1  2007 Thomson South-Western The Fundamental Marcom Decisions: Targeting, Positioning, Objective Setting, and Budgeting Chapter Four

2 Chapter Four Objectives Discuss the importance of targeting marketing communications to specific consumer groups and realize that the targeting decision is the initial and most fundamental of all marcom decisions. Understand the role of behaviorgraphics in targeting consumer groups.

3 Chapter Four Objectives Describe the nature of psychographic targeting and the VALS system. Appreciate major demographic developments such as changes in the age structure of the population and ethnic population growth.

4 Chapter Four Objectives Explain the meaning of geodemographics and understand the role for this form of targeting. Recognize that any single characteristic of consumers—whether their age, ethnicity, or income level—likely is not a sufficient basis alone for sophisticated marcom targeting.

5 Targeting Customers and Prospects Targeting specific audiences can be considered the starting point for all marcom decisions. Targeting allows marketing communicators to more precisely deliver their messages and prevent wasted coverage to people falling outside the targeted market.

6 Consumer Characteristics Characteristics that singularly or in combination influence what people consume and how they respond to marketing communications. Psychographics Demographics Geodemographics Behaviorgraphics

7 Classification of Four General Targeting Characteristics

8 Behaviorgraphic Targeting Based on how people behave (with respect to a particular product category or class of related products) rather than in terms of their attitude and lifestyles, their age, income, or ethnicity, or where they live. The best predictor of one’s future behavior is his or her past behavior.

9 Online Behavioral Targeting “Audience Management Systems” track Internet users’ surfing behavior in order to target them with specific advertisements.

10 Psychographic Targeting Captures aspects of consumers’ psychological make-ups and lifestyles including their attitudes, values, and motivations as they relate to buying behavior in a particular product category.

11 Illustrative Statements Used in a Banking-Related Psychographic Study

12 Four Psychographic Segments of Banking Behaviors “Worried Traditionalists” “Bank Loyalists” “Secured Investors” “Thrifty Bankers”

13 Yankelovich MindBase Segments: 8 general segments and 32 specific subsegments

14 The VALS™ Framework

15 VALS™ Innovators Motivated by ideals, achievement, and self- expression Possess both high income and self-esteem Possess both high income and self-esteem Change leaders most receptive to new ideas and technologies. Change leaders most receptive to new ideas and technologies. Active consumers: buy upscale products and services.Active consumers: buy upscale products and services.

16 VALS™ Thinkers Motivated by Ideals n Mature, satisfied, comfortable, and reflective. n Well-educated and informed. n Moderate respect for the status quo, but will consider new ideas. n Practical consumers: look for durability, function, and value.

17 VALS™ Believers Motivated by Ideals Motivated by Ideals Conservative, conventional people with concrete beliefs.Conservative, conventional people with concrete beliefs. Deeply rooted moral codes.Deeply rooted moral codes. Follow established routines organized around home and community.Follow established routines organized around home and community. Favor American products and are loyal customers.Favor American products and are loyal customers.

18 VALS™Achievers Motivated by their desire for achievement Motivated by their desire for achievement Goal-oriented lifestyles and deep commitment to career and family. Goal-oriented lifestyles and deep commitment to career and family. Live conventional lives, respect authority and the status quo.Live conventional lives, respect authority and the status quo. Image is important and they value established, prestige products that demonstrate their success.Image is important and they value established, prestige products that demonstrate their success.

19 VALS™ Strivers Motivated by achievement Trendy and fun loving.Trendy and fun loving. Concerned about the opinions of others.Concerned about the opinions of others. Money defines success.Money defines success. Active consumers who are as impulsive as their financial circumstances will allow.Active consumers who are as impulsive as their financial circumstances will allow.

20 VALS™ Experiencers Motivated by self-expression Young, enthusiastic, compulsive consumersYoung, enthusiastic, compulsive consumers Seek variety, excitement, and new opportunities.Seek variety, excitement, and new opportunities. Avid consumers who spend a comparatively high proportion of their income on fashion, entertainment, and socializing.Avid consumers who spend a comparatively high proportion of their income on fashion, entertainment, and socializing.

21 VALS™ Makers Motivated by self-expression Motivated by self-expression Express themselves and experience the world by working on it.Express themselves and experience the world by working on it. Practical people who have constructive skills and value self sufficiency.Practical people who have constructive skills and value self sufficiency. Buy basic products and prefer value to luxury.Buy basic products and prefer value to luxury.

22 VALS™ Survivors No strong primary motivation Few resourcesFew resources Primarily concerned with safety and securityPrimarily concerned with safety and security Cautious consumersCautious consumers Loyal to favorite brands, especially if they can purchase at a discount.Loyal to favorite brands, especially if they can purchase at a discount.

23 Geodemographic Targeting Based on the premise that consumers who reside within geographic clusters such as zip codes or neighborhoods also share demographic and lifestyle similarities.

24 Geodemographic Targeting Several companies delineate geographical areas into common groups including: –CACI(ACORN) –Donnelly Marketing (Cluster Plus) –National Decision Systems (Vision) –Experian (MOSAIC) –Claritas (PRIZM ) NE

25 Claritas PRIZM NE PRIZM=Potential Rating Index by Zip Markets and NE=New Evolution of their original system.

26 Claritas PRIZM NE : a collection of young urbanites who represent the nation’s most liberal lifestyles. Blend of young singles and couples, students and professionals and many racial backgrounds. disproportionately quick to attend the latest movie, frequent the newest nightclub or adopt the latest laptop. : represents those households at the middle of the U.S. socioeconomic ladder. Predominantly young, middle-class, and married with children. : eclectic lifestyles, including a mix of young singles, recently divorced and single parents who have moved to older, inner-ring suburbs.

27 Demographic Targeting Marcom practitioners are mainly concerned with: –the age structure of the population –the changing household composition of the U.S. –ethnic population developments

28 World Population Expected to grow to approximately 8 billion people by the year 2025 and 9 billion by Both China and India’s populations dramatically exceed that of the United States.

29 World’s 25 Largest Countries as of 2004

30 Aspects of the U.S. Population 293 million estimated population Ancestral diversity, with just over 7% referring to themselves as “Americans,” up from 5% in Relentless aging of the population

31 Largest Ancestral Group of U.S. Residents

32 The Changing Age Structure The U.S. population is aging relentlessly. Median Age:

33 Effects of the Baby Boom 1.The original baby boomers created a mini baby boom as they reached childbearing age. 2.Due to a low birthrate from the mid 1960s through the 1970s, there are now fewer young adults (ages 20 to 34) than in prior generations. 3.The number of middle-agers (35-54) has increased dramatically, totaling 85 million in 2005.

34 Marketing to Children and Teenagers Group of Americans aged 19 and under has fallen dramatically from 40 percent of the population in 1965 to 28 percent of the population in million occupants aged 19 and younger. “Kids” defined as ages 4 to 12. Spending for this age group totals more than $24 billion per year.

35 Preschoolers Preschool age children, age 5 or younger More babies were born in the U.S. in 1990 (4.2 million) than at any time since the baby boom of Toys, furniture items, and other products and services appealing to the family have increased substantially in recent years.

36 Demographic Targeting: Marketing to Preschoolers

37 Elementary School Age Children Ages 6 to 11 Children directly influence parents’ choice of clothing and toys, and even brands of toothpaste and food products.

38 Tweens Children between the ages of 8 and 12: a category defined as not quite kids and not yet teenagers. Average annual income of $22.68, or $23 billion annually.

39 Teenagers Over 25 million 13 to 19-year olds in the United States Generation Y 1982 to 1994: in 2005, 50 million Americans between 11 and 23. Group spends over $150 billion annually. Highly conformist, narcissistic, and fickle consumers. It is said that teenagers don’t like being “marketed to.” Use the Internet heavily.