firm looked more closely at who was downloading games from its Web site, they were people from all over theglobe.Withtheincreaseduseofsocialmedia,companiesareabletogetinformationonconsumers' searchbehavior.Loyaltycardsthatconsumersscanatmanygroceryanddrugstoresprovideanincredible amount of information on consumers' buying behavior. The great product idea you had? Companies are now using the Internet to track people's Web browsingpatternsandsegmentthemintotargetgroups.Evensmallbusinessesareabletodothiscosteffectively because they don't need their own software and programs. They can simply sign up online for products like Google's AdSense and AdWords programs. You can locate potential customers by looking at blog sites and discussion forums on the Web. Big-boards.com has thousands of discussion forumsyoucanminetofindpotentialcustomersinterestedinyourproduct.Doyouhaveablog?Goto BlogPoll.com, and you can embed a survey in your blog to see what people think of your idea. If you have a Web site, you can download an application onto your iPhone that will give you up-to-theminute information and statistics on your site's visitors. Getting a read on potential target markets doesn't necessarily have to involve technology. Your own personal experience and talking to would-be buyers is an important part of the puzzle. Go where youthinkwould-bebuyersgo—restaurants,malls,gyms,subways,grocerystores,daycarecenters,and offices—andaskquestionstofindoutwhattheydoduringtheday,whattheytalkabout,whatproducts or services do you see them using, and do they seem to be having an enjoyable experience when using those products or are they frustrated?
96 PRINCIPLES OF MARKETING VERSION 2.0
FIGURE 5.2 The Healthy Choice line of frozen dinners was launched by a heart attack victim.
Healthy Choice frozen dinners were conceived as a result of questioning potential customers. The food-maker ConAgra launched the dinners in the late 1980s after its CEO,CharlieHarper,sufferedaheartattack.OnedayacolleaguecomplimentedHarper on his wife's tasty low-fat turkey stew. That's when Harper realized there were people like him who wanted healthy convenience foods, so he began talking to them aboutwhattheywanted.TwoyearsaftertheHealthyChoicelinewaslaunched,itcontrolled 10 percent of the frozen-dinner market by concentrating on the health conscious segment.[5]
1.2 Segmenting and Targeting a Firm's Current Customers Findingandattractingnewcustomersisgenerallyfarmoredifficultthanretainingyour current customers. Think about how much time and energy you spend when you switchyourbusinessfromonefirmtoanother,evenwhenyou'rebuyingsomethingas simple as a haircut. If you aren't happy with your hair stylist and want to find a new hairdresser, you first have to talk to people with haircuts you like or read reviews of salons. Once you decide on a particular salon, you have to find it and explain to the new hairdresser how you want your hair cut and hope he or she gets it right. You also have to figure out what type of credit cards the new salon will accept and whether tips can be put on your credit card. Finding new customers, getting to know them, and figuring out what they really want is also a difficult process, one that's fraught with trial and error. That's why it's so important to get to know, form close relationships, and focus selling efforts on current customers.[6] In 2009, Backroads, a California company focused on adventure-based travel increased its revenuesbycreatingapersonalizedmarketingcampaignforpeoplewhohaddonebusinesswiththeminthe past. Backroads looked at customers' past purchases, the seasons in which they took their trips, the levelsofactivityassociatedwiththem,andwhetherornotthecustomerstendedtovacationwithchildren. Based on their findings, Backroads created three relevant trip suggestions for each customer and sent postcards and e-mails with links to customized Web pages reminding each customer of the trips he/shehadpreviouslybookedwithBackroadsandsuggestingnewones."Intermsofpastcustomers,it was like off-the-charts better [than past campaigns]," says Massimo Prioreschi, the vice president of Backroads' sales and marketing group.[7] In addition to studying their buying patterns, firms also try to get a better understanding of their customers by surveying them or hiring marketing research firms to do so or by utilizing loyalty programs. (A good source for finding marketing research companies is http://www.greenbook.org.) For example,ifyousignuptobecomeafrequentflierwithacertainairline,theairlinewilllikelyaskyoua number of questions about your likes and dislikes. This information will then be entered into a customer relationship management (CRM) system, and you might be e-mailed special deals based on the routes you tend to fly. British Airways goes so far as to track the magazines its most elite fliers like to read so the publications are available to them on its planes. Twitter is another way companies are keeping in touch with their customers and boosting their revenues. When the homemaking maven Martha Stewart schedules a book signing, she tweets her followers, and voilà, many of them show up at the bookstore she's appearing at to buy copies. Finding ways to interact with customers that they enjoy—whether it's meeting or "tweeting" them, or putting on events and tradeshows they want to attend—is the key to forming relationships with them. Many firms, even small ones, are using Facebook to develop closer relationships with their customers.HansenCakes,aBeverlyHills(California)bakery,hasabouttwothousandcustomerswhovisit itsFacebookpage.Duringherdowntimeatthebakery,employeeSuziFinerposts"cakesupdates"and photos of the goodies she's working on to the site. Along with information about the cakes, Finer extends special offers to customers and mixes in any gossip about Hollywood celebrities she's spotted in the area. After Hansen Cakes launched its Facebook page, the bakery's sales shot up 15-20 percent. "And that's during the recession," notes Finer, who is obviously proud of the results she's gotten.[8] Regardless of how well companies know their customers, it's important to remember that some customers are highly profitable, others aren't, and others actually end up costing your firm money to serve.Consequently,youwillwanttointeractwithsomecustomersmorethanothers.Believeitornot, some firms deliberately "untarget" unprofitable customers. Best Buy got a lot of attention (not all of it good) when it was discovered they had categorized its buyers into "personas," or types of buyers, and createdcustomizedsalesapproachesforeach.Forexample,anupper-middle-classwomanwasreferred to as a "Jill." A young urban man was referred to as a "Buzz." Pesky, bargain-hunting customers that BestBuycouldn'tmakemuchofaprofitfromwerereferredtoas"devils"andtakenoffthecompany's mailing lists.[9]
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 97
FIGURE 5.3 Are you a "high maintenance" customer? Always trying to "work a deal"? Then don't call Best Buy. They'll call you.
© 2010 Jupiterimages Corporation
one-to-one marketing Forming close, personal relationships with customers and giving them exactly what they want.
The knife cuts both ways, though. Not all firms are equal in the minds of consumers, who will choose to do business with some companies rather than others. To consumers, market segmentation means: meetmyneeds—give me whatIwant.[10] Steps companies take to target their best customers, form close, personal relationships with them, and give them what they want—a process called one-to-one marketing—are outlined in "Steps in One-to-One Marketing." In terms of our shotgun versus rifle approach, you can think of one-to-one marketing as a rifle approach, but with an added advantage: now you have a scope on your rifle. One-to-onemarketingisanideaproposedbyDonPeppersandMarthaRogersintheir1994book TheOnetoOneFuture.Thebookdescribedwhatlifewouldbelikeaftermassmarketing.Wewouldall beabletogetexactlywhatwewantfromsellers,andourrelationshipswiththemwouldbecollaborative, rather than adversarial. Are we there yet? Not quite, but it does seem to be the direction the trend toward highly targeted marketing is leading.
Steps in One-to-One Marketing
1. Establish short-term measures to evaluate your efforts. Determine how you will measure your effort. Will you use higher customer satisfaction ratings, increased revenues earned per customer, number of products sold to customers, transaction costs, or another measure? 2. Identify your customers. Gather all the information you can about your current customers, including their buying patterns, likes, and dislikes. When conducting business with them, include an "optin"questionthatallowsyoutolegallygatherandusetheirphonenumbersande-mailaddresses so you can remain in contact with them. 3. Differentiate among your customers. Determine who your best customers are in terms of what they spend and will spend in the future (their customer lifetime value), and how easy or difficult they are to serve. Identify and target customers that spend only small amounts with you but large amounts with your competitors. 4. Interact with your customers, targeting your best ones. Find ways and media in which to talk to customers about topics they're interested in and enjoy. Spend the bulk of your resources interacting with your best (high-value) customers. Minimize the time and money you spend on low-value customers with low growth potential. 5. Customize your products and marketing messages to meet their needs. Try to customize your marketing messages and products in order to give your customers exactly what they want—whether it's the product itself, its packaging, delivery, or the services associated with it.[11]
Audio Clip
Interview with Apurva Ghelani Listen to Apurva Ghelani, a senior sales engineer, from the marketing company Air2Web, discuss how companies like NASCAR get permission from consumers to send them advertisements via their wireless devices.
KEY TAKEAWAY
Choosing select groups of people to sell to is called target marketing, or differentiatedmarketing. Mass marketing, or undifferentiated marketing, involves selling the same product to everyone. The trend today is toward more precise, targeted marketing. Finding and attracting new customers is generally far more difficult than retaining one's current customers, which is why organizations try to interact with and form relationships with their current customers. The goal of firms is to do as much business with their best customers as possible. Forming close, personal relationships with customers and giving them exactly what they want is a process called one-to-one marketing. It is the opposite of mass marketing.
REVIEW QUESTIONS
1. Using the shotgun and rifle analogy, how do mass marketing, targeted marketing, and one-to-one marketing compare with one another? 2. How is technology making it easier for firms to target potential customers? 3. Outline the steps companies need to take to engage in one-to-one marketing with their customers.
98 PRINCIPLES OF MARKETING VERSION 2.0
segmentation bases Criteria used to classify and divide buyers into different groups.
We want to hear your feedback
At Flat World Knowledge, we always want to improve our books. Have a comment or suggestion? Send it along!http://bit.ly/wUJmef
2. HOW MARKETS ARE SEGMENTED
LEARNING OBJECTIVES
1. Understand and outline the ways in which markets are segmented. 2. Explain why marketers use some segmentation bases versus others.
Sellers can choose to pursue consumer markets, business-to-business (B2B) markets, or both. Consequently, one obvious way to begin the segmentation process is to segment markets into these two types of groups. Different factors influence consumers to buy certain things. Many of the same factors can also be used to segment customers. A firm will often use multiplesegmentationbases, or criteria to classify buyers,togetafullerpictureofitscustomersandcreaterealvalueforthem.Eachvariableaddsalayer of information. Think of it as being similar to the way in which your professor builds up information on a PowerPoint slide to the point at which you are able to understand the material being presented. There are all kinds of characteristics you can use to slice and dice a market. "Big-and-tall" stores cater to the segment of population that's larger sized. What about people with wide or narrow feet, or peoplewithmedicalconditions,orcertainhobbies?Next,welookprimarilyatthewaysinwhichconsumermarketscanbesegmented.Laterinthechapter,we'lllookatthewaysinwhichB2Bmarketscan be segmented.
2.1 Types of Segmentation Bases Table 5.1 shows some of the different types of buyer characteristics used to segment markets. Notice that the characteristics fall into one of four segmentation categories: behavioral, demographic, geographic, or psychographic. We'll discuss each of these categories in a moment. For now, you can get a roughideaofwhatthecategoriesconsistofbylookingatthemintermsofhowmarketingprofessionals might answer the following questions: < Behavioral segmentation.What benefits do customers want, and how do they use our product? < Demographic segmentation.How do the ages, races, and ethnic backgrounds of our customers affect what they buy? < Geographic segmentation.Where are our customers located, and how can we reach them? What products do they buy based on their locations? < Psychographic segmentation.What do our customers think about and value? How do they live their lives?
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 99
behavioral segmentation Dividing people and organization into groups according to how they behave with or act toward products.
TABLE 5.1 Common Ways of Segmenting Buyers By Behavior By Demographics By Geography By Psychographics
< Benefits sought from the product < How often the product is used (usage rate) < Usage situation (daily use, holiday use, etc.) < Buyer's status and loyalty to product (nonuser, potential user, first-time users, regular user)
< Age/ generation < Income < Gender < Family life cycle < Ethnicity < Family size < Occupation < Education < Nationality < Religion < Social class
< Region (continent, country, state, neighborhood) < Size of city or town < Population density < Climate
< Activities < Interests < Opinions < Values < Attitudes < Lifestyles
2.2 Segmenting by Behavior Behavioralsegmentationdividespeopleandorganizationintogroupsaccordingtohowtheybehave withoracttowardproducts.Benefitssegmentation—segmentingbuyersbythebenefitstheywantfrom products—is very common. Take toothpaste, for example. Which benefit is most important to you when you buy a toothpaste: The toothpaste's price, ability to whiten your teeth, fight tooth decay, freshenyourbreath,orsomethingelse?Perhapsit'sacombinationoftwoormorebenefits.Ifmarketing professionals know what those benefits are, they can then tailor different toothpaste offerings to you(andotherpeoplelikeyou).Forexample,Colgate2-in-1Toothpaste&Mouthwash,WhiteningIcy Blast is aimed at people who want the benefits of both fresher breath and whiter teeth.
Video Clip
A Vintage Colgate Commercial from the 1950s Watch the YouTube video to see a vintage Colgate toothpaste ad that describes the product's various benefits to consumers. (Onscreen kissing was evidently too racy for the times.)
Another way in which businesses segment buyers is by their usage rates—that is, how often, if ever, theyusecertainproducts.Harrah's,anentertainmentandgamingcompany,gathersinformationabout thepeoplewhogambleatitscasinos.Highrollers,orpeoplewhospendalotofmoney,areconsidered "VIPs."VIPsgetspecialtreatment,includingapersonal"host"wholooksaftertheirneedsduringtheir casino visits. Companies are interested in frequent users because they want to reach other people like them. They are also keenly interested in nonusers and how they can be persuaded to use products. The way in which people use products is also be a basis for segmentation. Avon Skin So Soft was originallyabeautyproduct,butafterAvondiscoveredthatsomepeoplewereusingitasamosquitorepellant,thecompanybeganmarketingitforthatpurpose.Eventually,Avoncreatedaseparateproduct called Skin So Soft Bug Guard, which competes with repellents like Off! Similarly, Glad, the company
View the video online at: http://www.youtube.com/v/9QrFa3tDwvY
100 PRINCIPLES OF MARKETING VERSION 2.0
FIGURE 5.4 Encouraging consumers to use your products for multiple purposes is a smart marketing strategy.
© 2010 Jupiterimages Corporation
demographic segmentation Segmenting buyers by personal characteristics such as their ages, incomes, ethnicity, and family sizes.
that makes plastic wrap and bags, found out customers were using its Press'n Seal wrap in ways the company could never have imagined. The personnel in Glad's marketing department subsequently launched a Web site called 1000uses.com that contains both the company's and consumers' use tips. Some of the ways in which people use the product are pretty unusual, as evidenced by the following commentpostedonthesite:"Ihaveahedgehogwholikestorunonhiswheelalot.Afterquiteawhile of cleaning a gross wheel every morning, I got the tip to use 'Press'n Seal wrap' on his wheel, making clean up much easier! My hedgie can run all he wants, and I don't have to think about the cleanup. Now we're both GLAD!" Although we doubt Glad will ever go to great lengths to segment the Press 'n Seal market by hedgehogowners,thefirmhascertainlygatheredalotofgoodconsumerinsightabouttheproductand publicityfromits1000uses.comWebsite.(Incidentally,onerainyday,theauthorofthischaptermade "rainboots"outofPress'nSealforherdog.Butwhenshelatertriedtotearthemoffofthedog'spaws, he bit her. She is now thinking of trading him in for a hedgehog.)
2.3 Segmenting by Demographics Segmenting buyers by personal characteristics such as age, income, ethnicity and nationality, education, occupation, religion, social class, and family size is called demographic segmentation. Demographics are commonly utilized to segment markets because demographic information is publicly available in databases around the world. You can obtain a great deal of demographic information on the U.S. Census Bureau's Web site (http://www.census.gov). Other government Web sites you can tap include FedStats (http://www.fedstats.gov) and The World Factbook (http://www.cia.gov/cia/ publications/factbook),whichcontainsstatisticsaboutcountriesaroundtheworld.Inadditiontocurrentstatistics,thesitescontainforecastsofdemographictrends,suchaswhethersomesegmentsofthe population are expected to grow or decline. Age Atthispointinyourlife,youareprobablymorelikelytobuyacarthanafuneralplot.Marketingprofessionalsknowthis.That'swhytheytrytosegmentconsumersbytheirages.You'reprobablyfamiliar with some of the age groups most commonly segmented (see Table 5.2) in the United States. Into which category do you fall?
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 101
retro brands Old brands or products companies "bring back" for a period of time.
TABLE 5.2 U.S. Generations and Characteristics Generation Also Known As Birth Years
Characteristics
Seniors "The Silent Generation," "Matures," "Veterans," and "Traditionalists"
1945 and prior
< Experienced very limited credit growing up < Tend to live within their means < Spend more on health care than any other age group < Internet usage rates increasing faster than any other group
Baby Boomers
1946-1964 < Second-largest generation in the United States < Grew up in prosperous times before the widespread use of credit < Account for 50 percent of U.S. consumer spending < Willing to use new technologies as they see fit
Generation X
1965-1979 < Comfortable but cautious about borrowing < Buying habits characterized by their life stages < Embrace technology and multitasking
Generation Y
"Millennials," "Echo Boomers," includes "Tweens" (preteens)
1980-2000 < Largest U.S. generation < Grew up with credit cards < Adept at multitasking; technology use is innate < Ignore irrelevant media
Note: Not all demographers agree on the cutoff dates between the generations.
Today'scollege-agestudents(GenerationY)composethelargestgeneration.Thebabyboomergeneration is the second largest, and over the course of the last thirty years or so, has been a very attractive marketforsellers.Retrobrands—oldbrandsorproductsthatcompanies"bringback"foraperiodof time—were aimed at baby boomers during the recent economic downturn. Pepsi Throwback and Mountain Dew Throwback, which are made with cane sugar—like they were "back in the good old days"—instead of corn syrup, are examples.[12] Marketing professionals believe they appealed to baby boomersbecausetheyremindedthemofbettertimes—timeswhentheydidn'thavetoworryaboutbeing laid off, about losing their homes, or about their retirement funds and pensions drying up. Babyboomersareagingandthesizeofthegroupwilleventuallydecline.Bycontrast,themembers ofGenerationYhavealifetimeofbuyingstillaheadofthem,whichtranslatestoalotofpotentialcustomer lifetime value (CLV), the amount a customer will spend on a particular brand over his/her lifetime, for marketers if they can capture this group of buyers. However, a recent survey found that the latestrecessionhadforcedteenstochangetheirspendinghabitsandcollegeplansandthatroughlyhalf of older Generation Yers reported they had no savings.[13] Sowhichgrouporgroupsshouldyourfirmtarget?Althoughit'shardtobeallthingstoallpeople, many companies try to broaden their customer bases by appealing to multiple generations so they don't lose market share when demographics change. Several companies have introduced lower-cost brandstargetingGenerationXers,whohavelessspendingpowerthanboomers.Forexample,kitchenwareandhome-furnishingscompanyWilliams-SonomaopenedtheElmStreetchain,aless-priceyversion of the Pottery Barn franchise. The Starwood hotel chain's W hotels, which feature contemporary designs and hip bars, are aimed at Generation Xers.[14] The video game market is very proud of the fact that along with Generation X and Generation Y, many older Americans still play video games. (You probably know some baby boomers who own a Nintendo Wii.) Products and services in the spa market used to be aimed squarely at adults, but not anymore. Parents are now paying for their tweens to get facials, pedicures, and other pampering in numbers no one in years past could have imagined.
102 PRINCIPLES OF MARKETING VERSION 2.0
advergames Electronic games sellers create to promote a product or service.
Video Clip
Evian Water: Roll, Baby, Roll! Watch the YouTube video to see a fun generational type of advertisement. No, the ad isn't designed to appeal to babies. It's aimed at us adults!
As early as the 1970s, U.S. automakers found themselves in trouble because of changing demographic trends. Many of the companies' buyers were older Americans inclined to "buy American." These people hadn't forgotten that Japan bombed Pearl Harbor during World War II and weren't about to buyJapanesevehicles,butyoungerAmericanswere.Plus,Japanesecarshaddevelopedabetterreputation. Despite the challenges U.S. automakers face today, they have taken great pains to cater to the "younger" generation—today's baby boomers who don't think of themselves as being old. If you are a carbuff,youperhapshavenoticedthattheonce-stodgyCadillacnowhasasportierlookandstiffersuspension. Likewise, the Chrysler 300 looks more like a muscle car than the old Chrysler Fifth Avenue your great-grandpa might have driven. Automakers have begun reaching out to Generations X and Y, too. General Motors (GM) has sought to revamp the century-old company by hiring a new younger group of managers—managers whounderstandhowGenerationXandYconsumersarewiredandwhattheywant."Ifyou'regoingto appealtomydaughter,you'regoingtohavetobeinthedigitalworld,"explainedoneGMvicepresident.[15] CompanieshavetodevelopnewproductsdesignedtoappealtoGenerationsXandYandalsofind newwaystoreachthem.Peopleinthesegenerationsnotonlytendtoignoretraditionaladvertisingbut also are downright annoyed by it. To market to Scion drivers, who are generally younger, Toyota created Scion Speak, a social networking site where they can communicate, socialize, and view cool new modelsofthecar.OnlineeventssuchasthefashionshowsbroadcastovertheWebarealsogettingthe attentionofyoungerconsumers,asaretext,e-mail,andTwittermessagestheycansignuptoreceiveso astogetcoupons,cash,andfreemerchandise.Advergamesarelikewisebeingusedtoappealtothetwo demographicgroups.Advergamesareelectronicgamessellerscreatetopromoteaproductorservice. Wouldyouliketoplayonenow?ClickonthefollowinglinktoseeafunonecreatedbyBurgerKingto advertise its Tender Crisp Chicken.
Burger King Advergame
http://web.archive.org/web/20110426194400/http://www.bk.com/en/us/campaigns/ subservient-chicken.html You can boss the "subservient chicken" around in this advergame. He will do anything you want—well, almost anything.
Income Tweensmightappeartobeaveryattractivemarketwhenyouconsidertheywillbebuyingproductsfor yearstocome.Butwouldyouchangeyourmindifyouknewthatbabyboomersaccountfor50percent of all consumer spending in the United States? Americans over sixty-five now control nearly threequarters of the net worth of U.S. households; this group spends $200 billion a year on major "discretionary" (optional) purchases such as luxury cars, alcohol, vacations, and financial products.[16]
View the video online at: http://www.youtube.com/v/_PHnRIn74Ag
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 103
FIGURE 5.5 Automobile companies may segment markets based on income, age, social class, and gender.
© 2010 Jupiterimages Corporation
FIGURE 5.6 Considering the rising number of U.S. women who live without spouses, entrepreneurs have launched handyman services in many markets.
© 2010 Jupiterimages Corporation
family life cycle The stages families go through over time and how it affects people's buying behavior.
Income is used as a segmentation variable because it indicates a group's buying power and may partially reflect their education levels, occupation, and social classes. Higher education levels usually result in higher paying jobs and greater social status. The makers of upscale products such as Rolexes and Lamborghinis aim their products at high-income groups. However, a growing number of firms todayareaimingtheirproductsatlower-incomeconsumers.Thefastest-growingproductinthefinancial services sector is prepaid debit cards, most of which are being bought and used by people who don'thavebankaccounts.Firmsarefindingthatthisgroupisalarge,untappedpoolofcustomerswho tendtobemorebrandloyalthanmost.Ifyoucaptureenoughofthem,youcanearnaprofit.[17]Based onthetargetedmarket,businessescandeterminethelocationandtypeofstoreswheretheywanttosell their products. Sometimesincomeisn'talwaysindicativeofwhowillbuyyourproduct.Companiesareawarethatmanyconsumerswanttobeinhigherincomegroupsandbehavelike they are already part of them. Mercedes Benz's cheaper line of "C" class vehicles is designed to appeal to these consumers. Gender Gender is another way to segment consumers. Men and women have different needs and also shop differently. Consequently, the two groups are often, but not always, segmented and targeted differently. Marketing professionals don't stop there, though. For example,becausewomenmakemanyofthepurchasesfortheirhouseholds,marketresearchers sometimes try to further divide them into subsegments. (Men are also often subsegmented.) For women, those segments might include stay-at-home housewives, plan-to-work housewives, just-a-job working women, and career-oriented working women. Research has found that women who are solely homemakers tend to spend more money, perhaps because they have more time. Inadditiontosegmentingbygender,marketresearchersmightcouplegenderwith marital status and other demographic characteristics. For, example, did you know that more women in America than ever before (51 percent) now live without spouses? Can you think of any marketing opportunities this might present?[18] Family Life Cycle Familylifecyclereferstothestagesfamiliesgothroughovertimeandhowitaffectspeople'sbuying behavior. For example, if you have no children, your demand for pediatric services (medical care for children)islikelytobeslimtonone,butifyouhavechildren,yourdemandmightbeveryhighbecause children frequently get sick. You may be part of the target market not only for pediatric services but also for a host of other products, such as diapers, daycare, children's clothing, entertainment services, and educational products. A secondary segment of interested consumers might be grandparents who are likely to spend less on day-to-day childcare items but more on special-occasion gifts for children. Many markets are segmented based on the special events in people's lives. Think about brides (and want-to-bebrides)andalltheproductstargetedatthem,includingWebsitesandtelevisionshowssuch asSay Yes to the Dress,My Fair Wedding,Platinum Weddings, andBridezillas.
104 PRINCIPLES OF MARKETING VERSION 2.0
FIGURE 5.7 Many markets are segmented based on people's family life cycle needs.
© 2010 Jupiterimages Corporation
Resorts also segment vacationers depending on where they are in their family life cycles.Whenyouthinkoffamilyvacations,youprobablythinkofDisneyresorts.Some vacation properties, such as Sandals, exclude children from some of their resorts. Perhaps they do so because some studies show that the market segment with greatest financial potential is married couples without children.[19] Keep in mind that although you might be able to isolate a segment in the marketplace,includingonebasedonfamilylifecycle,youcan'tmakeassumptionsaboutwhat thepeopleinitwillwant.Justlikepeople'sdemographicschange,sodotheirtastes.For example,overthepastfewdecadesU.S.familieshavebeengettingsmaller.Households withasingleoccupantaremorecommonplacethanever,butuntilrecently,thathasn't stopped people from demanding bigger cars (and more of them) as well as larger houses, or what some people jokingly refer to as "McMansions." The trends toward larger cars and larger houses appear to be reversing. High energy costs, the credit crunch, and concern for the environment are leading people to demand smaller houses. To attract people such as these, D. R. Horton, the nation's leading homebuilder, and other construction firms are now building smaller homes. Ethnicity People's ethnic backgrounds have a big impact on what they buy. If you've visited a grocery store that caters to a different ethnic group than your own, you were probably surprised to see the types of products sold there. It's no secret that the United States is becoming—and will continue to become—more diverse. Hispanic Americans are the largest and the fastest-growing minority in the UnitedStates.Companiesaregoingtogreatlengthstocourtthisonceoverlookedgroup.InCalifornia,the healthcareproviderKaiserPermanenterunstelevisionadslettingmembersofthissegmentknowthat they can request Spanish-speaking physicians and that Spanish-speaking nurses, telephone operators, and translators are available at all of its clinics.[20] African Americans are the second-largest ethnic group in America. Collectively, they have the most buying power of any ethnic group in America. Many people of Asian descent are known to be early adapters of new technology and have above-average incomes. As a result, companies that sell electronic products, such as AT&T, spend more money segmenting and targeting the Asian community.[21]Table 5.3 contains information about the number of people in these groups and their buying power. TABLE 5.3 Major U.S. Ethnic Segments and Their Spending Group Percentage of U.S. Population Annual Spending Power (Billions of Dollars) Hispanics 13.7 736 African Americans 13.0 761 Asians 5.0 397 Source: New American Dimensions, LLC. As you can guess, even within various ethnic groups there are many differences in terms of the goods and services buyers choose. Consequently, painting each group with a broad brush would leave you with an incomplete picture of your buyers. For example, although the common ancestral language amongtheHispanicsegmentisSpanish,Hispanicstracetheirlineagestodifferentcountries.Nearly70 percent of Hispanics in the United States trace their lineage to Mexico; others trace theirs to Central America, South America, and the Caribbean. All Asians share is race. Chinese, Japanese, and Korean immigrants do not share the same language.[22] Moreover, both the Asian and Hispanic market segments include new immigrants, people whoimmigratedtotheUnitedStatesyearsago,andnative-bornAmericans.Sowhatlanguagewillyou use to communicate your offerings to these people, and where? Subsegmentingthemarketscouldpotentiallyhelpyou.NewAmericanDimension,amulticultural research firm, has further divided the Hispanic market into the following subsegments: < Just moved in'rs.Recent arrivals, Spanish dependent, struggling but optimistic. < FOBrs (fashionistas on a budget).Spanish dominant, traditional, but striving for trendy. < Accidental explorers.Spanish preferred, not in a rush to embrace U.S. culture. < The englightened.Bilingual, technology savvy, driven, educated, modern. < Doubting Tomáses.Bilingual, independent, skeptical, inactive, shopping uninvolved. < Latin flavored.English preferred, reconnecting with Hispanic traditions. < SYLrs (single, young latinos).English dominant, free thinkers, multicultural.
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 105
geographic segmentation Segmenting buyers by where they are located.
geocoding The process of plotting geographic marketing information takes on a map.
geodemographics (neighborhood geography) Combining both demographic and geographic information for marketing purposes.
customer profile The description of a type of customer based on market segmentation criteria.
population density The number of people per square mile.
Youcouldgosofarastobreakdownsegmentstotheindividuallevel,whichisthegoalbehindone-toone marketing. However, doing so would be dreadfully expensive, notes Juan Guillermo Tornoe, a marketingexpertwhospecializesinHispanicmarketingissues.Afterall,areyoureallygoingtodevelop different products and different marketing campaigns and communications for each group? Probablynot,but"youneedtoperformyourduediligenceandunderstandwherethemajorityofthepeople youaretryingtoreachlandonthismatrix,modifyingyourmessageaccordingtothisinsight,"Tornoe explains.[23]
2.4 Segmenting by Geography Suppose your great new product or service idea involves opening a local store. Before you open the store,youwillprobablywanttodosomeresearchtodeterminewhichgeographicalareashavethebest potential.Forinstance,ifyourbusinessisahigh-endrestaurant,shoulditbelocatednearthelocalcollegeorcountryclub?Ifyousellskiequipment,youprobablywillwanttolocateyourshopsomewhere inthevicinityofamountainrangewherethereisskiing.Youmightseeasnowboardshopinthesame area but probably not a surfboard shop. By contrast, a surfboard shop is likely to be located along the coast, but you probably would not find a snowboard shop on the beach. Geographicsegmentationdividesthemarketintoareasbasedonlocationandexplainswhythe checkout clerks at stores sometimes ask for your zip code. It's also why businesses print codes on coupons that correspond to zip codes. When the coupons are redeemed, the store can find out where itscustomersarelocated—ornotlocated.Geocodingisaprocessthattakesdatasuchasthisandplots it on a map. Geocoding can help businesses see where prospective customers might be clustered and targetthemwithvariousadcampaigns,includingdirectmail.Oneofthemostpopulargeocodingsoftware programs is PRIZM NE, which is produced by a company called Claritas. PRIZM NE uses zip codes and demographic information to classify the American population into segments. The idea behind PRIZM is that "you are where you live." Combining both demographic and geographic informationisreferredtoasgeodemographicsorneighborhoodgeography.Theideaisthathousingareasin different zip codes typically attract certain types of buyers with certain income levels. To see how geodemographics works, visit the following page on Claritas' Web site: http://www.claritas.com/ MyBestSegments/Default.jsp?ID=20. Typeinyourzipcode,andyouwillseecustomerprofilesofthetypesofbuyerswholiveinyour area.Table5.4showstheprofilesofbuyerswhocanbefoundthezipcode76137—the"BriteLites,Li'l City" bunch, and "Home Sweet Home" set. Click on the profiles on the Claritas site to see which one most resembles you. TABLE 5.4 An Example of Geodemographic Segmentation for 76137 (Fort Worth, TX) Number Profile Name 12 Brite Lites, Li'l City 19 Home Sweet Home 24 Up-and-Comers 13 Upward Bound 34 White Picket Fences
ThetourismbureauforthestateofMichiganwasabletoidentifyandtargetdifferentcustomerprofiles using PRIZM. Michigan's biggest travel segment are Chicagoans in certain zip codes consisting of upper-middle-class households with children—or the "kids in cul-de-sacs" group, as Claritas puts it. The bureau was also able to identify segments significantly different from the Chicago segment, including blue-collar adults in the Cleveland area who vacation without their children. The organization then created significantly different marketing campaigns to appeal to each group. City size and population density (the number of people per square mile) are also used for segmentation purposes. Have you ever noticed that in rural towns, McDonald's restaurants are hard to find, but Dairy Queens (DQ) are usually easy to locate? McDonald's generally won't put a store in a townoffewerthanfivethousandpeople.However,thisisprimeturfforthe"DQ"—becauseitdoesn't have to compete with bigger franchises like McDonald's.
106 PRINCIPLES OF MARKETING VERSION 2.0
FIGURE 5.8 Virgin Mobile is helping stores capitalize on proximity marketing by sending text messages to Virgin Mobile users when they opt to receive them. Billboards outside stores tell Virgin Mobile users to "switch your Bluetooth on to get free stuff here!" (Who wouldn't want free stuff?)
© 2010 Jupiterimages Corporation
proximity marketing The process of segmenting buyers geographically and targeting them within a few hundred feet of a business businesses using wireless technology.
psychographic segmentation Segmenting people by their activities, interests, opinion, attitudes, values, and lifestyles.
Proximity marketing is an interesting new technology firms are using to segment and target buyersgeographicallywithinafewhundredfeetoftheirbusinessesusingwirelesstechnology.Insome areas, you can switch your mobile phone to a "discoverable mode" while you're shopping and, if you want, get ads and deals from stores as you pass by them, which is often less expensive than hiring people to hand you a flier as you walk by.[24]
Audio Clip
Interview with Apurva Ghelani To learn about how proximity marketing works at a real company, listen to Apurva Ghelani in this audio clip. Ghelani is a senior sales engineer for Air2Web, a company that helps businesses promote their brands and conduct transactions with people via their mobile phones.
In addition to figuring out where to locate stores and advertise to customers in that area, geographic segmentation helps firms tailor their products. Chances are you won't be able to find the same heavy wintercoatyouseeataWalmartinMontanaataWalmartinFloridabecauseoftheclimatedifferences between the two places. Market researchers also look at migration patterns to evaluate opportunities. TexMexrestaurantsaremorecommonlyfoundinthesouthwesternUnitedStates.However,northern states are now seeing more of them as more people of Hispanic descent move northward.
2.5 Segmenting by Psychographics Ifyourofferingfulfillstheneedsofaspecificdemographicgroup,thenthedemographiccanbeanimportant basis for identifying groups of consumers interested in your product. What if your product crosses several market segments? For example, the group of potential consumers for cereal could be "almost" everyone although groups of people may have different needs with regard to their cereal. Some consumers might be interested in the fiber, some consumers (especially children) may be interestedintheprizethatcomesinthebox,otherconsumersmaybeinterestedintheaddedvitamins,and stillotherconsumersmaybeinterestedinthetypeofgrains.Associatingthesespecificneedswithconsumers in a particular demographic group could be difficult. Marketing professionals want to know whyconsumersbehavethewaytheydo,whatisofhighprioritytothem,orhowtheyranktheimportance of specific buying criteria. Think about some of your friends who seem a lot like you. Have you ever gone to their homes and been shocked by their lifestyles and how vastly different they are from yours? Why are their families so much different from yours? Psychographicsegmentationcan help fill in some of the blanks. Psychographic information is frequently gathered via extensive surveys that ask people about their activities, interests, opinion, attitudes, values, and lifestyles. One of the most well-known psychographic surveys is VALS (which originallystoodfor"Values,Attitudes,andLifestyles")andwasdevelopedbyacompanycalledSRIInternational in the late 1980s. SRI asked thousands of Americans the extent to which they agreed or disagreedwithquestionssimilartothefollowing:"Myideaoffunatanationalparkwouldbetostayatan expensive lodge and dress up for dinner" and "I could stand to skin a dead animal."[25]Based on their responsestodifferentquestions,consumersweredividedupintothefollowingcategories,eachcharacterized by certain buying behaviors. < Innovators.Innovators are successful, sophisticated, take-charge people with high self-esteem. Because they have such abundant resources, they exhibit all three primary motivations in varying degrees. They are change leaders and are the most receptive to new ideas and technologies. Innovators are very active consumers, and their purchases reflect cultivated tastes for upscale, niche products and services. Image is important to Innovators, not as evidence of status or power but as an expression of their taste, independence, and personality. Innovators are among the established and emerging leaders in business and government, yet they continue to seek challenges. Their lives are characterized by variety. Their possessions and recreation reflect a cultivated taste for the finer things in life. < Thinkers.Thinkers are motivated by ideals. They are mature, satisfied, comfortable, and reflective people who value order, knowledge, and responsibility. They tend to be well educated and actively seek out information in the decision-making process. They are well informed about world and national events and are alert to opportunities to broaden their knowledge. Thinkers have a moderate respect for the status quo institutions of authority and social decorum but are open to consider new ideas. Although their incomes allow them many choices, Thinkers are conservative, practical consumers; they look for durability, functionality, and value in the products they buy.
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 107
consumer insight An understanding of consumers that results when both quantitative and qualitative information are gathered about them.
< Achievers.Motivated by the desire for achievement, Achievers have goal-oriented lifestyles and a deep commitment to career and family. Their social lives reflect this focus and are structured around family, their place of worship, and work. Achievers live conventional lives, are politically conservative, and respect authority and the status quo. They value consensus, predictability, and stability over risk, intimacy, and self-discovery. With many wants and needs, Achievers are active in the consumer marketplace. Image is important to Achievers; they favor established, prestige products and services that demonstrate success to their peers. Because of their busy lives, they are often interested in a variety of timesaving devices. < Experiencers.Experiencers are motivated by self-expression. As young, enthusiastic, and impulsive consumers, Experiencers quickly become enthusiastic about new possibilities but are equally quick to cool. They seek variety and excitement, savoring the new, the offbeat, and the risky. Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers are avid consumers and spend a comparatively high proportion of their income on fashion, entertainment, and socializing. Their purchases reflect the emphasis they place on looking good and having "cool" stuff. < Believers.Like Thinkers, Believers are motivated by ideals. They are conservative, conventional people with concrete beliefs based on traditional, established codes: family, religion, community, and the nation. Many Believers express moral codes that are deeply rooted and literally interpreted. They follow established routines, organized in large part around home, family, community, and social or religious organizations to which they belong. As consumers, Believers are predictable; they choose familiar products and established brands. They favor American products and are generally loyal customers. < Strivers.Strivers are trendy and fun loving. Because they are motivated by achievement, Strivers are concerned about the opinions and approval of others. Money defines success for Strivers, who don't have enough of it to meet their desires. They favor stylish products that emulate the purchases of people with greater material wealth. Many see themselves as having a job rather than a career, and a lack of skills and focus often prevents them from moving ahead. Strivers are active consumers because shopping is both a social activity and an opportunity to demonstrate to peers their ability to buy. As consumers, they are as impulsive as their financial circumstance will allow. < Makers.Like Experiencers, Makers are motivated by self-expression. They express themselves and experience the world by working on it—building a house, raising children, fixing a car, or canning vegetables—and have enough skill and energy to carry out their projects successfully. Makers are practical people who have constructive skills and value self-sufficiency. They live within a traditional context of family, practical work, and physical recreation and have little interest in what lies outside that context. Makers are suspicious of new ideas and large institutions such as big business. They are respectful of government authority and organized labor but resentful of government intrusion on individual rights. They are unimpressed by material possessions other than those with a practical or functional purpose. Because they prefer value to luxury, they buy basic products. < Survivors.Survivors live narrowly focused lives. With few resources with which to cope, they often believe that the world is changing too quickly. They are comfortable with the familiar and are primarily concerned with safety and security. Because they must focus on meeting needs rather than fulfilling desires, Survivors do not show a strong primary motivation. Survivors are cautious consumers. They represent a very modest market for most products and services. They are loyal to favorite brands, especially if they can purchase them at a discount.[26] To find out which category you're in, take a VALS survey at http://www.sric-bi.com/vals/ surveynew.shtml. VALS surveys have been adapted and used to study buying behavior in other countries, too. Note that both VALS and PRIZM group buyers are based on their values and lifestyles, but PRIZMalsooverlaystheinformationwithgeographicdata.Asaresult,youcangaugewhatthebuying habits of people in certain zip codes are, which can be helpful if you are trying to figure out where to locate stores and retail outlets. Thesegmentingtechniqueswe'vediscussedsofarinthissectionrequiregatheringquantitativeinformationanddata.Quantitativeinformationcanbeimprovedwithqualitativeinformationyougather bytalkingtoyourcustomersandgettingtoknowthem.(RecallthatthisishowHealthyChoicefrozen dinners were created.) Consumer insight is what results when you use both types of information. You want to be able to answer the following questions: < Am I looking at the consumers the way they see themselves? < Am I looking at life from their point of view? BestBuyaskedstoreemployeestodevelopinsightaboutlocalconsumergroupsinordertocreatespecialprogramsandprocessesforthem.Employeesinonelocaleinvitedagroupofretireestotheirstore to explain how to make the switch to digital television. The store sold $350,000 worth of equipment
108 PRINCIPLES OF MARKETING VERSION 2.0
andtelevisionsinjusttwohours'time.Howmuchdiditcost?Thetotalcostincludedninety-ninedollars in labor costs plus coffee and donuts. Intuit,thecompanythatmakesthetaxsoftwareQuicken,hasa"followmehome"program.Teams of engineers from Intuit visit people's homes and spend a couple of hours watching consumers use Quicken. Then they use the insights they gain to improve the next version of Quicken. Contrast this story with that of a competing firm. When a representative of the firm was asked if he had ever observedconsumersinstallingorusinghiscompany'sproduct,heresponded,"I'mnotsureI'dwanttobe around when they were trying to use it."[27]This company is now struggling to stay in business. To read about some of the extreme techniques Nokia uses to understand cell phone consumers around the world, click on the following link: http://www.nytimes.com/2008/04/13/magazine/ 13anthropology-t.html?pagewanted=all.
2.6 Segmentation in B2B Markets ManyofthesamebasesusedtosegmentconsumermarketsarealsousedtosegmentB2Bmarkets.For example, Goya Foods is a U.S. food company that sells different ethnic products to grocery stores, depending on the demographic groups the stores serve—Hispanic, Mexican, or Spanish. Likewise, B2B sellers often divide their customers by geographic areas and tailor their products to them accordingly. Segmenting by behavior is common as well. B2B sellers frequently divide their customers based on their product usage rates. Customers that order many goods and services from a seller often receive specialdealsandareservedbysalespeoplewhocallontheminperson.Bycontrast,smallercustomers are more likely to have to rely on a firm's Web site, customer service people, and salespeople who call on them by telephone. Researchers Matthew Harrison, Paul Hague, and Nick Hague have theorized that there are fewer behavioralandneeds-basedsegmentsinB2Bmarketsthaninbusiness-to-consumer(B2C)marketsfor tworeasons:(1)businessmarketsaremadeupofafewhundredcustomerswhereasconsumermarkets can be made up of hundreds of thousands of customers, and (2) businesses aren't as fickle as consumers. Unlike consumers, they aren't concerned about their social standing or influenced by their families and peers. Instead, businesses are concerned solely with buying products that will ultimately increase their profits. According to Harrison, Hague, and Hague, the behavioral, or needs-based, segments in B2B markets include the following: < A price-focused segmentis composed of small companies that have low profit margins and regard the good or service being sold as not being strategically important to their operations. < A quality and brand-focused segmentis composed of firms that want the best possible products and are prepared to pay for them. < A service-focused segmentis composed of firms that demand high-quality products and have top-notch delivery and service requirements. < A partnership-focused segmentis composed of firms that seek trust and reliability on the part of their suppliers and see them as strategic partners.[28] B2Bsellers,likeB2Csellers,areexploringnewwaystoreachtheirtargetmarkets.TradeshowsanddirectmailcampaignsaretwotraditionalwaysofreachingB2Bmarkets.Now,however,firmsarefinding theycantargettheirB2Bcustomersmorecost-effectivelyviae-mailcampaigns,search-enginemarketing, and "fan pages" on social networking sites like Facebook. Companies are also creating blogs with cutting-edgecontentaboutnewproductsandbusinesstrendsofinteresttotheircustomers.Forafraction of the cost of attending a trade show to exhibit their products, B2B sellers are holding Webcasts and conducting online product demonstrations for potential customers.
KEY TAKEAWAY
Segmentation bases are criteria used to classify buyers. The main types of buyer characteristics used to segment consumer markets are behavioral, demographic, geographic, and psychographic. Behavioral segmentation divides people and organization into groups according to how they behave with or toward products. Segmenting buyers by personal characteristics such as their age, income, ethnicity, family size, and so forth is called demographic segmentation. Geographic segmentation involves segmenting buyers based on where they live. Psychographic segmentation seeks to differentiate buyers based on their activities, interests, opinions, attitudes, values, and lifestyles. Oftentimes a firm uses multiple bases to get a fuller picture of its customers and create value for them. Marketing professionals develop consumer insight when they gather both quantitative and qualitative information about their customers. Many of the same bases used to segment consumer markets are used to segment business-to-business (B2B) markets. However, there are generally fewer behavioral-based segments in B2B markets.
CHAPTER 5 MARKET SEGMENTING, TARGETING, AND POSITIONING 109
REVIEW QUESTIONS
1. What buyer characteristics do companies look at when they segment markets? 2. Why do firms often use more than one segmentation base? 3. What two types of information do market researchers gather to develop consumer insight?
We want to hear your feedback
At Flat World Knowledge, we always want to improve our books. Have a comment or suggestion? Send it along!http://bit.ly/wUJmef
3. SELECTING TARGET MARKETS AND TARGETMARKET STRATEGIES
LEARNING OBJECTIVES
1. Describe the factors that make some markets more attractive targets than others. 2. Describe the different market-segmenting strategies companies pursue and why. 3. Outline the market-segmentation strategies used in global markets.
3.1 Selecting Target Markets Afteryousegmentbuyersanddevelopameasureofconsumerinsightaboutthem,youcanbegintosee thosethathavemorepotential.Nowyouarehuntingwitharifleinsteadofashotgun.Thequestionis, doyouwanttospendalldayhuntingsquirrelsorten-pointbucks?Anattractivemarkethasthefollowing characteristics: < It is sizeable (large) enough to be profitable given your operating cost.Only a tiny fraction of the consumers in China can afford to buy cars. However, because the country's population is so large (nearly 1.5 billion people), more cars are sold in China than in Europe (and in the United States, depending on the month). Three billion people in the world own cell phones. But that still leaves three billion who don't.[29] < It is growing.The middle class of India is growing rapidly, making it a very attractive market for consumer products companies. People under thirty make up the majority of the Indian population, fueling the demand for "Bollywood" (Indian-made) films. < It is not already swamped by competitors, or you have found a way to stand out in a crowd. IBM used to make PCs. However, after the marketplace became crowded with competitors, IBM sold the product line to a Chinese company called Lenovo. < Either it is accessible or you can find a way to reach it.Accessibility, or the lack of it, could include geographic accessibility, political and legal barriers, technological barriers, or social barriers. For example, to overcome geographic barriers, the consumer products company Unilever hires women in third-world countries to distribute the company's products to rural consumers who lack access to stores. < The company has the resources to compete in it.You might have a great idea to compete in the wind-power market. However, it is a business that is capital intensive. What this means is that you will either need a lot of money or must be able to raise it. You might also have to compete with the likes of T. Boone Pickens, an oil tycoon who is attempting to develop and profit from the wind-power market. Does your organization have the resources to do this? < It "fits in" with your firm's mission and objectives.Consider TerraCycle, which has made its mark by selling organic products in recycled packages. Fertilizer made from worm excrement and sold in discarded plastic beverage bottles is just one of its products. It wouldn't be a good idea for TerraCycle to open up a polluting, coal-fired power plant, no matter how profitable the market for the service might be.
110 PRINCIPLES OF MARKETING VERSION 2.0
multisegment marketing Targeting multiple groups of consumers.
Video Clip
Yogurt, Anyone? I Mean, Any Woman? Are women an attractive target market for yogurt sellers? The maker of this humorous YouTube video thinks so. (She seems to imply they are the only market.)
3.2 Target-Market Strategies: Choosing the Number of Markets to Target HenryFordprovedthatmassmarketingcanwork—atleastforawhile.Massmarketingisalsoefficient because you don't have to tailor any part of the offering for different groups of consumers, which is more work and costs more money. The problem is that buyers are not all alike. If a competitor comes along and offers these groups a p<

Get a 30 % discount on an order above $ 100
Use the following coupon code:
ESSAY30
Positive SSL