Transcript 1 - Oakton Community College

Sharpen the Focus:
Target Marketing Strategies and Customer
Relationship Management
Chapter Seven
Chapter Objectives
1. Identify the steps in the target marketing process
2. Understand the need for market segmentation
and the approaches available to do it
3. Explain how marketers evaluate segments and
choose a targeting strategy
4. Understand how marketers develop and
implement a positioning strategy
5. Explain how marketers increase long-term
success and profits by practicing customer
relationship management
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Market Segmentation
Market
Market
Segment
People or organizations with needs or wants
and the ability and willingness to buy.
A subgroup of people or organizations
sharing one or more characteristics that
cause them to have similar product needs.
The process of dividing a market into
Market
meaningful, relatively similar, identifiable
Segmentation segments or groups.
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The Importance of Market Segmentation
 Markets have a variety of product
needs and preferences
 Marketers can better define
customer needs
 Decision makers can define
objectives and allocate resources
more accurately
2
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Why Market Segmentation?
 Marketers can identify
customers with similar needs
 Marketers can design marketing
mixes matched to a specific segment
 Segmentation is consistent with the
marketing concepts of satisfying
customer needs and wants
2
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Target Marketing Strategy:
Selecting and Entering a Market
 Market fragmentation:
 The creation of many
consumer groups due
to the diversity of their
needs and wants
 Because of diversity, the
same goods/services
will not appeal to
everyone
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Figure 7.1
Three Steps in the Target Marketing Process
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Prentice-Hall.
7-7
Figure 7.2
Step 1-Segmenting Consumers Markets
Remember factors influencing
consumer decision making?
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Segmenting by Demographics:
Age and Generational Marketing
 Children
 Teens
 Tweens
 Generation Y: born
between 1979 and 1994
Why do marketers engage in
generational marketing?
Because different age groups
have different needs and wants
Members of a generation share
the same outlooks & priorities
Segmenting by Demographics:
Age and Generational Marketing
 Generation X:
born between
1965 and 1976
 Baby boomers:
born between
1946 and 1964
 Older consumers
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Segmenting by Demographics:
Gender
 Many products appeal
to one sex or the other
 Metrosexual:
A straight, urban male
who is keenly interested
in fashion, home
design, gourmet
cooking, and personal
care
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Segmenting by Demographics:
Other Variables
 Family life cycle:
 Family needs change over time
 Different product categories ascend or descend in
importance over the life cycle
 Income
 Strongly correlated with buying power
 Social Class
 Consumers buy according to image they wish to
portray rather than where they fall in the
framework
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Segmenting by Demographics:
Race and Ethnicity
 Race and ethnicity
 African Americans
 Asian Americans
 Hispanic Americans
 Cultural diversity is
increasing
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Segmenting by Demographics:
Place of Residence
 Geodemography:
 Combines geography with demographics
PRIZM website - http://www.zillow.com/
 Geocoding:
 Customizes Web advertising so people who log on
in different places see ad banners for local
businesses
 Search engine marketing example: Google
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Segmenting by Psychographics
http://www.youtube.com/watch?v=Mig7E5FtaAI
Psychographics use psychological, sociological, and
anthropological factors to segment a market
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Figure 7.3
VALSTM Framework (Values & Lifestyles)
Learn more
about each
segment by
visiting
Strategic
Business
Insights
(VALS types)
Take the
VALSTM
survey by
visiting
Strategic
Business
Insights
(survey link)
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Segmenting by Psychographics
 Niche markets may be
defined by a single
characteristic
 Psychographic
segmentation can be
industry specific
 Situations, such as a
bad economy, can
create opportunities for
psychographic
segmentation
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Segmenting by Behavior
 Behavioral segmentation:
 Segments consumers based
on how they act toward, feel about
or use a product
 User status
 80/20 rule and
segmentation by
usage status
 Long tail concept
 Usage occasions
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Segmenting B2B Markets
 Segmentation helps B2B firms understand the needs
and characteristics of potential customers
 Firms can be segmented by:
 Organizational demographics
 Production technology used
 Whether targeted business firm is a user/nonuser of
product
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Figure 7.4
Step 2-Phases of Targeting
a.
b.
c.
© 2012 Pearson Education, Inc. publishing as
Prentice-Hall.
7-20
a.-Evaluation of Market Segments
 A viable target segment should:
 Have members with similar product needs/wants
who are different from members of other segments
 Be measurable in size and purchasing power
 Be large enough to be profitable
 Be reachable by marketing communications
 Have needs the marketer can adequately serve
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b.-Developing Segment Profiles
 After segments are identified, profiles or descriptions
of the “typical” customer in a segment are developed
 Segment profiles might include demographics, location,
lifestyle, and product-usage characteristics
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Figure 7.5
c.-Choose a Target Marketing Strategy
© 2012 Pearson Education, Inc. publishing as
Prentice-Hall.
7-23
Choosing a Targeting Strategy
• Undifferentiated Strategy- The marketer assumes that
people have similar needs, and an attempt is made to
appeal to a broad spectrum of people. (one size fits all)
Efficiency occurs because of economies of scale. (Walmart)
• Differentiated Strategy - The firm develops one or more
products (and strategies) for each of several customer
groups. This strategy might involve marketing a single
product differently to different segments, by changing
marketing to appeal to each targeted group. (Toyota)
• Firms that focus their efforts on a single segment follow a
Concentrated targeting strategy. One or more products
may be promoted to the segment. (Niche marketing)
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Choosing a Targeting Strategy (con’t)
 Customized marketing strategy
 Tailoring specific products to individual customers
 Common in personal and professional services, and in
industrial marketing
 Mass customization
Modifying a basic good
or service to meet the needs
of an individual
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Step 3-In the Marketing Process
Positioning
Positioning: Developing a marketing strategy to
influence how a particular market segment perceives a
good/service in comparison to the competition
Also: Developing a specific marketing mix to influence
potential customers’ overall perception of a brand,
product line, or organization in general.
Position: The place a product or group of products
occupies in the consumers’ minds relative to
competing offerings.
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Figure 7.6
Stages in a Positioning Decision
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Modifying Positioning Strategies
 Repositioning is commonly used to change the brand
image
 Requires redoing a product’s position
in response to marketplace changes
 Repositioning may breathe life into Retro brands
 A once-popular brand that has been revived to
experience a popularity comeback, often by riding a
wave of nostalgia (Lava Lamps, Hula Hoops, etc.)
 Can you name any others?
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Targeting and Positioning Strategies Must
Complement Each Other
Sobe’s XTC targets 18-35
year olds who want a
“New Age” beverage that
offers an energy boost
without unhealthy
additives.
SoBe was inspired by
“herbal ecstasy”
cocktails made popular
in the 1990s, but
positioned as less risky.
© 2012 Pearson Education, Inc. publishing as
Prentice-Hall.
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The Brand Personality
 Brand personality:
A distinctive image that captures the brand’s character
and benefits
 Personality dimensions:
 Sincerity
Example?
 Excitement
Example?
 Competence
Example?
 Sophistication Example?
 Ruggedness
Example?
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Figure 7.7
Perceptual Map
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CRM-Customer Relationship Management
Toward a Segment of One
 Customer relationship
management:
 A systematic tracking of
consumers’ preferences and
behaviors over time in order
to tailor the value
proposition as closely as
possible to each individual’s
unique wants and needs
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CRM: A New Perspective on an Old Problem
 CRM systems capture information
 Touch-points interface customers and businesses
 CRM systems include:
 Order and delivery tracking websites
 Call centers
 Automatic reminder systems
 Sales contact management software
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CRM: Bottom Line
 Customer Relationships are important
 Lifetime value of a customer
 Focus on high value customers
 Cheaper to retain old customers
than get new ones
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