1-4 Segmenting targeted audiences - Marketing Plan Nowmarketingplannow.com/userfiles/marketing/Image/pdf/1-4 segmentin… · 1.4 Segmenting targeted audiences > 1/5 What is segmenting

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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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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

www.MarketingPlanNOW.com

http://www.MarketingPlanNOW.com

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Segmenting is dividing a market into distinct groupswith distinct needs, characteristics or behaviors.



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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Demand in the market

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Segmenting

S-1S-2

S-3



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What is a relevant segment? It has to be…

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Marketing plan DIY



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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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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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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- “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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1.4 Segmenting targeted audiences > 1/5

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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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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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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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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Segmenting by demographic attributes4life cycle



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Segmenting “by the book” ü

- Segmenting by needs





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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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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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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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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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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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Internet Behavioral Segmentation.Discussion…

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Segmenting by needs ü






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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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Segmenting by loyalty!



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Segmenting by loyaltyü



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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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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.

http://www.truejeans.com

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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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We located two segments to target when promoting incoming tourism to Lyon, France.

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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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Segmenting by mapping ü


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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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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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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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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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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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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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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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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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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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Segmenting by mapping ü

Segmenting by using supportive models ü

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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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Documents

1-4 Segmenting targeted audiences - Marketing Plan Nowmarketingplannow.com/userfiles/marketing/Image/pdf/1-4 segmentin… · 1.4 Segmenting targeted audiences > 1/5 What is segmenting