1-4 segmenting targeted audiences - marketing plan...
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Analysis of the current situation
c h a p t e r o n e
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Marketing Plan NOW danny abramovich
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Chapter 1out of 4 Segmenting
Targeted Audiences
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1.4 Segmenting targeted audiences
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Segmenting is dividing a market into distinct groupswith distinct needs, characteristics or behaviors.
a n a l y s i s o f t h e c u r r e n t s i t u a t i o n
1.4 Segmenting targeted audiences
Consumer Behavior is all about…Being & Having!
Behaving = BeingBehaving = Having
“Tell me what you buy and how you buy and I (as a marketing specialist) will tell you who you are!”
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Segmenting is dividing a market into distinct groupswith distinct needs, characteristics or behaviors.
Targeting is selecting those market segments that represent most value.“Most value” for the customer means that your offer has a high correlation with their needs (high level of involvement).“Most value” for your business means that these customers tend to loyalty with a low level of complains.
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1.4 Segmenting targeted audiences
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1.4 Segmenting targeted audiences
Demand in the market
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1.4 Segmenting targeted audiences
Segmenting
S-1S-2
S-3
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1.4 Segmenting targeted audiences
What is a relevant segment? It has to be…
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Marketing plan DIY
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1.4 Segmenting targeted audiences
Segmenting
S-1S-2
S-3
- Measurable - size, purchasing power.- Accessible - can be reached and served. - Differentiable - can respond differently.- Actionable - effective programs
can be developed.
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1.4 Segmenting targeted audiences
Segment(s) providing most value
S-1S-2
S-3
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1.4 Segmenting targeted audiencesFour Segmentation Strategies
üP3±P3±P3P3
lP2±P2±P2±±±P2
P1±P1±P1P1
S3S2S1S3S2S1S3S2S1S3S2S1
Diff. P’s per ind. S
Diff. P’s to same S
Diff. P’s to diff. S’s
Same P to diff. S’s
MicroNicheSegmentedMass
P = product/ service/ brand; S = segment
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1.4 Segmenting targeted audiences
How to segment? Here are five methods!
- Segmenting “by the book”
- Segmenting by needs
- Segmenting by loyalty
- Segmenting by mapping
- Segmenting by using supportive models
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1.4 Segmenting targeted audiences
- “by the book”
- by needs
- by loyalty
- by mapping
- by using supportive models
118 countries
152 diff. items
500 regular suppliers
1954 est.
30,000 outlets
50,000,0000 daily meals
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What is segmenting by the book?
The basic attributes that are recommended in the marketing books, and are part of our common reasoning, are never ending lists based on a statistical approach!
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1.4 Segmenting targeted audiences
Segmenting by the book!
Classification: Private, industrial, gov, org…Geography: Trade areas, regional climate… Demography: Age, gender, life cycle…Sociography: Income, education, religion…Psychography: Personality, values…Technography: Technological preference…
It was claimed that the above are never ending lists!Let’s have a closer look at demographic attributes…
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1.4 Segmenting targeted audiences
Segmenting by demographic attributes4age
Generation Y (Technology boom, terrorism)- fashion & style are important to them4ages under 28Generation X (Energy crisis, environmentalism)- careful shoppers looking for bargains4ages 29-48Baby Boomers (Booming economy 50’s-60’s)- wants multiple choices and to feel in control4ages 49-66Silent Generation (Rebuilding economy post WWII)- great savers so now it’s their turn4ages 66-82War Generation (WWII)- feeling guilt if they are wasteful4ages over 83
upda
ted
2009
by
DA
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1.4 Segmenting targeted audiences
Segmenting by demographic attributes4gender
- Connecting your female consumers toeach other connects them to your brand.
- If you’re marketing to one of her lives,you are missing all the others.
- If she has to ask, it’s too late. - Market to her peripheral vision and
she will see you in a whole new light.- This generation of female consumers
will lead you to the next.Marketing to Women
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1.4 Segmenting targeted audiences
Segmenting by demographic attributes4life cycle
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Segmenting “by the book” ü
- Segmenting by needs
- Segmenting by loyalty
- Segmenting by mapping
- Segmenting by using supportive models
1.4 Segmenting targeted audiences
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What is segmenting by needs?
Needs is a key word in understanding consumer behavior. If we can segment and target by the real needs of the individual who purchases expensive branded shoes or becomes a member of a fitness club, we can better profit from understanding this behavioral science called marketing!
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1.4 Segmenting targeted audiences
Segmenting by needs!
Approaching customers and re-phrasing them the question “why do buy this product or service?”being prepared to ask “why?” once you have got an answer to the first question.
Approaching those that are involved in the act of purchasing of your customers and re-phrasing them the same questions, but who are they?
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1.4 Segmenting targeted audiences
Segmenting by needs!
Those that are involved in the act of purchasing of your customers can also be approach by you
info gatherer
influencer
decider
purchaser
user
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1.4 Segmenting targeted audiences
Segmenting by needs!
Example: The mother is abroad on a business trip - she (info gatherer & influencer) asks her husband if he can buy a toy for their daughter - he (decider) asked his mother (purchaser) to buy a doll for her 5- year old grandchild (user).
info gatherer
influencer
decider
purchaser
user
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1.4 Segmenting targeted audiences
Segmenting by needs!There are several models illustrating the basic set of human needs. As marketing is a behavioral science, this issue is a major one - understanding or developing present and forecasted needs.
Abraham Maslow's “hierarchy of needs”
is a theory in psychology (1943)
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1.4 Segmenting targeted audiences
Segmenting by needs!
Internet Behavioral Segmentation.Discussion…
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1.4 Segmenting targeted audiences
Segmenting “by the book” ü
Segmenting by needs ü
- Segmenting by loyalty
- Segmenting by mapping
- Segmenting by using supportive models
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What is segmenting by loyalty?
When there is a potential to develop loyalty (a repetitive need can be fulfilled) there is a need to distinguish among customers upon their level of loyalty. Furthermore, if management favorites technological tools, it is more likely to succeed to segment by loyalty!
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When does loyalty start?
A customer is a person with money to buy, authority to buy & need - but these conditions represent only the potential to buy.
A consumer is a person that has activated the potential to buy.
But how can we define various levels of loyal consumers?
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Segmenting by loyaltyPyramid of loyalty!
Stake-holder
“Friend”
Recommending consumer
Loyal consumer
Return consumer
Consumer
Customer
The right to become a customer
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1.4 Segmenting targeted audiences
Segmenting by loyalty!
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Segmenting “by the book” ü
Segmenting by needs ü
Segmenting by loyaltyü
- Segmenting by mapping
- Segmenting by using supportive models
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What is segmenting by mapping?
Sometimes using a “trial & error learning method” (active experimentation) can lead to breakthrough findings. This may happen when moving from one known rule to another in the hope to locate new distinct groups to target along the map.How can we develop such a functional map?
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1.4 Segmenting targeted audiences
Segmenting by mapping!
Let’s take an example of an online jeans store > www.truejeans.comInitially, we are interested to map those who might be interested to purchase jeans online, have a credit card, are of a certain age group, gender, etc.
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1.4 Segmenting targeted audiences
Segmenting by mapping!
Peoplewho wear jeans
No Internet Internet
Credit card
18-30
31-40
men
No credit card
>45
women
oversize
İdeal size
We located a segment to target: Oversized women, aged 31-40, holding a credit card.Comment:You should use basic attributes from “Segmenting by the Book” (method #1/5).
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1.4 Segmenting targeted audiences
Segmenting by mapping!
We located two segments to target when promoting incoming tourism to Lyon, France.
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1.4 Segmenting targeted audiences
Segmenting by mapping can also clarify inter-relations between several targeted audiences.
It’s impossible to seize possible interaction among the segments in the table unless we can illustrate it as a map.
See next two slides.
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1.4 Segmenting targeted audiences
Segmenting by mapping!
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1.4 Segmenting targeted audiences
Segmenting by mapping!
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1.4 Segmenting targeted audiences
Segmenting “by the book” ü
Segmenting by needs ü
Segmenting by loyaltyü
Segmenting by mapping ü
- Segmenting by using supportive models
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Segmenting by using supportive modelsThere are few quantitative consumer marketing models that can facilitate segmentation with specific types of products & services. Let’s look at two of them:- Segmenting by diffusion of innovations- Segmenting by lifestyles
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1.4 Segmenting targeted audiences
Segmenting by using supportive models:Diffusion of innovations, Everett M. Rogers (1962)
What does this model come to show?The process by which an innovation is adapted over time among the potential target audiences within a market (originally referred to as “a social system”).
What type of business activity can this model support segmentation with? New ventures, new products/ services/ ideas, new brands.
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Segmenting by diffusion of innovations
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1.4 Segmenting targeted audiences
Segmenting by diffusion of innovationsWhen launching a new venture, product/ service/ idea or brand, the first two potential target audiences comprise some 15% of the market (mainly technological products were tested):- Innovators are venturesome typesthat enjoy being on the cutting edge.
- Early adapters are often leadersof opinion, visionaries.
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1.4 Segmenting targeted audiences
Segmenting by diffusion of innovationsAccording to Geoffrey A. Moore (1991), author of Crossing the Chasm: Marketing and selling high-tech products to mainstream customers, the most difficult step is making the transition between early adopters (visionaries) & early majority (pragmatists). This is the chasm (gap) that he refers to.
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1.4 Segmenting targeted audiences
Techies“Try it”
VisionariesMove ahead of
the heard
PragmatistsMove with the heard
ConservativesMove only when
necessary
SkepticsMove only when
there is no choice!
This is the chasm, that according to Moore, caused the high-tech bubble to explode in the late 1990’s - it’s all about the importance of segmenting targeted audiences!
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1.4 Segmenting targeted audiences
Segmenting by using supportive models:VALS (Values, Attitudes & Lifestyles) Stanford Research Institute - SRI (1970’s)
Does the following clarify what are VALS?- In your 20’s you should try it all,- In your 30’s you should figure out what you do best,- In your 40’s you make money at what you do best,- In your 50’s you just don’t “do”, it’s when you should
enjoy life. (no!)www.MarketingPlanNOW.com
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1.4 Segmenting targeted audiences
Segmenting by VALS (Values, Attitudes & Lifestyles)
What does this model come to show?A research method which psychologically categorizes consumers into eight lifestyle groups (psychographic segmentation).
What type of business activity can this model support segmentation with?Existing businesses wishing to expand into new niche markets.
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1.4 Segmenting targetedaudiencesSegmenting by Values, Attitudes & Lifestyles (VALS)
Comment:“Resources” = income &
education &self-confidence
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1.4 Segmenting targeted audiences
Thinkers - one example out of eightThese consumers are the high- resource group of those who are motivated by ideals. They are mature, responsible, well- educated professionals. Their leisure activities center on their homes, but they are well informed about what goes on in the world and are open to new ideas and social change. They have high incomes but are practical consumers and rational decision makers.
1 - descriptive phase
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1.4 Segmenting targeted audiences
Thinkers - one example out of eight- Estimated % of the population in a given country- Socioeconomic factors of this group- Typical neigbourhoods where this group lives- Consumer habits such as brand preferences- Mass communication preferences
2 - marketing orientation
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1.4 Segmenting targeted audiences
Segmenting “by the book” ü
Segmenting by needs ü
Segmenting by loyaltyü
Segmenting by mapping ü
Segmenting by using supportive models ü
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1.4 Segmenting targeted audiences
Ultimate goal: To segment by using two methods or more out of the proposed five
Segmentationby
supportive models
Segmentationby
mapping
Segmentationby
loyalty
Segmentationby
needs
Segmentationby
the book
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a n a l y s i s o f t h e c u r r e n t s i t u a t i o n
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