©2006 Prentice Hall3-6 Seven-Step E-Marketing Plan 1.Situation analysis 2.E-Marketing strategic planning 3.Plan objectives 4.E-Marketing strategy 5.Implementation

©2006 Prentice Hall 3-6

Seven-Step E-Marketing Plan

1. Situation analysis

2. E-Marketing strategic planning

3. Plan objectives

4. E-Marketing strategy

5. Implementation plan

6. Budget

7. Evaluation plan


Step 2: E-Marketing Strategic Planning

• Market and product strategies, called Tier 1 tasks or strategies, are outcomes of strategic planning.– Segmentation– Targeting– Differentiation– Positioning

• Marketers conduct analyses to determine strategies.– Market opportunity analysis

o Demand analysiso Segment analysiso Supply analysis

©2006 Prentice Hall

Segmentation

Targeting

Value

Differentiation

CRM/PRM

Positioning

Communication

Distribution

Offer

E-MarketingStrategy

Tier 2tasks

Tier 1tasks

Exhibit 3 - 1 Formulating E-Marketing Strategy in Two Tiers


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.


E-Marketing 4/EJudy Strauss, Adel I. El-Ansary, and Raymond Frost

Chapter 8: Segmentation & Targeting Strategies


"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 herdsmen: once they trap consumers, they must learn to tame and cultivate them as ongoing sources of nourishment."


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.


– 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?

1-800-Flowers


Segmentation & Targeting Overview

• Marketing segmentation is the process of grouping individuals or businesses, according to the use, consumption or benefits of a product or service.

• Targeting is the process of selecting market segments that are most attractive to the firm.– Criteria to select segments: accessibility,

profitability, growth.


S

D

S

Internal Data Secondary Data Primary Data Information: consumer behavior, competitive intelligence

Product Database

Customer/ Prospect Base

Other Data/ Information

*Marketing Knowledge*

Tier 1 Segmentation Targeting Differentiation Positioning

Tier 2 Marketing Mix CRM

Performance Metrics

Sources, Databases, and Strategy: Tier 1 Strategies


Three Basic Markets

• Business Market– Your customers are businesses (B2B)

o FedEX

• Government Market– Your customer is/are government(s)

o US Government is the world’s largest buyer ($200 billion per year)

o Contracts

• Consumer Market– Your customer is an individual consumer


eCommerce Business Models ToInitiated by

Business Consumer Government

Business B2Bwww.acnielsen.comwww.ideafactory.com www.acevn.com Asia commercial e-business in Vietnam

B2Cwww.vinabook.com www.target.com.au

B2Gwww.borensteingroup.com: Agencies and Counselors that support Public Sector IT Marketers

Consumer C2Bwww.vietnamworks.com

C2Cwww.5giay.comwww.ebay.com

C2Gwww.govworks.gov

Government G2Bwww.vcci.com.vn Vietnam Chamber of Commerce and Industry

G2Cwww.ato.gov.au Australian Taxation Office

G2Gwww.govonesolutions.com


• Geographic location.

• Demographics.

• Psychographics.

• Behavior with regard to the product.

• Companies can combines bases, such as geodemographics (geography and demographics).

Segmentation Bases


Bases Geographics Demographics Psychographics Behavior

Identifying /ProfilingVariableExamples

CityCountyStateRegionCountry

AgeIncomeGenderEducationEthnicity

ActivitiesInterestsOpinionsPersonalityValues

Benefits soughtUsage levelBrand loyaltyUser status

Segmentation Bases and Examples of Related Variables


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: computer and Internet adoption rate, telecom services, social uses of and receptivity to IT.

• Language spoken may also be a variable.



• 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 (online opinion leaders)

Demographic Segments


Generational Groupsin our Working Populations

Year Born Current Age

Matures 1920-1940 Over 68

Boomers 1940-1960 48-68

Generation X 1960-1980 26-48

Millennials 1980-2000 8-28


Millenials• Of those born between 1979 and 1994, over

75% use the Internet. – The majority of college students use email, instant

messaging and keep 5-6 chat windows at a time.

• 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 real challenge, however, it is proving ground for the future.


Ethnic Groups• In America, Hispanics, African-Americans, and Asia

ethnic groups are important online market.– 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.

• In Singapore, Chinese form 75.2%, Malays form 13.6%, Indians form 8.8%, while Eurasians and other groups form 2.4%


Influentials

• Influentials are individuals who influence others -> a highly attractive target market worthy of focus.

• Represent 10% of the population and 15% of Internet users.

• They serve as opinion leaders for the rest of the population.

• According to Washington Post study, influentials research travel destinations (86%) products (82%), and access the web at least once a day.


Psychographic Segments

• User psychographics include:– Personality: Traits (other-oriented / self-oriented)

and habits, – Values: Deeply held convictions (religious beliefs),

– Lifestyle: Non-product-related behavior– Activities: (playing sports or eating out),

– Interests: Attitudes and beliefs people hold.– Opinions:


Interest Communities

• Interest communities attract like-minded individuals who post comments on Web sites or send e-mails to other members.

• Ten important types of online communities (p. 202)• There are 3 ways to target online communities.

– Provide chat rooms, discussion groups, bulletin and online events.

– Advertise on another firm’s community site.– Join the community and post as a member (stealth or

guerilla marketing – can lead to a backlash if discovered)


• 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.

Attitudes and Behaviors


Technographics segmentsFast 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

Mouse Potatoes Love interactive entertainment on the PC

Techno-StriversHighest proportion of PC ownership among low-income groups

Digital Hopefuls Strong potential markets for low cost PCS

Hand shakers Don’t uses technology for business (dinosaurs)

Sidelined Citizens Technology laggards

Findings• Older users tend to have a more negative attitude toward

technology• Attitudes of older users may be less negative if they use a

PC at work of live in large cities• Men tend to be more optimistic• 40% of high income citizens are optimistic• College students or young family are optimistic

-> high-income optimists shop online twice more than others

-> early adopters are high income technology optimist

Starbucks used Technographics and discovered that 47% of its customers are early adopters -> Starbucks will likely have good success selling online.


• 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.

Behavior Segments


Usage Segments

• Marketers can segment according to how consumers use the Internet.– Home vs. work access– Access speed– Preferred receiving device– Time spent online– Industry specific usage


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.


Home and Work Access

• The most popular sites for U.S. at-work access follow:– 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.


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.


Access Speed

• Broadband users operate differently from narrowband users online. They:– 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.


ActivityData

Service % ActivityData 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

2002 Predicted Revenue Proportion for Data Type on Mobile Devices Worldwide Source: Fichter (2001)


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:– 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.


User Segments Based on Online Viewing Behavior

Segment Important Facts Online Time

Simplifiers50% of total online purchases.49% have been online for over five years. Longest online tenure.

7 hours per month.

Surfers8% 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.

Connectors36% active user population.40% have been online under two years.42% have made online purchases.

Less than the average of 9.8 per month.

Bargainers8% of active user population.52% are eBay users.

Less than the average of 9.8 per month.

Routiners6% 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


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.


Targeting Online Customers

• E-marketers may select from among 4 different approaches for a targeting strategy.– Mass marketing or undifferentiated targeting– Multisegment marketing– Niche marketing– Micromarketing

• The Internet’s big promise is individualized targeting.


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.


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.

Documents

©2006 Prentice Hall3-6 Seven-Step E-Marketing Plan 1.Situation analysis 2.E-Marketing strategic planning 3.Plan objectives 4.E-Marketing strategy 5.Implementation