1  2007 Thomson South-Western The Fundamental Marcom Decisions: Segmenting and Targeting Chapter Four

2 Segmenting & Targeting Goal: Targeting allows marketing communicators to more precisely deliver their messages and prevent wasted coverage to people falling outside the targeted market.

3 Consumer Characteristics Psychographics Demographics Geodemographics Behaviorgraphics Benefit

4 Classification of Four General Targeting Characteristics

5 Behaviorgraphic Targeting Based on how people behave (with respect to a particular product category or class of related products) – e.g. past purchase behavior; online search activity; etc. The best predictor of one’s future behavior is his or her past behavior.

6 Behavioral Targeting for Tambrands

7 Benefit Segmentation & Targeting Segment and target consumers on the basis of the key benefit they seek from the product. Toothpaste category: Automobiles category:

8 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

9 Psychographic Segments Porsche example

10 Psychographic Segmentation The Euroconsumer:

11 Psychographic Segmentation The Euroconsumer:

12 Cluster Analysis A statistical method for grouping similar objects Basis for market segmentation

13 Spatial Display – Scatter Diagram Buy On price Buy on image

14 Illustrative Statements Used in a Banking-Related Psychographic Study

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

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

17 The VALS™ Framework

18 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.

19 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.

20 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.

21 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.

22 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.

23 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.

24 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.

25 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.

26 What VALS type are you? Take the survey at: bi.com/VALS/presurvey.shtmlhttp:// bi.com/VALS/presurvey.shtml

27 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. “You are where you live”

28 Geodemographic Targeting Several companies delineate geographical areas into common groups including: –ACI(ACORN) –Experian (MOSAIC) –Claritas (PRIZM ) sp?ID=0&SubID=&pageName=Homehttp:// sp?ID=0&SubID=&pageName=Home NE

29 Claritas PRIZM NE PRIZM=Potential Rating Index by Zip Markets and NE=New Evolution of their original system. (Total 66 clusters)

30 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.

31 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

32 World Population World Population Growth –6.67 billion (2009) to 8 billion (2025) to 9 billion (2050) Changing Age Structure in United States –Median age will increase to 38 by 2025 –More middle-aged Baby Boomers –Fewer children, teenagers, and young adults due to decreased birthrates Both China and India’s populations dramatically exceed that of the United States.

33 World’s 25 Largest Countries as of 2007

34 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

35 Largest Ancestral Group of U.S. Residents

36 Population of the United States by Age Group, as of 2006

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

38 Demographic Segments by Age Group Preschoolers (5 years or younger) Elementary-school-age children (6-11 years) Tweens (8-12 years) Teenagers (13-19 years) –Millennial Generation or Generation Y –Highly conformist, narcissistic, and fickle consumers Young adults (20-34 years) –Generation X (Baby Busters) –Yup & Comers, Bystanders, Playboys, and Drifters

39 An Appeal to Preschoolers’ Parents

40 An Appeal to Teenagers

41 Demographic Targeting: Marketing to Preschoolers

42 Demographic Segments: Age Middle-Aged (35-54 years) –Younger baby boomers and older Gen Xers –Target category for luxury goods and youth Mature Consumers (55 years or older) –Are 23% of the total U.S. population –Have highest discretionary income and most assets –Census Bureau classification: Olders (55 to 64); Elders (65 to 74); and the Very Old (75 and over) –Descriptive groups: Healthy Hermits, Ailing Outgoers, Frail Recluses, and Healthy Indulgers

43 An Appeal to Female Baby Boomers

44 The Ever-Changing American Household Household Defined –An independent housing entity, either rental property or owned property. U.S. Households –Growing in number, shrinking in size, and changing in character –Married couples with children families now represent less than one-third of all households –Single person and unrelated persons households are a growing market

45 Generation Y / Millenials / Net Generation About 70 million in numbers Age not yet 30 – those generally born between 1977 and 2002 (Gen X – 1965 – 1976) Some put them as age 16 – 27 (1978 – 1989) High performance and high maintenance Speak your mind philosophy – question everything – willing and unafraid to challenge the status quo Very independent and tech-savvy

46 Generation Y / Millenials / Net Generation Possess financial smarts Work-Life balance is not just a buzz word Change, change, change – skeptical of employee loyalty – multi taskers – don’t like to stay too long on one assignment High self-worth

47 Generation Y / Millenials / Net Generation One in three is not a Caucasian One in four lives in a single parent household Three in four have working mothers Very practical / pragmatic group “stumble on to the brand in unexpected places” Strong sense of entitlement Want the best and feel they deserve it Ambitious with high expectations

48 Generation Y / Millenials / Net Generation Gen Yers respond to humor, irony, and the (apparently) unvarnished truth. Sprite has scored with ads that parody celebrity endorsers and carry the tagline ''Image is nothing. Obey your thirst.'' J.C. Penney & Co.'s (JCP) hugely successful Arizona Jeans brand has a new campaign showing teens mocking ads that attempt to speak their language. The tagline? ''Just show me the jeans.''(JCP)

49 Young Adults Yup & Comers: The highest levels of education and income, focus on intangible rewards and confident about themselves Bystanders: Predominantly female African-Americans and Hispanics, disposable income is low but love fashion and shopping Playboys: “Pleasure before duty” lifestyle, self-absorbed, fun-loving and impulsive Drifters: Frustrated with their lives, the least educated, and choose brands that offer a sense of belonging and self-esteem Bystanders (37%) Playboys (19%) Drifters (16%) Yup & Comers (28%)

50 Ethnic Population Developments % of population as of 2000

51

52 African-Americans African Americans: 40.5 million as of 2010, or 13% of the U.S. population African Americans are attractive consumers because: –The average age of black Americans is considerably younger than that for Whites –African-Americans are geographically concentrated, with ¾ of all blacks living in just 16 states –African-Americans tend to purchase prestige and name-brand products in greater proportion than do whites.

53 Hispanic Americans (Latinos) Grew from 4 million in 1950 to an expected population of nearly 48 million in Hispanic Americans: 25% of the U.S. population by 2010, currently nearly 40 million U.S. residents. A key in designing effective advertising for Hispanics is to advertise to them in their dominant language. Interethnic differences in Cubans, Mexicans, and Puerto Ricans as well as differences within each grouping mean there is no one market.

54 Top 10 U.S. Hispanic Markets (estimates as of 2006)

55 Asian-Americans As of 2000, approximately 10.7 million Asians in the U.S. By 2010, the number will increase to 14 million and more than 33 million by Asian-Americans on average are better educated, have higher incomes, and hold more prestigious jobs than any other segment of society. No single market. Some success with customizing marketing programs to Asian values.