Transcript elc310day9

ELC 310
Day 9
©2006 Prentice Hall
Agenda
• Questions?
• Assignment 3 posted
• Due October 17 @ beginning of class.
• Assignment 3.doc
• Quiz1 Corrected
• Results were a bit disappointing
• Avg = 75
• Quiz 2
• Chap 6-10
• Oct 17 or 21?
• You should be working on your eMarketing Plans
• Due Oct 28, Presentations on Oct 28
• Today we will be discussing Segmentation And Targeting
Strategies (part of Tier 1)
©2006 Prentice Hall
Seven-Step E-Marketing Plan
1.
2.
3.
4.
5.
6.
7.
Situation analysis
E-Marketing strategic planning
Plan objectives
E-Marketing strategy
Implementation plan
Budget
Evaluation plan
©2006 Prentice Hall
3-6
Step 2: E-Marketing Strategic Planning
• Market and product strategies, called Tier 1 tasks or
strategies, are outcomes of strategic planning.
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Segmentation
Targeting
Differentiation
Positioning
• Marketers conduct analyses to determine strategies.
• Market opportunity analysis
• Demand analysis
• Segment analysis
• Supply analysis
©2006 Prentice Hall
3-9
Differentiation
Tier 1
tasks
Tier 2
tasks
Segmentation
Positioning
Targeting
E-Marketing
Strategy
Offer
CRM/PRM
Communication
Value
Distribution
Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers
©2006 Prentice Hall
E-Marketing Strategic Planning:
Segmenting & targeting
- Market opportunity analysis (MOA):
- The demand analysis = market segmentation analyses to describe
and evaluate the potential profitability, sustainability, accessibility,
and size of various potential segments.
- The segment analysis in the B2C market with demographic
characteristics, geographic location, selected psychographic, and
past behavior toward the descriptors help firms identify potentially
attractive markets.
 Allows the company to select its target market and understand
its characteristics, behavior, and desires in the firm’s product
category.
©2006 Prentice Hall
E-Marketing 4/E
Judy Strauss, Adel I. El-Ansary, and Raymond Frost
Chapter 8: Segmentation & Targeting Strategies
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8-1
"Marketers are hunters -- following the tracks of
consumers and scattering promotional bait to lure
elusive dollars out of hiding places,"
Jim Nail, senior analyst in Media &
Entertainment Research.
"Email turns marketers into herders: once they trap
consumers, they must learn to tame and cultivate them
as ongoing sources of nourishment.“
http://www.forrester.com/ER/Press/Release/0,1769,256,FF.html
©2006 Prentice Hall
Chapter 8 Objectives
• After reading Chapter 8 you will be able to:
• Outline the characteristics of the three major
markets for e-business.
• Explain why and how e-marketers use market
segmentation to reach online customers.
• List the most commonly used market segmentation
bases and variables.
• Outline five types of usage segments and their
characteristics.
• Describe the four coverage strategies e-marketers
can use to target online customers.
©2006 Prentice Hall
8-2
1-800-Flowers
• Utilized data mining software to identify
customer segments for better targeting.
• As a result of segmentation and targeting
strategies, customer retention increased by
15% and sales by 13.8% in 2003.
• Web site attracted 13.1 million new
customers and the repeat order rate
increased to 43%.
• Why do you think better segmentation and
targeting lead to reduced phone time and
lower costs?
©2006 Prentice Hall
8-3
Segmentation & Targeting Overview
• Marketing segmentation is the process of
grouping individuals or businesses, according
to use, consumption or benefits of a product or
service.
• Targeting is the process of selecting market
segments that are most attractive to the firm.
©2006 Prentice Hall
8-4
Sources, Databases, and Strategy: Tier 1 Strategies
©2006 Prentice Hall
Three Basic Markets
• Business Market
• Your customers are businesses (B2B)
• FedEX
• Government Market
• Your customer is/are government(s)
• US Government is the world’s largest buyer ($200 billion
per year)
• Contracts
• Consumer Market
• Your customer is an individual consumer
©2006 Prentice Hall
8-5
eCommerce Business Models
• B2B
• Business to Business
• B2C
• Business to Consumer
• C2C
• Consumer to Consumer
• G2C
• Government to
Constituent
• G2G
• Government to
Government
©2006 Prentice Hall
• C2G
• Constituent to
Government
• G2B
• Government to Business
• B2G
• Business to Government
• C2B
• Consumer to Business
Segmentation Bases
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Geographic location.
Demographics.
Psychographics.
Behavior with regard to the product.
Companies can combines bases, such as
geodemographics (geography and
demographics).
©2006 Prentice Hall
8-6
Segmentation Bases and Examples of Related Variables
Bases
Geographics
Demographics Psychographics Behavior
Identifying /
Profiling
Variable
Examples
City
County
State
Region
Country
Age
Income
Gender
Education
Ethnicity
http://www.census.gov/
©2006 Prentice Hall
Activities
Interests
Opinions
Personality
Values
Benefits
sought
Usage level
Brand
loyalty
User status
Geographic Segments
• Product distribution strategy is a driving force behind
geographic segmentation.
• Companies want to reach only customers in countries where it distributes
products.
• Firms offering services online will only sell to geographic areas where
they can provide customer service.
• Companies must examine the proportion of Net users in its selected
geographic targets before deciding to serve the Web community.
• Countries may be segmented based on Internet usage.
• U.S. has 186 million users.
• China has 95.6 million users.
• Japan has 77.9 million users.
• Geographic markets may also be evaluated by infrastructure
variables.
• Language spoken may also be a variable.
©2006 Prentice Hall
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Top Internet Languages
Dutch, 1.8%
Russian, 2.5%
Other, 5.2%
Italian, 3.3%
Portuguese, 3.5%
English, 35.8%
French, 3.8%
Korean, 4.1%
German, 7.3%
Spanish, 9.0%
Chinese, 14.1%
Japanese, 9.6%
©2006 Prentice Hall
8-8
©2006 Prentice Hall
Posadas:
• The leading hotel chain in Mexico,
• Targets tourists in Mexican and United States markets.
• Focuses heavily on the U. S. market and built its first site for the United
States because it recognized that Internet penetration was much higher.
Fiesta Americana Site in Spanish, English and Porteguese Source: www.posadas.com
©2006 Prentice Hall
Demographic Segments
• In developed nations, users are much like the
mainstream population demographically.
• Three market segments are of great interest to
e-marketers.
• Millenials
• Ethnic groups
• Influentials
©2006 Prentice Hall
8-9
Generational Groups
in our Working Populations
Year Born
Current Age
Matures
1920-1940
68-88
Boomers
1940-1960
48-68
Generation X 1960-1980
28-48
Millennials
?-28
©2006 Prentice Hall
1980-200?
Millenials
• Of those born between 1979 and 1994, over 75% use
the Internet.
• The majority of our college students (age 28 and younger)
• They grew up with the Internet.
• 80% have cell phones and 36% use text messaging.
• Most have broadband for downloading music and
watching videos online.
• This group is a proving ground for the future.
• Lots of research papers on Millennial loaded in Blackboard
©2006 Prentice Hall
8-10
Ethnic Groups
• 59% of Hispanics use the Internet; 55% use the
Spanish language online.
• African Americans have 43% rate of adoption
and tend to be younger, more highly educated
and more affluent than African Americans not
using the Internet.
• More than half of Chinese Americans have
Internet access and high purchasing power.
©2006 Prentice Hall
8-11
Influentials
• Influentials are individuals who influence
others.
• Represent 10% of the population and 15%
of Internet users.
• They serve as opinion leaders for the rest
of the population.
• Marketing multipliers
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8-12
Psychographic Segments
• User psychographics include:
• Personality:
• Values:
Traits (other-oriented / self-oriented)
and habits,
Deeply held convictions (religious beliefs),
• Lifestyle:
• Activities:
Non-product-related behavior
(playing sports or eating out),
• Interests:
• Opinions:
Attitudes and beliefs people hold.
©2006 Prentice Hall
Interest Communities
• Interest communities attract like-minded
individuals who post comments on Web sites or
send e-mails to other members.
• Exhibit 8.7 lists ten important types of online
communities. (page 202)
• There are 3 ways to target online communities.
• Provide online chats and events.
• Advertise on another firm’s community site.
• Join the community and post as a member (stealth
or guerilla marketing).
©2006 Prentice Hall
8-14
Attitudes and Behaviors
• Some marketers believe that a segment’s
attitudes toward technology determine buying
behavior.
• Forrester Research measures attitudes toward
technology with a system called
Technographics™.
• Their findings provide a number of clues about
online purchasing behavior.
©2006 Prentice Hall
8-15
Attitudes Toward Technology
Examples of the 10 consumer technographics segments in
the United States:
Fast Forwards
the biggest users of business software
New Age Nurturers
the most ignored group of technology consumers
Gadget Grabbers
buy low cost, high-tech toys such as Nintendo
Traditionalists
use VCRs but not much more
Media Junkies
love TV and are early adopters of satellite television
©2006 Prentice Hall
Attitudes Toward Technology
Examples of the 10 consumer technographics segments in
the United States:
Mouse Potatoes
Love interactive entertainment on the PC
Techno-Strivers
Highest proportion of PC ownership among lowincome groups
Digital Hopefuls
Strong potential markets for low cost PCS
Hand shakers
Don’t uses technology for business (dinosaurs)
Sidelined Citizens
Technology laggards
©2006 Prentice Hall
Motivation for Using Internet
Technology
Optimists
52%
Technology
Pessimists
48%
Career
Family
Entertainment
Fast Forwards
12%
New Age
Nurturers
8%
Mouse Potatoes
9%
Low Income Techno-Strivers
(<$40,000)
7%
Digital Hopefuls
7%
Gadget Grabbers
9%
High
Income
Traditionalists
8%
Media Junkies
5%
High
Income
(>$40,000)
Low Income
Handshakers
7%
Sidelined Citizens 28%
Consumer Technographic Segments and Proportion in the United States
Source:
from Modahl (2000)
©2006
PrenticeAdapted
Hall
Behavior Segments
• Two common segmentation variables are
benefits sought and product usage.
• Online shopper can be bargain hunters or
convenience shoppers.
• Marketers often segment by light, medium and
heavy product usage.
©2006 Prentice Hall
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Usage Segments
• Marketers can segment according to how
consumers use the Internet.
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Home vs. work access
Access speed
Preferred receiving device
Time spent online
Industry specific usage
©2006 Prentice Hall
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Home and Work Access
Segmentation by access point is important because the needs are
different:
• Home:
• 80% of home users have slow connection speeds, making large graphics
and other files undesirable on sites frequented from home.
• A small but growing number of households have more than one PC and
are networking them within the home.
• Work:
• 42 million U.S. users access the Internet from work.
• People spend nearly twice as much overall time online than those who
access only from home.
• The audiences in all countries are much more heavily male.
©2006 Prentice Hall
Home and Work Access
• The most popular sites for U.S. at-work access follow:
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Telecom or Internet services (29.7 million visitors)
Finance, insurance, or investment (21.2 million visitors)
Travel (18.4 million visitors)
Corporate information (14.6 million visitors)
Special occasions such as greeting cards, gifts or flowers (14.1
million visitors)
• E-marketing strategists can use such information to
target their Web site offerings.
• Strategies might include special products, the language
in sites, and the amount of interactivity and multimedia
possible for work users.
©2006 Prentice Hall
Access Speed
• The type of Internet connection + the information
receiving appliance both affect usage behavior. Faster
connections at work allow users to receive larger data
files filled with multimedia content.
• 20% of the U.S. population has broadband Internet access from
home (21.9 million).
• 25.5 million office broadband users (60%).
• Home users:
• Are connected through ISPs offering cable modems and DSL
(satellite).
• Cost is still a barrier for many home users.
• Broadband penetration is nearly high enough to reach the critical
mass needed for true video and audio program delivery on
demand. This will certainly change the face of the Web.
©2006 Prentice Hall
Access Speed
• Broadband users operate differently from narrowband
users online. They:
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Play audio CD’s (75%),
Play online games (60%),
Download music (48%),
Watch streaming video or DVD’s (67%).
Mobile wireless users have very small screens and slow access
speed.
• About 200 million wireless devices were in use during
2001 = hard for marketers to resist!
• 13.1 million PDAs (personal digital assistants)
• The majority of the other 187 million devices are cell phones.
©2006 Prentice Hall
2002 Predicted Revenue Proportion for Data Type on Mobile Devices Worldwide Source: Fichter (2001)
Activity
Data
Service %
Activity
Data Service
%
E-mail, Fax, Voice mail
30
Mobile office
7
Online banking
15
Telemetry
5
Location dependent
information services
15
Games
3
Internet access/surf
13
Payments
1
simple info services
10
Telematics (in car)
1
©2006 Prentice Hall
Time Online
• Although the Internet has been growing, not all the people with
access are as active logging on as others.
• Six user segments based on the active user’s time online, pages,
domains accessed, and the amount of time spent per Web page:
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Simplifiers want end-to-end convenience.
Surfers want what’s new.
Connectors are novelty seekers.
Bargainers look for deals..
Routiners want something special..
Sportsters desire highly interactive content.
• These segments are likely to overlap because people use the
Internet for different purposes at different times—such as research,
e-mail, chat, work, and so forth.
©2006 Prentice Hall
User Segments Based on Online
Viewing Behavior
Segment
Important Facts
Online Time
7 hours per month.
Simplifiers
50% of total online purchases.
49% have been online for over five years.
Longest online tenure.
Surfers
8% of active user population.
32% of online time usage—far more than
any other segment.
More than the average of 9.8 hours
per month.
Connectors
36% active user population.
40% have been online under two years.
42% have made online purchases.
Less than the average of 9.8 per
month.
Bargainers
8% of active user population.
52% are eBay users.
Less than the average of 9.8 per
month.
Routiners
6% have purchased online.
They visit fewer domains.
9.8 hours per month.
Sportsters
4% of active user population.
7.1 hours per month.
McKinsey and comScore Media Matrix data
©2006 Prentice Hall
8-19
Targeting Online Customers
• Marketers must select the best potential segments for targeting:
• Review the market opportunity analysis,
• Consider findings from the SWOT analysis,
• Look for the best fit between the market environment and the firm’s
expertise and resources.
• Sometimes it is easy to discover a new segment and experiment with
offers that might appeal to this group
• Other times it is a lengthy and thorough process.
 To be attractive, an online segment must be accessible through the
Internet, sizable, growing, and hold great potential for profit.
©2006 Prentice Hall
Targeting Online Customers
• E-marketers may select from among 4 different
approaches for a targeting strategy.
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Mass marketing or undifferentiated targeting
Multisegment marketing
Niche marketing
Micromarketing
• The Internet’s big promise is individualized
targeting.
©2006 Prentice Hall
8-20
Differently “Abled”
(not in this text but important enough to mention)
= “The Internet’s next niche” :
• Spend 20 more hours a week online than other
Internet users.
• Fifty-four million U.S. consumers have disabilities,
health problems, or handicaps that prevent full
participation in work, school, or housework.
• Exists Web accessibility guidelines to accommodate
disabled people.
• BUT this segment is a demographically diverse group,
and tend to have low incomes, making them difficult
and undesirable targets for some firms.
©2006 Prentice Hall
Differently Abled
• Why do marketers target this segment, despite
its low income and accessibility challenges?
• Social values of full accessibility and potential legal
action.
• To draw a larger consumer audience.
• The huge baby boomer group is headed for some of
these problems as they reach age 65 and older.
• This market can be a productive target: The 2000
Paralympics Games from Australia experienced good
traffic.
• Most importantly, a market consisting of 54 million
Americans has a great deal of purchasing power.
©2006 Prentice Hall