1. Segmentation & Targeting
5604 Digital Marketing
Segmentation & Targeting
Consumer Behavior
September 27, 2017
Open elements of value & scroll to hierarchy

2. Agenda
6:00p Welcome + Objectives + Logistics 6:10p Activity: Segmentation + Targeting 6:30p Segmentation & Targeting Review 6:55p Case Discussion: ABC Financial Service 7:10p Break 7:25p Project Activity #1: Who are my customers? 8:10p Consumer Behavior + The Elements of Value 8:30p Project Activity #2: What influences a customer’s decision to buy? 8:55p Wrap-Up

3. SEPTEMBER 25 – STRATEGIC FOUNDATION
SEPTEMBER 19 – RESEARCH & ANALYSIS
schematic of marketing strategy formation process exhibit 2

4. Our learning goals for today:
Articulate the role that segmentation plays in marketing strategy
Utilize the primary segmentation variables used in both consumer and business market segmentation
Evaluate what constitutes good (and not-so- good) segmentation
Make informed targeting decisions
Use both market segmentation & buyer personas to make marketing decisions.
Evaluate the buying process & how a customer makes a purchase decision
Identify how a customer derives value from a product / service.

5. Customer Segmentation & Instagram
Departure of co-founders: Kevin Systrom and Mike Krieger, announced earlier this week.

6. “Kevin was careful in the early days about the customers he tried to attract Because it’s like a neighborhood. You get a vibe from a neighborhood, and that determines if you want to stay.”
- Roelof Botha, partner at Sequoia Capital
“Kevin was careful in the early days about the customers he tried to attract,” says Roelof Botha, a partner at Sequoia Capital who led a Series B investment in Instagram. “Because it’s like a neighborhood. You get a vibe from a neighborhood, and that determines if you want to stay. At the outset, with the designers and photographers, the people recruited to come to Instagram, some of those were cultivated personally. And getting people who posted good-quality photographs turned out to be an important initial condition, because that made other people realize this is what you do when you come to Instagram.”

7. users + sponsored photo ads
2010
2011
2012
2013
2014
2015
2016
2017
2018
Instagram
Launches
Bought by
Facebook
for $1b
100 million
users + sponsored photo ads
Sponsored video ads
500 million
users
1 billion
users; valued at $100b
DISCUSSION POINTS – FOCUS ON CUSTOMER SEGMENTATION STRATEGY
Using Roelof Botha’s quote as a starting point, map out how Instagram’s customer segmentation strategy evolved over the past 8 years. Who did Instagram target in 2010? In (And how was that reflected in the decision to sell to Facebook? In 2015? In 2018?
If you have time: What did Instagram do well with its segmentation strategy? How could it have improved along the way?

8. Segmentation &
Targeting:
Theory + How-To

9. Group customers with similar needs into segments—determine characteristics in each.
Segmentation
Group customers based on similar needs
Profile each segment
Targeting
Assess attractiveness of each segment
Select segments to target
Positioning
Define value proposition for target segments
Develop an action plan

10. There are common segmentation variables for consumer markets…
Description
Geographic
Country, City, Region, Urban vs Rural, Climate
Demographic
Age, Income, Gender, Generation, Marital Status, Family Size, Occupation
Psychographic
Lifestyle, Personality, Activities, Interests, Opinions,
Behavioral
Usage Rate, Loyalty, Product Knowledge, Involvement, Decision, Purchase Occasion
Benefits Sought
Convenience, Value, Safety, Status

11. The ultimate goal is to group customers with similar needs and preferences.
WHY
Why do customers make the decisions they do?
Needs, preferences, decision-processes
WHAT
What have the customers done?
Usage, loyalty, profitability
WHO
Who are the customers?
Demographics, media habits, lifestyle

12. Ask,“Is this a useful segmentation?”
Identifiable Does the segment have unique characteristics & behaviors? Substantial Are there enough people in this segment? What is the size of the market? Accessible Is the segment reachable? Is it easy or difficult to reach? Stable Is there longevity in the segment? Differentiable Is the segment distinct from other groups? Actionable Can you meet the segment’s needs?

13. To select a segment, ask: “Which offers the best opportunity for our organization?”
SEGMENT CHARACTERISTICS
Segment Size
Segment Growth Rate
Segment Profitability
Target
Market
Selection
COMPETITION
Competitor’s Strengths
Competitor’s Resources
Competitor’s Intensity
COMPANY FIT
Objectives
Competencies
Resources

14. There are similarities in B2B segmentation.
Variable
Description
Geographic
Country, City, Region, Urban vs Rural, Climate
Firmographic
Industry, Firm Size, Global/Regional, Ownership Structure
Buying Approach
Centralized / Decentralized, Purchase policies, Involvement of Decision Makers
Behavioral
Volume, Loyalty, Attitude toward risk, Purchase frequency, Urgency
Benefits Sought
Price, Product quality, Customer service, Relationship

15. In B2B, you may manage multiple “WHYs.”
Key Customers
Prime Customers
Primary Decision Maker
Nurse
Administrator
Purchase Drivers
Patient satisfaction
Physician requirements
Return on investment
Necessity
Low maintenance
Low risk, low liability
Deciding factors
Performance
Patient outcomes & safety
Caregiver safety
Reliability
Ease of use
Price

16. Segmentation &
Targeting:
B2C Example

17. “If you’re not thinking segments, you’re not thinking
“If you’re not thinking segments, you’re not thinking.” – Theodore Levitt
President Barack Obama used a sophisticated segmentation strategy to reach voters in the 2012 U.S. Presidential Election.

18. His campaign implemented tactics to address voter segment needs and interests.
WOMEN, AGES
Contribute the Most Money
Love George Clooney & Sarah Jessica Parker
Read Vogue Magazine

19. Obama used geographic / demographic / psychographic segments to win swing states.

20. Segmentation strategy & effective targeting won the 2016 election, too.

23. Trump ads addressed the concerns of Rust Belt families.
Youtube link: 1:02 – 2:02

25. Segmentation &
Targeting:
Buyer Personas

26. Personify your target with buyer personas.
STRATEGIC OPPORTUNITY
STRATEGIC IMPLEMENTATION
Segment
Buyer Personas
GOAL: Is this a customer segment that we can target profitably?
What’s the size of this market?
What’s the $ opportunity in this market?
What’s the future of this market?
Are our competitors serving this market?
If we serve this market, how might competitors respond?
GOAL: How can I meet this customer’s needs?
What are the unique characteristics that distinguish a typical customer?
What are this customer’s unmet needs?
How does this customer find information about my service / product?
Who influences this customer?
How does this customer make decisions?

27. An Example: Global Investment Company
Strategic Issue: Are there opportunities to build relationships with prospective customers earlier in their lives? Context: Traditional financial institutions capture college students with introductory products like checking accounts, savings accounts, and student loan options. Investment firms connect with customers through employer-sponsored benefit plans or when those customers start considering retirement.

28. College Student Persona 1: The Skeptical Investor
Checking Account
Savings Account
Current Investments
Financial Knowledge
Motivation to Invest
Yes
Maybe
None
Minimal
“I have savings, but I have no plan to invest any time soon.”
– College Student,
Stony Brook University, 19
Description
Wants
Financial Stability
Needs
Financial Education
Pain Points
Lack of Trust
(1) Personal Interviews
(2) College-Educated Millennials: An Overview of Their Personal Finances
(3) College Students are put to the Test

29. College Student Persona 2: The Potential Investor
Checking Account
Savings Account
Current Investments
Financial Knowledge
Motivation to Invest
Yes
None
Moderate
Medium
“Investment and retirement will become concerns when I graduate; until then, I’ll focus on studying”
Description
Goals
Save for “long-term” needs (in this case 5 – 10 years)
Needs
Usable online interface
Low Cost
Interpersonal interaction
Pain Points
Investments are for people who are older
– C.K., Lehigh University, 23

30. College Student Persona 3: The Current Investor
Checking Account
Savings Account
Current Investments
Financial Knowledge
Motivation to Invest
Yes
Minimal to Extensive
High
“I invest with Northwestern Mutual because my friend works there.”
– Member of the Military, 24
Description
Goals
Begin investing as soon as income allows
Needs
Investment Plan/Timeline
Pain Points
Perceived lack of Investible Income

31. Case Discussion

32. Case Discussion: ABC Financial Services
After reviewing the case, describe some of the problems with ABC’s current segmentation strategy. Why are they problems?
Refer to the Segmentation and Targeting reading assigned for today and develop a segmentation strategy for the company. Based on your analysis of the data provided, explain how ABC Financial Services should segment the market? Which attributes are most relevant?
Based on that analysis, describe the firm’s best customer segments. Who are the least profitable customers? Outline 2 or 3 top customer segments, based on current customer data.
From there, develop a buyer persona to represent the best prospective customer segment. While not required, Xtensio has a tool to help you build one. Why do you believe this is the best prospective customer segment?

33. Break

34. Project Activity #3: Who are my customers?
You and your team members are the founders of a new digital marketing firm that helps organizations in the private, social, and public sectors integrate augmented reality into their marketing strategies. As founders of the firm, it’s your responsibility to develop new clients. Tonight, begin developing a segmentation & targeting strategy for your new digital agency. By the project presentation, you’ll want to identify the segments in the market, which you plan to target, and why. In the case of this B2B sale, understanding your target segment will also require understanding your prospective clients’ target segments, as well.
Consider the potential market for your new firm’s AR application. Brainstorm potential market segments, using the content from today’s lecture & the “Segmentation & Targeting” reading.
Which segmentation variables are most relevant to your segmentation strategy? How will you define distinct market segments? (Exhibit A)
Evaluate the “Who, What, Why” to refine prospective segments & what motivates them. When doing this, consider that your new firm is selling B2B, so your team will need to evaluate your prospective client’s customers and how your AR solution will help your clients better serve their customers. Also, consider the buying approach for the prospective segments. (Exhibit B)
Discuss which of the segment(s) your new firm will target and why. (Exhibit C).
Finally, discuss which marketing intelligence / market research sources you’ll use to test & support your segmentation.
me your notes following class,

35. Activity debrief.
What challenges did you face while completing this activity?
Did you find a need for further information? How will your team gather that information?
What did you learn about segmentation & targeting?
Why is effective segmentation & targeting a critical component of marketing strategy?

36. Consumer Behavior

37. The purchase funnel outlines distinct stages in the buying process.

38. Multiple people participate in the purchase decision (DMU).
Who influences the family vacation destination?
Fidelity & parents. What role do they play??

39. In B2B, sell to the interests of each person in the organizational buying center (OBC).

40. Customers have distinct questions at each stage.
Need arises (trigger)
Search options
Evaluate alternatives
Develop a choice set
Pre-Purchase
Where to buy
When to buy
How to pay
Purchase
Evaluate satisfaction
Share experience with friends, family, & beyond
Decide whether to repurchase
Post-Purchase

41. “What consumers truly value, however, can be difficult to pin down and psychologically complicated.” -Elements of Value

42. 4 categories of value
Functional
Emotional
Life Changing
Social Impact

44. An Example: An Internationally-Recognized Children’s Hospital
Strategic Issue: Can we better connect with individual donors through social media to increase overall giving & donor retention? Context: The hospital generates multi-million dollar gifts from high net worth donors. It effectively administers campaigns for capital projects. However, it sees an opportunity to better capture donors who connect through events, fundraisers sponsored by individuals, and other non-capital projects.

45. Consumer Behavior:
Nonprofit Example

46. Sara Martin Ashleigh Chase Age: 34 Education: College, Certification
Profession: Nurse
Income: $65,000
Interests: Children’s Health, Healthy Lifestyle, Exercise
Involvement with HOSPITAL: Ran at a 5k event
Comments: Wants something in return for donating (5k, gala, etc.)
Ashleigh Chase
Age: 28
Education: College
Profession: Teacher
Income: $35,000
Interests: Education, Children’s Health
Involvement with HOSPITAL: Participates in Daisy Days, but does not give
Comments: Little expendable income, involved with brands and causes online.
Based on research
Salaray: SRCH_IL.0,12_IM676_KO13,29.htm
Sources:
Sources: Blackbaud, The Next Generation of American Giving, 2013
and-authentic-brand-loyalty/
Source: [Hospital] Facebook Insights
Source: “Where Men and Women Give,” Women’s Philanthropy Institute

47. Customer journey Case study:

48. Project Activity #4: What do they value?
You and your team members are the founders of a new digital marketing firm that helps organizations in the private, social, and public sectors integrate augmented reality into their marketing strategies. As founders of the firm, it’s your responsibility to develop new clients. Tonight, begin to identify what your prospective customers value & how they make decisions. To that well, it will help to understand what your customers’ customers value first.
Define the OBC for your target segment. Who will help make decisions?
Outline a few notes on your target customers’ customers. Who are the customers? How does your client/customer provide value to them?
How can your AR solution help your prospective client provide more, better, faster value to their customers?
Use the 30 elements outlined in the Elements of Value to identify elements that most apply to your target segment.
NOTE: All work completed in class should be substantiated & tested through research before presenting your final project.