E-MARKETING/6ECHAPTER 8
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8-2CHAPTER 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.
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8-3CHAPTER 8 OBJECTIVES,
CONT.
Outline several types of Internet usage segments and their characteristics.
Describe two important coverage strategies e-marketers can use to target online customers.
Define differentiation and positioning and give examples of companies using them.
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Jim McCann started 1-800-Flowers as a traditional retailer in New York City in 1976.
In 1995, he extended the brand to the Internet and offer 24/7 worldwide delivery.
He used SAS data mining software to identify customer segments for better targeting. The software analyzed the clickstreams
and purchasing patterns of the firm’s 21 million customers.
THE 1-800-FLOWERS STORY
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8-6THE 1-800-FLOWERS STORY,
Cont.
1-800-Flowers can respond to the segment of one person and their purchasing patterns.
The Web site’s Facebook page has nearly 500,000 likes, nearly 14,000 people talking about the site, and over 20,000 Twitter followers.
Over half of its 4.6M online customers were repeated buyers.
Why do you think better segmentation and targeting lead to reduced phone time and lower costs?
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8-8SEGMENTATION &
TARGETING OVERVIEW
Marketing segmentation is the process of grouping individuals or businesses, according to use, consumption, or benefits of a product or service.
Market targeting is the process of selecting market segments that are most attractive to the firm. Targeting segments can include accessibility,
profitability and growth potential.
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8-9 THREE MARKETS
Three important markets sell to and buy from each other: Business Market: Marketing of products
for use in the business operation, as components, or for resale.
Government Market: Federal, state, county, city, and foreign governments.
Consumer Market: The consumer market involves marketing goods and services to end consumers.
Outline the characteristics of the three major markets for e-business.
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8-10THREE BASIC
MARKETS
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Marketers create segments to identify and reach the right people at the right time. Geographic location Demographics Psychographics Behavior with regard to the product
Companies can also combines bases, such as geodemographics (geography and demographics) (Claritas PRIZM System)
Marketers create segments based on variables that can be used to identify and reach the right people at the right time.
MARKET SEGMENTATION BASES AND VARIABLES
List the most commonly used market segmentation bases and variables.
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8-12GEOGRAPHIC SEGMENTS
Product distribution strategy is a driving force behind geographic segmentation.
Countries may be segmented based on Internet usage. China has 513M users. U.S. has 245M users.
Geographic markets may also be evaluated by rates of global Facebook and search engine adoption, language spoken, and other variables. Other countries have their own search engines
and social networks (Google.sa) Global markets require careful study
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8-13TOP INTERNET LANGUAGES
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In the early years, Internet users were young, college educated males with above average income.
In developed nations, users are much like the mainstream population demographically.
Two market segments are of great interest to e-marketers. Millennials Kids
DEMOGRAPHIC SEGMENTS
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DEMOGRAPHIC SEGMENTS, CONT.
MILLENNIALS
Born between 1979 & 1994, over 95% use the Internet.
“Confident, connected, and open to change.” Skillful at multitasking and able to handle the
information overload Heavy social networking users Sleep with cell phones Live on text messages The first generation to ignore marketers Media channels used
Text, Email, Facebook , iPods, P2P Networks and Virtual worlds
This group is a marketing proving ground for the future.
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DEMOGRAPHIC SEGMENTS, CONT.KIDS
Spending power of $40 Billion Under 11 year old segment jumped to 20
million in 2011 and increasing. Under 17 online group is increasing. Online activities include:
Online gaming Homework Music Videos Email Shopping Music and game downloads Instant messaging Chat rooms
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PSYCHOGRAPHIC SEGMENTS
User psychographics include: Personality (traits; other-oriented vs self-
oriented) Values deeply held principles (e.g. religious,
and green environment beliefs) Lifestyles & Activities refer to nonproduct-
specific behavior (e.g. playing sports or eating out)
Interests & Opinions are attitudes and beliefs people hold (e.g. Facebook is waste of time, others they could not exist without e-mail)
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8-18 INTEREST COMMUNITIES
10 important types of online communities (Exhibit 8.7), including Social networking, Six degrees of separation (LinkedIn)
Three ways to target online communities. Provide online discussion groups, bulletin
boards, and events or through company-owned social network pages.
Advertise on another firm’s community site. The firm can join the community and post as a
member. Advantages & disadvantages
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Attitudes – internal evaluations about people, products, and other objects
Behaviors – what a person physically does (talking…).
Psychographic information helps e-marketers define and describe market segments.
Most marketers believe that a segment’s attitudes toward technology can help determine buying behavior. Forrester Research measures attitudes toward
technology with a system called Technographics.
ATTITUDES AND BEHAVIORS
TECHNOGRAPHICS
Technographics – measures consumer and business attitudes toward technology by combining three variables optimistic or pessimistic toward technology Income level Primary motivation for going online Forrester identified 10 consumer
Technographics segments in the U.S. Results revealed that
Technology optimism declines with age Men are more optimistic about technology 40% of high income citizens are optimistic
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TECHNOGRAPHICS, CONT.
How these findings translate to online purchasing?1. high income optimists shop online while low-income
pessimistic not a good market 2. Early adopters: high-income technology optimists - first
consumers to shop online, while Laggards: low- income technology pessimists - last consumers to shop online.
3. Companies can use Technographics segments to profile consumers who shop online & where to allocate resources
Technographics survey results assist businesses with product development and launches, lead generations, cross-selling opportunities, customer service, and brand building.
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8-22 INFLUENTIALS
Influentials are individuals who are opinion leaders online. They include: Online journalists, such as Arianna Huffington
of The Huffington Post. Industry opinion leaders, such as Brian Solis,
author, speaker, analyst, and blogger. Influential social network authors, such as
Lady Gaga.
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Two common segmentation variables are benefits sought and product usage. Marketers using benefit segmentation
form groups of consumers based on the benefits they desire from product.
Product usage is applied to segmentation in many ways. Marketers often segment by light,
medium, and heavy product usage. Marketers can segment users as brand
loyal, loyal to a competitive product, switchers, and nonusers.
BEHAVIOR SEGMENTS
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BEHAVIOR SEGMENTS, CONT.
BENEFIT SEGMENTS
The Internet offers something for everyone (information, entertainment, news, etc.), thus, design products and services to meet those needs.
This approach is more practical than demographic one
To determine benefits sought, marketers can look at what people actually do online. Online activities: connect, create, learn, enjoy, trade
and give. Marketers also check popular websites
Microsoft, Google, and Yahoo! are consistently among the top Web sites in most countries.
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BEHAVIOR SEGMENTS, CONT.
USAGE SEGMENTS
Marketers can segment according to technology-use characteristics such as smartphone, tablet, or PC and which browser they use.
Mobile access 55% of cell phone owners connect to the
internet using smartphones. 90% of smartphone users have taken an
action, such as booking a hotel, after searching.
Outline the five types of Internet usage segments and their characteristics
BEHAVIOR SEGMENTS, CONT.
ONLINE ENGAGEMENT LEVEL
Customer Engagement Online: Users are actively participating by adding content for others to view.
Forrester categorizes social media users according to usage segments that are highly engaged online:
Creators who gather other people’s content, upload or share it.
Conversationalists Critics Collectors Joiners Spectators Inactives
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BEHAVIOR SEGMENTS, CONT.
INDUSTRY-SPECIFIC USAGE SEGMENTS
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TARGETING ONLINE CUSTOMERS
E-marketers select a targeting strategy. Which targets to serve online Which locations Other factors (catalog)
Two targeting strategies are well-suited for the internet. Niche marketing. Micromarketing (individualized
targeting).
Describe two important coverage strategies e-marketers can use to target online customers.
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TARGETING ONLINE CUSTOMERS, CONT.
Niche marketing Selecting one segment and develops one
or more marketing mixes to meet the needs of that segment (e.g. Amazon)
Can be risky because competitors may be drawn into profitable markets
Micromarketing (individualized targeting) When a firm tailors all of the marketing
mix to a very small number of people. The Internet’s big promise is individualized
targeting.
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AMA define a differential advantage1. A property of any product that is able to claim
a uniqueness over other products in its category. The differential advantage of a firm is often called its distinctive competences.
2. An advantage unique to an organization; an advantage extremely difficult to match by a competitor (economic definition).
Differentiation is what a company does to the product to convince the market that the product has specific advantages.
DIFFERENTIATION ONLINE
Define differentiation and positioning and give examples of companies using them.
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8-31DIFFERENTIATION
DIMENSIONS
A company can differentiate its offering along many dimensions, including: Product innovation Mass customization Service differentiation Customer relationship management (CRM) Personnel differentiation Channel differentiation Image differentiation Site atmospherics Efficient and timely order processing
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Positioning is a strategy to create a desired image for a company and its products in the minds of a chosen user segment.1. Determine the product category in which the brand
competes2. Determine whether the brand is differentiated in that
product category3. Tell the brand story from the consumer’s viewpoint
Examples of positioning bases online Product or service attributes Technology position Benefits position User category position Competitor position Integrator position
POSITIONING
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